Vendor vs Partner: Why relations matter in the IT Industry

Many CEOs led to this conclusion back then: “ok, to conquer the wild west, I need a fast horse & caravan – but do I really need to build a caravan factory and hire drivers? Maybe I don’t. So, let’s outsource this part – IT is nothing more than a cost I need to spend to leverage internet power in my business”. The result of such thinking was a rapid growth of large, complicated software products (advertised as customizable) and IT Outsourcing Centers in developing countries, where the engineers were affordable – but working totally independently to business people.

Why this approach failed? Well, because the internet is not a wild west – it’s just a global market, with all standard market rules. You need to have a unique value proposition which drives your competitive advantage to have a growth. The only difference from classic market is that your business advantage must be digital. And you can’t just buy the out-of-the-box business unique value. This principle applies both to building software products – and organizing software teams.

Approach to building Custom Solutions

Once the business organizations understood, that building software is way better approach to obtaining digital competitive advantage than buying it (Why? We elaborated it here in details) – many software projects started. There were two leading approaches – companies either build own IT Departments and started utilizing own resources to build and maintain software – or invited third parties to this process.

Working with Vendors there are many models of cooperation for building custom software. A popular approach is to outsource the project– and expect the delivery of agreed scope in agreed budget and time (fix model). However predictable this model is, customer loses a lot of flexibility for changes (which is crucial for software delivery). Another approach is to lease vendor’s engineers for the project (time and material / body leasing model). Customer gains necessary flexibility, but need to manage new resources, budgeting, and risks. There is also a risk that leased people won’t fit to organizational culture or even worse – will not feel the connection and attachment to the software product they are building.

Having to choose between no flexibility and people & risk management, many organizations decided to build their own IT Teams. They obtained flexibility, cultural fit, and commitment from engineers – but the results were also not as brilliant as expected. Why? First, there are limited engineering resources in the market, so business organizations are competing with software houses, startups, and digital-native companies. Second – more important – having only internal IT closes the organization to knowledge sharing and best practices which software vendors were bringing to the table.

Well, looks like we cannot have everything… or can we?

Vendor vs Partner

We have Software Vendors and Technology Partners. What is the main difference? Well – the very definition of business goal which drives the engineering company. Software Vendors make money on Projects Delivery and People Leasing. The business strategy of a software vendor is to deliver a agreed scope of the project – or agreed experts in time. Software Vendors hires technology experts, effective project managers and analysts who support customers in defining the target goals. Focus is on cost-effective, punctual deliver of software or resources. With an efficient vendor management, many companies are successfully building business value.

Partners have different business goal – Software Partners focus not only on delivering software or people on time but shares responsibility for business outcomes these resources are producing. Partners take part in the scope definition – but not only by agreeing on “what”, but also supporting “why”. Scope is less important than the overall business success. The same approach applies to leasing the engineers – Partners are hiring experts with a special focus on cultural fit and ability for commitment. Knowing the business strategy of the customer, business objectives, organizational culture, and technology aim – Partners can expand Customer’s IT Divisions as a symbiotic part, bringing people, technology, and know-how to the table.

Being a partner is more challenging than delivering out-of-the-box solutions or custom projects. Partners needs to understand Customer’s Business, Organization, Value Streams & Culture – and address topic related to Enterprise Architecture, Technology Strategy, Teams Organization and People-Systems Management. Within our 20 years journey in BlueSoft, we have played that role multiple times – being the Leading Partner in Vendor Consolidation initiative (more details here), changing the way our Customers perceive technology in business advantage (more details here), or more recently – designing & implementing new IT Operating Model & Strategic Platforms and participating in IT Transformation projects in some of Raiffeisen Group network banks and other major banks in EU. In all those initiatives, we took responsibility for our advisory & delivery, allowing our customers to leverage technology in the way it fits their business.

To be such a Partner, you need to hire not only the best engineers, but also digital transformation architects, experienced managers & consultants – and scale. The biggest benefit from being a Partner is a potential to grow together with the Customer – so the game is worth to play.

BlueSoft Partnership Model

For many years we were combining and shaping our approach working with multiple Customers being their Partner, which now became our own Partnership Model in BlueSoft. The key benefit of our model is addressing the cultural challenge – which is shaping the cooperation into the way where experts from BlueSoft and from the Customer Organization are perceived as One Team, part of Customer Delivery Center. We are addressing both Strategy and Execution level of working together with our Customers – combining the advantages from Fix Model, Body Leasing and Service Provisioning acting as a part of internal IT. We are incorporating all three approaches (body leasing, fix delivery & competence center / IT Division) within one model, agreeing on smart KPIs, Business Success Measures and Value Delivery not only on the IT initiative level – but also on organization level. This is a key difference between partner and vendor – as a partner, we are focusing on delivering business value together with our Customer.

With partnership model, our company is mirroring the needs of our Customer within own organization domains. We work together on Business Model Map to co-create Technology Strategy and Delivery Teams Topologies. The result of strategic alignment is mutual understanding of business success, described on numbers by smart KPIs and success measures. Together with our Customer we create a Digital Acceleration Program, on which we work together using different models of cooperation.

On execution level – our engineers, carefully selected not only by technical, but also cultural fit, are working closely together with Customer IT and Business Departments. We take responsibility for delivery of the business goals not only on fix model, but also working as Competence Center or smart body/team leasing formula. Combining all methods of contracting, we are choosing the best-fit model for achieving business goals by each team.

Partnership is something more than just having another vendor agreement – it’s a joint journey to achieve Business Goals with a Customer being an expert in the business area – and BlueSoft being experts in technology adoption to support the business value streams.

How do we start?

Being a partner is both privilege and responsibility. It’s also a strategic decision for any organization to invite a third party to such a close relation. Trust is everything – and we don’t expect anyone who never worked with us to just believe us on word.
With New Customers, we first want to prove ourselves – on both strategy and execution level. Within Strategy Level we have a dedicated service which will boost your digital transformation and translation from business goals into IT Strategy: working on DevOps & Cloud Adoption Program, Agile Consulting Services, IT Operating Models Transformation, Data Management and Delivery Practices Acceleration.

Within the Strategy Level, our best Consultants and Architects will help you plan the Digital Acceleration Program, combined with projects and IT initiative which will support the delivery of business goals – which we then follow on Execution Level. We want to prove ourselves to you, building the best-fit DevOps Platforms, migrating the systems to the cloud, transforming the way Delivery Teams works (knowledge transition by example) and co-building Business Applications. Once we prove ourselves as a vendor, we can commit and scale to become your Partner.

With Existing Customers – you already know how we work and what we bring to the table. Many Customers trusted us with a Partnership Approach and successfully build the business with them. We can prove that IT can be a game changer – having a scalable partnership. You don’t need to go within Digital Journey alone – together we can go much further. Just let anybody from BlueSoft know that you are interested.