Vet Your Vendor: When ROI Just Isn't Enough

Determining which vendor will lead you down the right path can be challenging and providers are turning to technologies that promise a return on investment, but is that enough?

Imagine it’s a very stormy night and you are home alone. You hear a knock at the door. You look through the peephole and it’s your analytics provider. Do you pretend there’s no one home or hide the silverware before they come in? Or do you celebrate this unexpected guest and look forward to an evening with an old friend? This may seem like an abstract thought, but the question every organization faces is… who do you let in and when should they leave?

After serving as a health system executive for almost 20 years, and now as an executive helping to build next-generation health IT tools and services, I’ve been on both sides of that door. Based on my experiences, I am all too familiar with the attributes of a good IT and analytics partner, and frankly, most are not up to the task.

Every organization must now view data as both a strategic asset and a choking hazard, meaning that your IT partners can make the difference between advancement and growth, and an early death. Unfortunately, discerning which vendor will lead you down the right path can be incredibly difficult. In the absence of firm evaluation criteria, providers are turning to technologies that promise to provide a return on their investment. But is ROI the best measure for this type of relationship? Aren’t there other factors that matter just as much, if not more? And how can providers assess that larger value and evaluate desired financial, clinical and long-term business results?

Here are a handful of helpful ideas to start with:

1. Write a good a contract, but don’t expect a “perfect” one – Contracts are a time capsule of legal terms from when we didn’t know better, but had to write rules for a game we didn’t know well enough. However, a good contract documents the moment in time so that even if both teams are gone by renewal time, there’s a trail for survivors to follow, including clear clauses about intent and business objectives, metrics of success and a fair process for auditing. Above all, recognize that contracting is the time when you have the most leverage. The vendor wants your signature, so you can insist upon services and support during the negotiation that may not happen later. Remember, once that contract gets signed, the smaller your organization, the quieter your wheel squeaks. And with your leverage, REFUSE ANY GAG CLAUSES. Those do nothing but punish you and the industry. 

2. Align incentives – Ensure your partner is incented to pull in the same direction you are for the long term. Incentives are not only financial, but include things like quality improvement, industry leadership and awards. What matters to you and your organization, and is your partner willing to measure themselves by what you achieve, or is it all about them? Anyone not willing to prioritize your needs over their own, or go at risk for achievement, should be viewed with suspicion right out of the gate. Insist that aligned incentives become a key portion of the contract metrics if you want to test the strength of the relationship and hold new partners accountable for achievement.

3. Question security capabilities – Particularly for IT and analytics products, you need to trust your partner to be a good steward of your data, and use it to advance your strategic interests. You will receive vague promises that protections are in place, but similar tales were told by Equifax and look how that turned out. Moreover, protections don’t just stop and start with external threats – what about conflicting motives within the company? All too often, vendors making promises are affiliated with payer or other organizations that are not always on your side. Even if there are “firewalls” in place, why would a payer be in the game if there were nothing to gain? If you are concerned about where some of your data may go in the organization, you may want to reconsider why any of your data would go. 

4. Learn about the engagement approach – Engagement can be a double-edged sword. On one side, you have vendors that give no thought to your unique business needs in favor of the easiest path toward one-size-fits-all. I have seen slide decks where “customization” consisted of nothing more than a “Find and Replace” command, with the organization’s name substituted for a competitor across town. On the flipside, however, I’ve seen engagement defined too deeply, with vendor staff embedded in your work to the point where you can’t live without them when the contract is done – a one-way dependency that makes future negotiations and renewal options a losing proposition. A middle ground approach that marries your individual business expectations with enablement expertise is best.

5. Don’t settle for insight, demand results – No one loses weight just because they put the calorie counts on the menu. Information isn’t power until it’s put into action. Know what you want to achieve and engage with a partner that will take you there, or beyond. What would complete victory look like? Set stretch goals for each contract like your finance team does for your corporate finances. Remember that results are not the same thing as success – I can clean my dog with a power washer, but he won’t let me pet him for a while. A contract that leaves a trail of bodies and anger serves no one, even if it delivered the ROI.

6. Consider vendor reputation – Don’t believe anyone’s hype. Virtually every vendor has found someone to coronate them as the “BEST,” and those designations are more a reflection of the number of groups offering seals of approval than the talent at the table. Validate performance by talking to peers and other customers, including the last one that left the vendor. Listen to analysts. Review testimonials from groups you have heard of. Trust your gut and be thorough. Just because they have one or two happy clients doesn’t mean they are any good – even a broken clock is right twice a day.

7. Ask for the roadmap – It’s important to engage with partners who are constantly innovating and improving upon their customers’ experience. Don’t settle for what the product is today, know what you’re investing in for the future. Also, be very clear about how you expect to influence the development of any product. If a tool is key to your success, it would be nice if they let you fix it when it isn’t working to meet your needs. Check out user groups and other customer forums to ensure you have opportunities to provide continual feedback and influence product development.