Midmarket CIOs: Why We've Fired A Vendor

When the employees of Kirby-Smith Machinery started complaining that their Internet had slowed to a point where it impacted productivity, Bill Graham, IT manager for the construction equipment dealer, knew he had a problem. But what he didn't know at the time is that the complaints wouldn't be his biggest headache. That came when Kirby-Smith couldn't get help from Websense, its Web filtering vendor.

Faced with angry employees on one side and a figurative stone wall on the other, Graham was forced to make a decision that midsize CIOs face regularly. He had to fire a vendor.

As more and more companies delay or postpone spending on IT projects, it becomes imperative that current IT infrastructure runs optimally, and CIOs still expect support from their vendors. According to Graham and other IT executives at midmarket companies, that doesn't always happen.

A relationship with a vendor is like a marriage. Both parties initially commit to each other and work to ensure a long and successful union. Unfortunately, some marriages end in divorce. Several midsize CIOs said knowing how and when to break up is critical.

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The hardest decision for CIOs, and their VARs, is knowing when to cut their losses, said Gary Lee, vice president of Columbia, Mo.-based Carfax's data center. "Sometimes you just have too much cost where you want to walk away, but you can't. It's like not getting divorced because of the kids," he said. "Not being able to admit a mistake can cause more pain than admitting it. I find that I'm often the one saying, 'Let's punt,' not the people closer to it. They'll say, 'No, just one more patch. One more patch.' " But one more patch turns into many more patches and still nothing is resolved, he said.

According to several CIOs, the decision to fire a vendor can be broken into five steps: diagnosing the problem, bringing in help or getting a second opinion, finding a replacement solution, implementing that new solution, and executing that solution.

Carfax's Lee painfully recalls the steps involved in his decision to fire a vendor a year into a project because he realized it wasn't going to work.

Carfax, a vehicle history information provider, was looking for a job scheduling software application that could run on Windows, Unix and VMS. The company chose a suite from one vendor and spent a year trying to get it to work. He finally had to make a decision to scrap the whole solution. "We were out a little bit of money, but in the end, we were out a year of time. That was the bigger issue," Lee said.

He replaced the original vendor with BMC and its Control-M suite and has been happy ever since.

Lee said what made the decision a bit easier is that he had a Plan B in place, a strategy he has replicated in subsequent IT projects and one he advises others to do, too. "You need a backup that is really viable. If you can't negotiate with your top choice, you should have a second choice," he said.

In the case of Oklahoma City-based Kirby-Smith, Graham and his solution provider, Peak Uptime of Tulsa, Okla., had traced the company's Internet problems to a deployment of a SurfControl Web filtering solution that needed some updates and reconfiguration. However, Graham said Kirby-Smith wasn't getting the support it needed from Websense, which had bought SurfControl. Websense was more interested in getting Kirby-Smith to upgrade to the next level of Websense software, but Kirby-Smith didn't want to do that, Graham said. So he said goodbye.

"We had difficulty when we called and we even got our VAR involved because they had sold us the SurfControl originally, and they had a heck of a time getting support," Graham said.

Erin Malone, senior director of sales and channel programs for Websense, acknowledges there was a period of transition during the integration of SurfControl, but added "our team was able to respond quickly and resolve the majority of instances before they escalated." She said customer retention and partner migration rates are now dramatically enhanced.

Kirby-Smith counted on Peak Uptime to guide it through the process of finding a new solution. Peak Uptime recommended Cymphonix Network Composer, a solution it has sold for about two years. "It's a dedicated hardware-based appliance, not a separate OS you have to manage," said Herb Sanders, a senior network engineer with the solution provider.

The Cymphonix product helped give top priority to Kirby-Smith's VoIP calls, while Internet traffic for its own purchasing needs also receives attention.

Network Composer also revealed that some of Kirby-Smith's employees spent much of their day browsing sports news and video Web sites, so the company throttled down that traffic to 10 percent, which didn't block the sites but made going to them more difficult. As a result, all traffic is flowing smoothly and complaints have gone away.

Kirby-Smith's example is one shared by many midsize companies that have enterprise-level needs that are not met with enterprise-level support. Even with a solution provider's guidance, midsize CIOs often find that an investment they've made in IT turns out to be wrong.

NEXT: Cutting The Cord

Joseph Tait, director of IT at NMS Labs, a Willow Grove, Pa.-based clinical toxicology and forensic testing company, said finding the right solution is often more art than science, and it's important to cut ties if a product is no longer helping you run your business.

But finding the right help is also a challenge, he said. Manufacturers have a subjective opinion on their own products and services and aligning with a VAR that can differentiate solutions is imperative. "I'm going to spend $250,000 on storage. IBM tells you they're the best. NetApp tells you they're the best. You need to manage that [finding a VAR] process tightly. The business needs should drive what you're looking for," Tait said.

Large enterprises, especially ones with long histories, have built a strong discipline around purchasing that extends to IT equipment, but midsize companies, and newer companies, often don't have that luxury, Tait said. For example, a previous employer was using dozens of vendors and spent $8 million annually on consulting services when Tait arrived. "It was a circus; there was no structure, he said.

Over time Tait was able to instill some discipline practices that helped save the company money. Now at NMS Labs, he faces the same challenge—figuring out a way to keep IT expenditures under control while making sure the needs of his technology users are met by the right vendors. It's a battle midsize companies face every day, he said.

CIOs need to have a complete understanding of their IT providers' capabilities for now and the future, and for products and services, Tait said. For example, Tait's previous employer started a toll-free number that customers could call to find a nearby dealer. The contract for that system went to a small company that promised to route calls to 1,800 stores around the country.

"When we first started, it was not a big deal, but then we had a national ad campaign and we realized this thing better do what it was supposed to do," Tait said.

Upon inspection, he found the call router was "literally in a guy's garage with a bank of racks. It was not AT&T," Tait said. In one fell swoop, the company had outgrown its IT infrastructure and needed a replacement, he said.

Tait agreed with Graham that it's difficult to find the right solution because too many vendors don't give midsize companies the attention they need.

"They take your business for granted," he said. "If you're not big enough on their radar, they don't care. That's a challenge for midsize companies. If I call IBM, I don't have a dedicated rep anymore. Midsize companies are often subject to the limitations of the person trying to help you."

Ultimately, CIOs need to make a decision that they are comfortable with, said Carfax's Lee. For example, when Carfax was upgrading its Web application strategy, it eliminated IBM's WebSphere, even though Lee acknowledges it's a great product.

He selected BEA instead, which has worked out well. "It's been a learning experience."