January 27, 2021

Volume XI, Number 27

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2014 Resolutions Series: Trapped in an Unhealthy IT Vendor Relationship? How to Make the Best of a Difficult Situation

My client, “Hal”, head of IT procurement for a large regional hospital system called me yesterday morning and declared “I hate vendors!”  One of the hospital’s key vendors had just delivered a set of unexpected and “urgent” contract amendment documents for an “add-on” to the hospital’s electronic medical record system.  To Hal’s chagrin, the “add-on” appears to be necessary for the hospital to meet certain meaningful use requirements.  Hal sees no way to avoid the add-on, and may even welcome the new functionality, but laments the surprise approach from a long-term vendor.  Knowing that many of our readers share Hal’s conundrum, it seems the perfect time to address #2 on our list of 8 Technology Contacting Resolutions for 2014, Choose Your Technology Vendors Wisely and Manage the Relationship with Care.

Long-term customer relationships in the IT world should be cherished, but often those relationships are rife with problems – surprise costs, slow response to support requests, upgrades riddled with errors and overall poor communication.  Once an organization has committed to a particular vendor solution,backing out is expensive and complex, especially if the solution provides a mission critical business functionality.  Short of transitioning to a new vendor, here are some suggestions as to how to make improvements in an ongoing vendor relationship:

  • Designate a vendor relationship manager in your organization:  the success of the relationship depends not just on conscientious vendor performance but on diligent vendor management.  Make it one person’s job to monitor and enforce vendor performance.

  • Establish and stick to a routine of regular meetings, monthly and in-person if possible, to provide an easy and natural forum for communicating about the relationship, both the good and the bad

  • Read the contract!  Contracts for key vendor solutions anticipate the problems inherent in long-term relationships and contain tools for vendor management such as service level and other performance reporting, requirements for regular management-level meetings, escalation clauses to senior management for unresolved disputes, price protection and benchmarking.  Comprehensive contracts, once signed, are often forgotten or ignored.  Pull out the contract, get to know your rights and use them.

  • Don’t sit on problems – create vendor accountability by notifying your vendor promptly when something goes wrong and documenting in detail the facts and circumstances.

  • Keep informed of what the vendor’s competitors are doing.  Read industry reports, such asGartner.  It also helps to read this research and do appropriate due diligence at the outset to ensure that you choose a vendor with proven success and that can deliver what you need.

  • Plan ahead for transition.  The best means of motivating better vendor performance is to have an alternative.

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©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume IV, Number 114
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About this Author

Julie Korostoff, Intellectual Property, Technology, Attorney, Licensing & Technology Transactions Licensing & Collaborations Health Information Privacy & Security Royalty Monetization Securities & Capital Markets IT Transactions & Outsourcing Israel
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Julie understands that every company needs to innovate and drive efficiencies through the intelligent use of technology and data. As Chair of the firm’s IT Transactions & Outsourcing Group, her practice lives at the intersection of business and technology. Over the past two decades, Julie has led nearly every type of technology transaction, helping clients as they create, scale, and refine their businesses through technology development, licensing and distribution, and the outsourcing of related business processes and services. She has earned a reputation as a trusted advisor and...

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