The Company You Keep
Client-vendor relationships are as old as free enterprise itself. The first companies of feudal England relied on each other even in pursuit of independent objectives. In fact, Wikipedia defines a company as “an association or collection of individual real persons and/or other companies, who each provide some form of capital”. Consumer packaged goods (CPG) companies for decades have developed relationships across the demand chain — from knowledge workers in India to retailers in Indiana. Now, more than ever, the “company we keep” often determines success in the marketplace. Surprisingly, this goes for vendors also! This month, Werner Graf, CPG general manager at Tata Consultancy Services (TCS), reflects on leveraging client-vendor relationships for success. What vendor management trends are driving successful relationships?
Graf: We see a clear progression from two traditional vendor management strategies to a singular strategy of “Vendor Ecosystems”. Historically, CPG companies either: 1) consolidated spend with one strategic partner to generate leverage, or 2) employed a “best of breed” approach with multiple vendors. The former model drove efficiency through partner familiarity, but required constant vigilance against complacency. The second model kept vendors hungry, but suffered from learning curves and transient talent. Today, clients are “empaneling” a shortlist of global partners with the skills and attitude to succeed.
What skills and attitudes are essential in “vendor ecosystems?”
Graf: Vendors in the “ecosystem” earn their place through recognized competence, favorable pricing and commitments to partnership. They keep it by exceeding client expectations without prompting. This requires a dedication to excellence and an ability to play nice in the sandbox. Wise clients understand what is important to their vendors to get the best from them. The goal isn’t to have one company work in servitude to the other, yielding only SLA table stakes, but rather, two companies jointly attack a common purpose, innovate together and drive competitive advantage for each other.
Provide an example of effective joint marketing.
Graf: To ignite innovation and drive competitive advantage, both companies must be vested in each other. “Client Reference Marketing” is an easy way to do this. SAP does this beautifully and its differentiated campaign does two things for clients: 1) it provides them with free positive press, and 2) it secures an implied commitment from SAP to quickly resolve any dissatisfaction. I did the same thing as an IBM Client Executive for Campbell Soup Company years ago. After Campbell’s bought Websphere, IBM ran Websphere ads in Forbes, Fortune, the Wall Street Journal, etc., with a pyramid of soup cans as a backdrop. Very rarely had Campbell’s lent its name to a vendor’s product. However, CIO Doreen Wright understood that not only was she getting free soup ads, IBM would never, ever let Websphere fail in her shop after running national ads. It was a win for Big Blue and a win for Campbell’s. ConAgra and Tata recently presented at Oracle’s Open World, underscoring our great partnership with both companies. Again, this is today’s world: An ecosystem of partners driving competitive advantage for each other. The company you keep is more and more a determinant of market success.