by Steve Schlarman – June 15, 2009   

“Getta Your Tuttsi Fruitsi Ice Cream!”  For those of you who love old films, you may recognize this cry as the lead-in line from Chico Marx as he suckers in a poor unsuspecting sap in the movie “A Day at the Races.” If you’ve never seen this hilarious skit, Chico proceeds to sell book after book out of his ice cream cart to his victim (Groucho Marx) on the promise of a super secret tip for a horse race. “The horses are categorized in this book by jockey name”; “You must have the Trainers Manual to know the jockey”; “You must have the Jockey Manual to know the horse” and so on. In the end, Groucho ends up with a six-foot stack of books, a pocket empty of money and no hot tip on the horse.

For companies faced with the many technological challenges of today’s business world, vendors can seem like Chico―just buy this one more item and you will be fine. In many cases, it is a justifiable approach. Most technologies are building blocks that allow an organization to mature and improve their business one step at a time.

This past week, I read an interesting blog post evangelizing the need to reduce the number of vendors and implying that a strategic relationship with a few choice, large technology providers is most cost effective. The concept is good―reduce the number of vendors, reduce complexity, reduce costs through “bulk” purchases, etc. 

However, there are some factors that make this a challenge for any company. The breadth of technological needs across a large enterprise is so varied that even if you gather together the largest vendors, you will most likely have to use a dozen or more, and you may be forced to settle for the product or service available―not the product in the market that best fits your business needs. Smaller vendors that focus on a specific business function usually have the best-in-class approach for that particular function. And while large vendors may have new and innovative products, the smaller companies are the ones really pioneering new approaches because they are focused on a smaller piece of the puzzle.

The issue of selecting the right number of vendors to support the organization’s objectives and requirements further highlights the need for a vendor management program to navigate the technology market. IT must have a strategy to utilize large vendors where it makes sense and to handle vendors in a controlled manner to gain the benefits of innovation, niche business products and agility of smaller companies. This follows along the lines of Forrester’s Vendor Management Office (VMO) indicated in the aforementioned blog post. While a fully fledged VMO may not be the answer for everyone, the concept of employing a formalized vendor management program to ensure that the organization is gaining optimum value from its vendor relationships is worthy of serious consideration.