Don’t Bail on Your Vendor Partners
Martina Conlon | March 26, 2014
Our 2014 projects and priorities research has shown that, once again, policy system replacements are the top priority for most insurers today. I’m involved in many system selection efforts and recently participated in a number of reference discussions with prospects and existing clients for various products.
There were several common themes with the reference accounts. They all provided good references as expected, but also recognized the weaknesses in the organizations and provided guidance on how to manage and address these weaknesses.
Interestingly, something had gone seriously wrong in every implementation; the vendor was significantly accountable for the issues and the projects almost failed. However, instead of leaning back and taking aim at the vendor, each of these savvy insurers leaned in—to work with the vendor to resolve the problems.
Unlike seven years ago, today most core systems projects are successful. They are big, hairy, often ugly, projects that are far from problem-free, but they typically do end with a system in production, satisfied stakeholders, and an intact IT department.
Improved outcomes can be attributed to several things: our industry products are more mature; our vendors are more experienced; and carriers are better at integration and, more importantly, vendor management. Vendor management is as important as the product, implementation methodology, and project management.
So as you embark on your core systems effort, consider the vendor a partner, not a supplier. Clearly assign vendor relationship management to leaders in the IT and business community and don’t relegate this relationship to purchasing or procurement.
Invest in the relationship; join their advisory board, take full advantage of the opportunity to influence the offering development, network with their other customers, and develop a deeper personal relationship with the vendor leadership.
Serve as a reference to become an asset to the vendor’s business beyond the money you pay, and use the reference calls as a networking opportunity. During your project, conduct regular leadership meetings with the vendor and broadly communicate status, issues and performance. Encourage transparency and honesty, and track performance and value metrics in as detailed a level as possible. Become important to the vendor.
But don’t expect perfection or you will be disappointed. Even the most professional, large systems integrators and the hot industry software providers have issues. Conduct due diligence up front to understand their strengths, issues, and weaknesses, confirm that you can deal with their blemishes, and plan for how you will address or prevent the expected problems.
Work consistently to manage your implementation projects and the vendor relationship. Not all core systems projects succeed or can be saved, but thoughtful vendor selection followed by proactive vendor management can significantly improve your odds for success.
(Martina Conlon is a partner with the research and advisory firm Novarica.)
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