by Kenneth J. Piddington

Fuel Company Takes a Fresh Approach to IT Vendor Management

News Analysis
Sep 26, 20143 mins
IT LeadershipIT Strategy

At Global Partners, IT teaches its vendors how to be strategic partners for the business, not just sell their shiny new boxes.

Global Partners started as a heating oil company whose technology strategy was limited to keeping the lights on. But as the company entered a period of rapid growth, the CEO became interested in what IT could deliver.

So when I came in, it was with the mandate to reshape IT from a utilitarian function into an agent of transformation. To accomplish this, we identified technologists who could blossom into business-oriented folks with a front-office technology mind-set. We launched an education program and overhauled the help desk, and within four years, IT became a vital part of the organization. One example is a new line of convenience stores, where we partnered with marketing to create a mobile payment and loyalty app. The key was to build that partnership from the start, as opposed to letting IT be an afterthought.

One of our credibility-winning moments was providing our Branded Fuels Group with a real-time dashboard and analytics capability. We knew what they needed, figured out how to build it, and said, “Here’s a present.” As we added more projects like that, we won more credibility.

To move on to bigger accomplishments, though, we had to increase our reliance on vendors, which led to our strategic partner program. For many CIOs, interactions with vendors are usually either sales calls or attempts to resolve complaints. But we needed real partners who understood our mission and didn’t just want to sell us something. That meant developing a new way of building relationships. The program’s goal was to identify which vendors were willing to support our mission and then teach them about our needs so they could deliver a real solution, not just their latest shiny box.

We held a strategic partner summit to outline the program–our requirements, scoring approach and reward structure. We served a big dinner, with 130 vendors, business-unit representatives and IT folks all seated next to each other like cousins at a wedding. We provided cheat sheets for our internal folks so our messaging was consistent. Our vendor list shrunk by about 20 percent in that first year; some companies understood what we needed but couldn’t provide the service.

We held annual summits and included a few new vendors to test the waters–do they have the right attitude, are they asking the right questions, are they patient? Building the right relationship takes time, and we built that time into the process in order to give vendors a chance to provide greater value.

Many IT people don’t have experience working with vendors as partners, so the first year was hard, but ultimately it became second nature. We saved a few million dollars in that first year, plus gained hundreds of hard-to-quantify benefits. We also reduced shadow IT: Now when a vendor goes around IT to the head of sales, for instance, our business colleagues are so in tune with the value of the IT relationship that they don’t want anything to do with the vendor directly. And when the CEO and CFO saw the results–fewer complaints about products and services, positive financial impact, improved IT service levels, fewer negotiations, lower maintenance costs–they fully supported the initiative.

Kenneth J. Piddington, former CIO at Global Partners, is a member of the CIO Executive Council.