At Arm’s Length or Close to the Vest? The Optimal Relationship between Clients and Vendors
By Anil Singh-Molares,
Bellevue, WA, U.S.A.
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relationships between vendors and clients go through their
ebbs and flows (more insourcing, followed by more outsourcing,
followed by…). As predictable as the swings of a pendulum,
all of us - clients and vendors - go through our normal gyrations
back and forth. And it is all in an attempt to find that elusive,
but allegedly perfect, middle ground - but where is it? And
beyond the question of where to place work (inside or outside),
the question is more about the right tenor of vendor-client
relationships--at arm’s length or close to the vest? The answer,
I will argue, is both, in the right proportion.
While running vendor relations
at Microsoft in the mid-1990s I developed that company’s
"strategic localization partner" program. Through this program,
many of the constituent companies of what would later become
BGS, the Mendez group, and Lionbridge were developed with
significant input from Microsoft: Opera, Translingua, Meta,
Gecap etc… With only one notable exception, all of these
companies were very successful in the nineties. The hallmarks
of the "strategic partner" program that we established were
designed to lower the barriers between vendor and clients
by emphasizing common teams and objectives, and an approach
of "if they succeed, we win" rather than "if we make the
vendors fail, we win (as our jobs will be more secure)."
We emphasized very tight communication links, virtual teams,
frequent trips and training to each other’s sites,
as well as bonuses and other incentives, such as guaranteed
profitability in some cases. The proverbial "us and
them" did not exist - rather we all belonged to the
Did it work? Yes and No. Some Microsoft divisions embraced
the concept, some rejected it. But the concept of vendors
as extensions of client teams (rather than simple providers
to them) did begin to take hold. And this approach yielded
many notable achievements, particularly in the consumer
space, for instance with the creation of Microsoft’s
encyclopedia, where we had dedicated vendor teams worldwide
for a period of 7 years. In this context, it is noteworthy
that in those instances where we pushed the "close
to the vest" concept, both clients and vendors achieved
their common objectives: good quality at reasonable cost
for the client, and increased profitability for the vendors.
Similarly, instances where the "at arm’s length" concept
was used invariably resulted in higher costs and lower quality
for the client and significantly reduced profitability for
the vendors. In addition, the "arm’s length" approach
also produced considerable churn in the vendor base of those
groups using this approach, as vendors left in frustration
or were ousted in favour of the "next best thing."
Where are we today?
Before joining Microsoft in 1991 I ran a translation company
in the Boston area. Now at the helm of Echomundi LLC, an
International Services company, I find the contrast between
my experience as both a vendor and a client instructive
and informative in answering the question of how close vendors
and clients have or should become:
What has changed:
industry is far more mature and professional. Localization
as a discipline, rising wages and respect for language
specialists, growing sophistication in tools and approach
are all readily apparent. The process has been streamlined
and codified to a large extent. Various CMS, TM and Project
Management tools have also helped reduce costs and increased
a rule, there also appears to be more frequent contact
between clients and vendors, more training sessions, conferences,
meetings, trips etc.
many types of interactions between clients and vendors
now seem principally driven more by increasing efforts
to "measure and quantify" quality, productivity etc. In
this context, the notion of "Service" is now largely
defined as success in meeting the client’s metrics
on a job to job basis (as indeed we are all measured one
job at a time), and not as much on creative problem solving,
flexibility, adaptability, transparency and innovation.
What remains the same:
There are certain limitations inherent in the client-vendor
relationship that cannot be overcome. That is, when one
party pays the bills it has the right to set expectations
of service as it deems fit. Conversely, once they have accepted
the terms and conditions of a particular client, service
companies have an obligation to respond to their client’s
requirements to the best of their ability. This fundamental
axiom is unchangeable.
And now to return to our basic question: At Arm’s Length
or Close to the Vest?
The "Arm’s Length" approach in its ideal application
has obvious benefits: each party treats the other as a professional
entity, there are clear expectations and deliverables, an
optimized use of technology, and tightly controlled costs
and profit margins. The downside, however, is glaring: if
you as the client don’t develop strong and lasting relationships
with your vendors, they won’t be your vendors for long (either
because you will tire of them or they will tire of you).
By maintaining too much distance from your vendors, they
are never motivated to really integrate with your approach.
In short, they can become clinical and dispassionate (if
not unmotivated and indifferent). One additional drawback
of this approach is that it also easily lends itself to
bureaucracy run amok, where it can become more important
to "follow the rules" than to "get the job done" - surely
The "Close to the Vest" approach in its ideal form seeks
to eliminate the barriers between clients and vendors. Through
frequent interaction, joint training, and team building
the vendor becomes an extension of the client’s team.
Both parties share the pains and rewards of individual projects.
Both put themselves on the line to a greater degree in innovative
problem solving and troubleshooting. And by building relationships
for the long haul, the investments that each party makes
in the other are more resilient. The downside to this approach,
however, can be possible "subjectivity" in measuring
work and an unwillingness of one party to honestly hold
the other party accountable when mistakes occur.
Really what we all (clients and vendors) want is a combination
of both the "Arm’s Length" and "Close to the Vest"
approaches - that is, deliverables and costs that can easily,
objectively and professionally be measured on the one hand,
combined with cordial personal relationships, which are
essential for effective problem-solving, on the other. This
"middle ground" will vary according to the individual requirements
of clients and the capacity of the vendors that they select
to meet those requirements, but it is clearly a combination
of the benefits of both approaches.
Clients and Vendors that hew to this joint approach will
find increasing satisfaction in their relationships on all
levels: quality, cost, profitability and service. In this
context all of us should strive to be "understanding professionals"
rather than exclusively one thing or the other.
Born in Holland and raised in
Europe and the United States, Anil Singh-Molares is a global
citizen, a global entrepreneur and businessperson. From
1991-2003, Anil worked as a Senior Director at Microsoft
Corporation, where he implemented Microsoft’s "strategic
localization partner" program. Since leaving the software
giant, he founded and serves as CEO of EchoMundi
LLC, a rapidly growing international services
firm that helps corporations do business abroad. He can
be reached at Anil@echomundi.com.
© 2006 Anil Singh-Molares. All rights reserved.
This article was originally published in GALAxy newsletter:
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