Factors Contributing to the Information Technology Vendor-Client Relationship

Abstract: This paper examines the relationship between IT vendors and the clients who use their products and services. The last fifteen years have seen a large increase in the amount of spending on purchased software as opposed to internally developed software. The dynamic of these relationships has not been a focus of current IS research and, as such, remains largely unexplored. The paper identifies the factors that influence the success of information technology vendor-client relationships. Qualitative interview data is analyzed using grounded theory to create a list of factors that describe both good and bad relationships as perceived by experienced IT professionals. Using these factors, a model of information technology vendor-client relationships is presented. Future research directions are suggested as well as implications for research and practice. Keywords: Vendor-client relationship, information technology, grounded theory INTRODUCTION Forrester estimates the information technology global spending figure to be about $1.55 trillion. This figure has been growing by about 4 percent for most of the last ten years. This includes infrastructure, software, consulting, and telecom purchases made by global organizations (Bielski 2007). By choosing to enter into a purchase agreement for these services or technologies, firms now have to deal with outside vendors as opposed to internal resources. The choice to purchase information technology, as opposed to developing the technology in-house, has led to a greater need to focus on vendor-management activities. The focus on vendor-management activities represents a different skill set for information technology professionals, since now the focus is more on interpersonal skills and less on technical competencies. Studying the domain of vendor-client relationships has predominantly come from the marketing and operations research disciplines. Research has produced models for predicting successful relationships (Moorman, Deshpande, et al. 1993) and included a variety of variables that influenced these exchange relationships. However, there has been a disagreement on both what constructs should be included in a model and how the success of the relationship should be measured. Some studies have measured success from an economic standpoint, while others have used behavioral variables like commitment or general satisfaction. There has also been no empirical investigation into the application of these theories to information technology vendor-client relationships. The inconsistency among existing models of general exchange relationships and the fact that they have not been empirically tested on information technology vendors present an opportunity for a gap in the literature to be closed. In this paper we define vendor-client relationships as the total of all activities directed toward establishing, developing, and maintaining successful relational exchanges between technology vendors and their clients. As such, the core research question is: What are the critical factors that influence the success of information technology vendor- client relationships? In answering this question, the paper is organized as follows. First is an overview on vendor- client relationships as they have been described in previous research. Second is a description of the research method employed as part of this study. Next is a description of the empirical findings that emerged from a grounded theory study of twenty-four information technology relationships. The findings of the study are then developed into a theoretical model that conceptualizes the information technology vendor-client relationship. Future research directions, limitations, and implications for practitioners and researchers are also discussed. VENDOR-CLIENT RELATIONSHIPS IN PREVIOUS LITERATURE One focus of prior research has been a description of vendor-client relationships based on the stages of the relationship's development. …