I've had a rough vendor spell lately. I can't say it happens often, but it definitely occurs. One vendor believes it's my responsibility to keep his employees employed, and still another seems to think I should buy something new to get him to fix something we already own.

Yet another vendor told me that the difficult procurement process he wants me to go through exists because his company is publicly held and its share price is contingent on this process. (I couldn't make this stuff up if I tried.)

It occurred to me, as it has in the past, that vendors aren't the problem here — I am. Vendors, after all, are people and have the same characteristics as anyone else, even if we pay a premium for their services. In my career, I've always struggled with the idea that we pay a premium and then must also provide care and feeding (i.e., vendor management). That's just the way it is and isn't entirely unintuitive, since anyone who works in our environment is part of the same team.

It's important (for me at least) to remember that vendors serve an invaluable set of roles in the insurance industry. Among others, they provide insight across a broad range of experiences, supplement staff at key junctures, and bring solutions to mission-critical elements of operations. Our industry would suffer without them — perhaps even fail — because individual companies have limited insight into themselves, require variable labor costs, and should be more focused on insurance than technology.

In other words, vendors are necessary and they require care and feeding, too, albeit in a different way than staff. Over time, I've come to realize certain patterns that highlight these differences, and serve as my "rules of engagement" for vendors:

  1. Always own your requirements. No vendor knows you or what you want better than you do.
  2. If possible, control your design. Build models, specifications, or whatever design artifacts you create to let the vendor know exactly what you want. This is especially true for custom development.
  3. Think of vendors like partners, not hired help. Doing so frees you to suggest changes that you may have otherwise thought were impossible. Such thinking is especially true with software vendors; they're more open to suggestion than you might think.
  4. Remember the three parts of truth: the truth, the whole truth, and nothing but the truth. Note that you'll almost always get the truth but seldom the other two parts. It's up to you to dig and ask compelling questions or make clear points when dealing with vendors.
  5. Never let a vendor rest on their laurels. Do so by frequently (or at least randomly) engaging new vendors to get competitive bids.
  6. Ask questions, don't make assumptions. Almost all the friction I've experienced with vendors has occurred because of false assumptions I made about what they delivered or were thinking.

If those rules are so great, why did that bad vendor week happen? Well, vendors are human, and we all make mistakes. OK, that was unfair, but it's my blog.

Thank you for the therapy session, I feel better now. Next time, I'm going to talk about core processing in the MGA/wholesaler world with some comparisons to carriers. (No complaining, I promise!)

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