Vendor Prenups and Exit Strategies

InfoWorld published a good story yesterday called “How to Divorce Your Tech Vendor”.

I have spent the majority of my career with end-user organizations and vendor management has always been a key role. I have made mistakes and learned some hard lessons. No matter how good the relationship is at first, it almost always sours as the vendor becomes complacent and assumes a posture of entitlement. This scenario has worsened with the recession and the advent of outsourcing and cloud computing. Vendors that were once all powerful simply are not so any more – there are too many alternatives. And end-user IT shops are being asked to do more with less by their customers, and they expect reciprocal behavior from their vendors. Yet those same vendors still operate in the old model and do not acknowledge the new circumstances.

As the InfoWorld post bears out, the cloud introduces even more uncertainty with vendor relationships with the area of custody. If all your assets are in the vendor’s cloud and the relationship goes south, can you get back that data and do so without outages, damages, and lawsuits.

As managers consider their vendor relationship, they need to formulate an exit strategy. The article recommends “prenups”, or ensuring the appropriate legal jargon in the contract to escape a bad situation. For the IT manager this is not always an option; sometimes they inherit contracts that have been in force for years, or have a contract thrust upon them by other parts of the business. So the strategy may need to be more creative, maybe establishing relationships deeper into vendor’s organization, moving to more open products, or simply considering mitigation. At a minimum, the manager must document the risk of an unhealthy dependency on a vendor and appeal to the organization for assistance.

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