SMB vendor selection a tricky business

CIOs at SMBs offer advice on how to negotiate with the growing number of vendors who want them as new customers.

John Bowden knows how to divide the good vendors from the not-so-good ones. The CIO of Salt Lake City-based Lifetime Products, Inc., a manufacturer of residential basketball systems and outdoor furniture, looks for two things in vendors: honesty and knowledge. He keeps a list of IT vendors who pitch him products and then uses discretion when deciding whether to return the calls.

"The sales vendors don't understand exactly what they are talking about," said Bowden, who oversees 20 IT workers that serve approximately 2,300 employees at Lifetime. "You have to keep vendors honest. Keep strong relationships and standardize on a few vendors."

Bowden was among the CIOs who attended the 2nd annual CIO Decisions conference in Pebble Beach, Calif., last week – and among the many mid-market IT executives who said they are besieged by sales calls. Like Bowden, many of them had a similar message for SMB vendors: 'Don't call us, we'll call you.'

As IT vendors hone in on small and medium-sized companies for new business, they may be finding that IT execs in the mid-market are tough customers. They are renowned for being loyal to vendors and resellers who have served them well in the past, and are wary of large vendors who might try to re-package applications built for enterprise systems by putting a SMB sticker on it – but not simplify the installation or licensing processes..

Donna Cottrell, a chief of information systems division for the U.S. Coast Guard, in Elizabeth City, N.C., has learned through experience to err on the side of caution when dealing with IT vendors. In one project, Cottrell noted that instead of the vendor acknowledging that it wasn't going well, "they offered me some pie in the sky solution," she said. "Even me, not a techie, said, 'You can't say that!'" So Cottrell took her technical staff with her to see the vendor as a group. She presented the problem to the vendor and asked them what they'd do. "The vendor finally admitted [their mistake], once they got their technical people involved," Cottrell said.

There's also the possibility of second-rate sales staff being assigned to tap potential new customers. "I get a lot of half-baked sales calls, about one or two per week," said Bob Wittig, CIO of San Carlos, Calif.-based Independent Electric Supply. But, he admitted, "If someone is persistent, I'll return the call."

Other CIOs are not so accommodating. Ron Guilmette, IT director at Metenco-Aluma Shield, a Daytona-Beach, Fla.-based manufacturer of cold storage doors, gets about 10 calls per week from vendors. While they are calling him, Guilmette is telephoning peers to search for references. "I shy away from vendors who are pushing their products only to push their product," Guilmette said. "You need to discuss your [SMB] needs. I research the companies first, then I find vendors through networking."

Giulmette is not alone. Many SMB IT executives get creative when shopping for vendors. From dragging technical staff along to homegrown portals for vendors and contract scrutiny, the winning vendor has not only the best product, but also the most knowledge of the customer's situation.

"I take the RFP route, said Leslie Bauer, CIO at Lanham, Maryland-based Radio One, Inc. "It's all about negotiations. I keep a database of vendor reports. We get better prices and services when vendors can provide the reports we need." Bauer said she chooses vendors who can work with her to manage assets. "I look at price vs. performance, and I check references," Bauer said.

Negotiations should also include close scrutiny of vendor contracts and an understanding of the terminology. "Know what you want and need, and know your business," said Doris Wilkins, director of MIS at Holzer Medical Center in Gallipolis, Ohio. "Make sure you understand all terminology, and be sure to learn what it means, because [otherwise] it will come back to bite you."

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