Monday, December 19, 2016

What do you do when your preferred vendor walks away from the deal ?

It was a great journey working with you and the team to design the solution; the innovative concept outlined is path-breaking and definitely an industry first. We learned a lot during interactions and refining the architecture; we are thankful for the opportunity. We have discussed the project and debated the immense value it brings both of us with the partnership. Regret, unfortunately we are unable to proceed with the engagement and would like to thank you for offer; we wish you all the best in your future endeavors !

Above is the gist of email received by the CIO from one of the large IT vendors who came up with the best technology solution to the opportunity. It was not a surprise even though collectively they had invested over two man years into the project which had the Board’s blessings as well as eye of the CEO. Just a few months back the leadership team from the vendor had visited them and provided the right messages to the CEO on their commitment to the project; he decided to break the news to the CEO – his manager.

The company had lagged behind in some technology solutions that had given an edge to their competitors; not that it made a significant difference, it did score brownie points with customers. Solutions in question were investment intensive and required lot of rigor to sustain; the big players were always competing on such differences in capability. Global competitive benchmark required a multiplier on the investment that none had made in the industry thus far; the company saw this as an opportunity.

So the net was cast far and wide to evaluate best in class solutions; the laggard reputation preceding the company did not evince excited responses from the providers. The CIO used all his reputation to nudge them into action, the serious face put forward by the cross-functional team made up for the rest of push required. Activity levels rose through the process reaching a crescendo as they arrived at a well-informed conclusion in an open and transparent assessment to select the best option for their global aspirations.

Recommendations were presented to the Management and the Board; everyone acknowledged the thorough nature of the process, metrics and weightage in the calculations. The project was accorded approval with a fair budget and the task shifted to financial negotiations which was not perceived to be a hurdle towards closure. Purchase under the tutelage of the CFO was thus handed over charge of expeditiously moving ahead to keep the momentum going and give the company the much needed impetus towards glory.

The shortlisted solution provider recognized the energy infused into the discussions with necessary approvals sought to strike while the iron was hot. With global leadership team’s presence, they reinforced their commitment to the company vision, the project and committed execution with best of resources. After ensuring comprehensiveness of the Bill of Material, terms and conditions, clauses defining inclusions and exclusions, Finance/Purchase and the vendor finally started looking at the numbers and the total cost of ownership.

They went back and forth from unreasonable to the outrageous, the game of negotiation began with each attempting to maximize their value. As time passed by, the business team began to feel uneasy on outcome of the protracted exercise which threatened to break up the positivity that prevailed prior to going into the financial discussion. The CEO was dutifully informed of the ongoing progress as the weeks flowed into months; the impasse was now also hurting the vendor who had put their best foot forward.

The CIO along with the business head attempted to reconcile to the situation while impressing on the CFO the need to progress; competition had already picked up the ball and started moving in the same direction ! The CFO brushed aside their pleas with the view that he cannot pay more than what he perceived as value for the solution. Business teams withdrew active follow up and left the baby in the lap of IT; the CIO realized that ego had overpowered rationale thought and asked the vendor to decline the business.

In the meeting caught unawares, the CEO sought details which the CIO provided in the presence of the Business Head who was not party to the game. An urgent meeting was summoned with Finance, Purchase, Business and IT heads to analyze and find a way to recover the situation. The CFO who was handpicked by the CEO found himself in a compromised situation; he unsuccessfully attempted to shift the blame, finally sheepishly agreeing to recall the vendor and accept their last provided offer to move ahead.

Happy ending ? For next time …

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