Customers can gain from being a vendor reference

No IT vendor’s news announcement is truly complete without a couple of glowing quotes from customers; nor is any vendor conference really a success unless the company has lined up a few satisfied CIOs to talk up their strategy and products.

Cynics might say such arrangements constitute a Faustian bargain on the part of IT professionals. But linking arms with a vendor can provide honest, lasting advantages, which are ever more welcome in this age of slashed IT budgets and shrunken staffs, observers say. The key is to take care and preserve your principles.

Customer reference programs tend to operate as a continuum. One of the most basic initial steps is agreeing to appear on a vendor’s “NASCAR slide,” the collage of company brands found in PowerPoint decks everywhere, said Ray Wang, a partner with the analyst firm Altimeter Group.

A second step might see a customer provide a quote for a press release. Users could go further by agreeing to speak with media, analysts, or potential customers who are being approached by the vendor. The deepest level of engagement is participating in a vendor’s case study.

Serving as a customer reference generates a variety of benefits, such as better discounts at contract renewal time or free passes to annual customer conferences, Wang said. Plus, “you’ll get wined and dined for a year,” he added jokingly.

“But it’s not always that cynical,” Wang said. “You really have to believe in the stuff to be a reference.”

That’s the philosophy held by Mykolas Rambus, CIO of Forbes Media.

The company does a variety of endorsements but goes to the mat “only for our closest strategic partners,” Rambus said. “We have an ongoing relationship with them and we’re happy to go to bat for them in the marketplace to help them get customers.”

Doing so “absolutely” gives Forbes better bargaining power, as well as other benefits, such as additional services and expertise or insights into the vendor’s road map, he added.

For “nominally positive” vendors, Forbes may agree to a press release quote, but won’t take bigger steps, such as sending executives to speak at a conference, according to Rambus.

And Forbes has also turned down some requests, mostly from services providers who weren’t up to snuff.

“It’s a rare situation, only one or two instances. But yes, they would still ask. I think that speaks to the cluelessness, in some cases, of the vendor’s leadership,” he said.

Even if you have a solid relationship with a vendor, it’s wise to proceed carefully with each endorsement, particularly when it involves a new implementation, according to Wang.

“I wouldn’t go public until you’ve worked out all the kinks [in the project],” he said. If the implementation you glowingly praised in a press release or onstage ends up being a complete failure, “you’ll be seen as a laughingstock,” Wang said. “The vendor may have gotten 20 sales [out of your endorsement], but it’s all downside for you.”

Indeed, a high-profile instance of this occurred in the past few years. Waste Management put out a press release with SAP when it decided to implement the vendor’s ERP (enterprise resource planning) software. But in 2008, the trash hauler sued SAP, alleging the project was a disaster.

The best way to avoid such scenarios is by participating with an implementation case study. While this will require the most time and resources, vendors want very badly for the case study to succeed, and therefore may provide a wealth of additional consulting services and customization work to ensure that it does, Wang said.

The city of Miami, Florida, has worked with Microsoft on a number of case studies and recently took part in the vendor’s early adopter program for Windows 7, said James Osteen Jr. assistant director in the city’s information technology department.

The result was “an extreme positive” for the city, as Miami received an early look at the new operating system and a wealth of technical assistance, Osteen said.

However, Miami’s relationship with Microsoft doesn’t give the city any direct negotiating leverage, according to Osteen. “We buy off the state of Florida’s contract, so the terms are predefined for us.”

But overall, it’s worthwhile for Miami to work with Microsoft because the vendor’s technical support “gives us value back,” he said.

That attitude is key to any endorsement, he added. “If I don’t believe in the product, I’m not going to endorse it. You need to make sure your integrity is intact.”

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Jim Love, Chief Content Officer, IT World Canada

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