How to Sever Bad Vendor Relationships

Maryland Automobile Insurance Fund CIO Cindy Warkentin advises mid-market CIOs on how to walk away

When things aren't working with a vendor, how do you effectively terminate the relationship?

This is something most CIOs would prefer not to think about. But it's important to plan how to terminate a vendor relationship, especially if you are in a small or mid-market business like ours. If things go badly, any disruption can be highly damaging to the business.

There is usually language in the contract that covers termination, and it's always advisable to consult with legal when considering a termination. What's also important is how you go about disengaging. It can be a delicate dance—you want to continue to be on "speaking terms" with your soon-to-be ex-vendor for the sake of possible future engagements or to protect other units in your company that may still be doing business with them.

There are different ways to play it, depending on the state of the relationship and the criticality of the vendor's product or service. You may be completely open every step of the way, clearly stating to your vendor that you are moving on and why. But in a highly volatile or risky situation, you may want to keep your termination plans to yourself until you already have a new vendor engaged.

Severed Connections

As an example of the latter approach, we discovered one day that we had lost our Internet access and could not identify the problem. We worked with our ISP, who also could not find the problem. That presented a serious challenge because our main revenue-generating stream is through the Net. We determined that the telecom company had generated a "disconnect" order erroneously and, after a struggle, we got them to admit it was their problem. Even then we didn't get good service—they had conflicting disconnect and connect orders in different units, and the right hand didn't know what the left hand was doing.

We escalated the problem multiple times before they finally killed the disconnect order. But that was it for us. We went with another ISP and telecom company for Internet access. Because we had been so burned by the experience and were very afraid it might happen again, there was a brief time—about 10 days—when we had a service overlap between the two ISPs. I didn't like having to double-pay during that period, and I typically don't take a redundant vendor approach, but given the risk and our exposure, it was the more prudent path.

Cindy Warkentin is CIO at the Maryland Automobile Insurance Fund and a contributor to the CIO Executive Councils Mid-Market CIO/IT Vendor Relations Playbook. E-mail mentor topics to connect@cio.com.

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This story, "How to Sever Bad Vendor Relationships" was originally published by CIO Executive Council.

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