Reasons not to change IT (or any other) Supplier

If your contract with any service is up for renewal then it is quite normal for you to want to look around at alternative providers, what they can offer and the costs that they will do the service for.

I get two or three supplier calls every week wanting me to change from my current provider for Utilities, Accountancy, Legal Work, IT Support (!), Telephones.. the list goes on but in each case I have to consider whether the change would be a positive one both in the future and in the short term.

There is a saying that “The bitterness of poor quality remains long after the sweetness of low price is forgotten” and this is one of the considerations that I have when I am looking at moving providers for any service, the main questions I use are:

  1. Am I happy with the service I have had so far?
  2. How much inconvenience will there be to my business?
  3. Will the new provider be more interested in what my business does?
  4. Is there a big cost saving
  5. Can I see better value in moving in the longer term (12 months or more)?
  6. Is my current supplier a “partner” in what I am doing?

Looking at these in a bit more detail:

  • Am I happy with the service I have had so far?

If I am happy then why would I even look at moving, one situation where I can be happy but want to move, would be where the provider I have had and built a relationship with, has been taken over by or merged with another and it has become immediately apparent to me that the change is not a positive one from my position. This recently happened with our Accountant who retired and we were moved to the new company that had taken his business, I was not happy with the new company and therefore moved to a new provider of my choice that I felt would be better suited to my needs.

If you are happy with the service then the chances of you moving are far less, hence why every business should be striving to make their customers happy

  • How much inconvenience will there be to my business?

You cannot change suppliers without an element of inconvenience or hassle. Whether it is just paperwork that needs to be filled in following several meetings discussing the change, to setting up new payment systems or to complete hardware and software replacements there is an element of inconvenience to the business.

Often the level of inconvenience will be played down by the new supplier, after all, they want your business, my favorite expression with IT Systems is to consider it as you would open heart surgery, some considerable initial pain, followed by a period of recovery that will be extended based on the complexity of the requirements, this seems to fit the bill from our experience in the past.

If you cannot quantify the level of inconvenience so you can then put a cost on it, then you should be considering this as a warning bell against moving, unless you have an overriding reason to move.

  • Will the new provider be more interested in what my business does?

All relationships in business should be win-win for both supplier and client, but there are levels as we know of these relationships where at one end there is little or no “relationship” present, so you really don’t care if you change supplier every month the impact is minimal, to one where the provider is integrated into your planning and business strategy, with significant value-add to the business having spent time getting to know your specific requirements, how you operate and where you are going.

This to me is extremely important, there are a lot of remote, Internet-based services that can offer extremely low-cost solutions but by definition the majority of these are “boilerplate” by which I mean that a set of documents, processes and procedures have been created that broadly fit everyone’s basic requirements, but there is little or no input or focus on your specific requirements.

I like giving examples and a good one for this is the outsourced human resources (HR) companies. I have spoken to a few in my time, however, they are all using standardised templates (they call them “proven”) that comply with the requirements of the Law as it now is, however not a single one asked me how my business operated before offering me their off the shelf product with my Companies name stamped on it.

Having and interest in your business should be a priority, if your current supplier is not, then that could be a reason to move, or speak to them and come up with a plan to make your existing supplier more relevant to you.

  • Is there a big cost saving?

This is a big one.  I can say that cost is a significant factor, however, the cost comes at a price.

What I mean by this is that there is a standard set of costs associated with any business and your supplier will have these in the same way that you do, if costs are too high then the only way to create profit is to either increase sales or decrease costs, nothing else (legal) can change this basic equation.

If we think of the classic example of outsourcing call centres, there have been some major companies that have fallen foul of reducing cost by using call centres located in lower cost locations, typically the far east. This certainly reduced cost and enabled them to keep or reduce prices, but what actually happened is that the levels of Customer Satisfaction decreased and people moved to alternative providers, in fact, the marketing of “UK Call Centres” has become widespread as a positive tool for a sale.

If there is a significant perceived saving, I would always ask the new provider how they maintain costs? Are you really offering a like for like service?

We offer a maximum 4 hour onsite response with immediate access to a member of our engineering team to our client’s problems, we had a renewal with a client recently who showed me that they could get a significant saving with an alternative supplier, but we pointed out that although they were offering a 4 hour response, this was the maximum time that they would take before returning a client’s call for support, not be onsite or offer immediate telephone support so not “like for like”.  In this case, as they have 10-15 calls per month they could see a potential problem with extended downtime. When they went back to the supplier and asked for a like for like service, the costs were similar and therefore there was no big cost saving to be had.

  • Can I see better value in moving in the longer term (12 months or more)?

Looking at the bigger picture, cost savings should be looked at longer term, there will be a lot of initial cost in moving to a new provider of almost any kind, however, if you can balance this initial cost with long term savings then it is much easier to qualify the financial reasons for the move. If you can’t see long term savings then you should consider whether there are other reasons for the changes you are looking to make.

Telecoms are a big player in the long term cost savings, we look at long-term bills from clients that are looking to move providers and then look at the most cost effective option for the client, as we offer call inclusive and exclusive contracts it can often be proven that having your calls included in larger organisations can be an expensive option as many people are low users and these often outweigh the high usage users. Again this is about knowing your client’s requirements.

  • Is my current supplier a “partner” in what I am doing?

I am a great believer in partnerships in business, whether as a client or a supplier, it never ceases to amaze me what people do in their business and one of my goals is always to look at what we know and see how this can be used to improve a business, usually with improved efficiencies.

To regularly be asked to sit in on planning meetings shows that this type of partnership is present and it only comes from spending time with a client.

If you have this type of relationship with a client or supplier, then as a client, I would suggest that the reason you are thinking of changing is outside of the normal parameters and possibly these parameters deserve to be looked at in detail as you will not get such buy-in from a new supplier immediately, it is not generally possible.

 

So if you are thinking of changing what should you do today?

Certainly the first thing is to pick up the phone and discuss your concerns, often this is a simple communication problem, something has changed in your organisation, or in your suppliers and the two no longer quite marry up, opening a dialogue is certainly the first line to a resolution, is far lower cost in terms of both money and time and in the majority of cases can resolve the problems that are making you consider change.

Write down your expectations. A list of what you expect from a supplier is the basis of an agreement and becomes a measure that you can use to determine your service levels.

Don’t forget as a Supplier, you have expectations of a client and these should also be written down, I did this some years ago, it is a simple list:

  • Be honest with us, it is difficult to help without the whole story
  • Talk to us, we can make mistakes but we can only rectify change and improve with your help
  • Thank us, take a few seconds to make our day
  • Pay us, it is a fundamental fact that without money we cannot exist to help you
  • Recommend us, please help us to move our business forward as well

 

Finally a quote:

The common law of business balance prohibits paying a little and getting a lot … it cannot be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.” ~ John Ruskin

Business should always be a Win/Win for both parties, if you can create this within your business then you and your suppliers should never need to change for anything but the “right reasons” .. but that’s another Blog entirely !

Steve Farmer

 

 

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