You’re Not Choosing an IT Vendor – You’re Choosing the Right Delivery Partner

Executive Summary

IT vendor selection is one of the least appreciated strategic decisions a leadership team can make. While many organizations approach it as a procurement exercise focused on price and capacity, the evidence shows that the stakes are existential. McKinsey has found that large-scale IT programs overshoot budgets by 45 percent, run seven percent longer than planned, and deliver 56 percent less value than expected; nearly one in six spirals into a “black swan” event with cost overruns approaching 200 percent. Poor choices don’t simply waste money – they slow growth, sap trust, and can force companies into defensive rebuilding of in-house capabilities. By contrast, selecting a true partner shifts the trajectory. The right partner provides accumulated experience, reliable governance, transparent pricing, and a delivery model that links technology execution directly to business outcomes. As Reiz Tech’s Data & Power Platform Offering Lead  Giedrius Gustas puts it, “The most important factor is experience – both positive and negative. Every project leaves lessons that shape the practices we use when implementing new initiatives. The ability to apply accumulated experience to identify a client’s challenges and propose practical solutions is what sets partners apart.” The imperative for executives is clear: you are not buying services, you are choosing a delivery approach. The difference between a transactional vendor and a strategic partner shows up in the long-term competitiveness of the enterprise.

Why Vendors Are Not Interchangeable

The idea that IT vendors are fungible remains common in procurement functions. Executives often assume that competing suppliers can deliver the same results, and that differentiation exists only in hourly rates, staffing models, or geographic footprint. This assumption is dangerous.

Every large IT program is, by definition, a high-variance bet. As McKinsey has documented, the average large IT project will exceed budget, miss deadlines, and underdeliver benefits – with 17 percent so catastrophic that they threaten the existence of the company itself. In this environment, execution is not neutral; it amplifies risks or mitigates them. Vendors are not neutral either – their accumulated practices, their approach to governance, and their willingness to share risk with the client all shape whether projects succeed or fail.

Giedrius Gustas stresses that this difference begins with how vendors leverage experience:“No two projects are ever identical, but the principles and values demonstrated during execution reveal a lot about a vendor. Just as important is the ability to apply accumulated experience to identify a client’s challenges and propose practical solutions.”

In other words, what companies purchase is not labor, but delivery method. A capable partner embeds mechanisms to capture lessons learned, to surface risks early, and to build alignment with stakeholders before resistance emerges. An incapable vendor repeats the same mistakes across clients, concealing issues until it is too late. The results diverge dramatically, even if the contracts looked identical on paper.

The Real Cost of a Poor Vendor

The cost of a bad vendor choice is both immediate and compounding. At first, the consequences appear in missed milestones, strained budgets, and frustrated teams. Over time, the hidden costs become clearer: opportunity lost, organizational fatigue, and a corrosive erosion of trust.

“The most immediate and visible impacts are additional time and costs,” Gustas explains. “But beyond the financial loss, there is often a deeper impact – erosion of trust. A poor vendor experience can make clients hesitant to work with external providers in the future. In some cases, this leads them to build internal teams instead, convinced that most external vendors cannot provide the quality of service they expect.”

That erosion of trust carries an organizational price tag. Gartner has shown that poor supplier relationships slow innovation cycles and block access to external expertise. The Consortium for IT Software Quality (CISQ) put the 2022 cost of poor software quality in the United States at $2.41 trillion – with nearly $260 billion tied directly to unsuccessful IT projects. These failures not only drain budgets but also paralyze organizations, leading boards to question technology investments altogether.

Gustas has seen this dynamic firsthand. In one client engagement, executive leadership was eager to modernize, but frontline employees resisted: “The executives wanted us to work with them, but the employees were forced to join the sessions, which led to a negative mindset from the very start. Ultimately, everything comes down to people – their attitude, mood and perception of the company. At the end of the day, the client decides whether they want to work with you or not and gaining their trust is fundamental.”

The result was predictable: progress stalled, projects were delayed, and leadership was forced to intervene directly. What began as a misalignment between leadership intent and stakeholder engagement became an organizational crisis – one that could have been avoided with earlier alignment and a partner capable of orchestrating change.

What a True Partner Looks Like

If vendors are not interchangeable, what distinguishes a true partner? Here, Gustas emphasizes a cluster of qualities that consistently mark the difference:

“Transparency and open communication are vital – sharing next steps, risks, and challenges, and offering concrete solutions. Behind every partnership is a reliable, competent, adaptable team that understands expectations, speaks the client’s business language and prices transparently.”

Notice that few of these qualities are purely technical. They are governance qualities: the ability to make risk visible, to adapt to client needs, and to maintain integrity in pricing. In other words, what defines a partner is not simply technical expertise but the maturity of the delivery system they bring.

Research supports this. McKinsey’s work on IT sourcing shows that organizations that reframe vendors as shared-outcome partners – with joint governance structures, aligned incentives, and “win–win” contracts – capture up to four times more value than those who pursue transactional models. Gartner’s guidance on supplier relationship management points in the same direction: prioritizing transparency, shared accountability, and co-creation leads to faster time-to-market and higher resilience.

Partners, in short, behave as extensions of the client’s leadership team, not just as suppliers of labor.

Signs You Need More Than a Service Provider

Many organizations realize too late that their vendor is not equipped to function as a partner. The signs are visible if leaders know what to look for.

• Stakeholder resistance emerges late. As Gustas notes, “When critical stakeholders are not properly involved from the beginning, resistance often arises during the delivery phase.” If vendors are not orchestrating stakeholder buy-in from day one, the risk of downstream resistance skyrockets.

• Cost creep without benefit clarity. McKinsey’s data shows the average IT program already runs at a deficit; without disciplined benefit tracking, leaders may discover too late that value has vanished.

• Board pressure drives short-termism. Gustas observes, “Executives operate under short time horizons – sometimes just months or a year – to prove their value. As a result, they focus on immediate impact, with cost savings at the top of the list.” The problem: those savings rarely translate into competitive advantage.

• Reactive projects dominate the portfolio. Security gaps, compliance requirements, or platform upgrades force spending that absorbs budget but produces little differentiation.

  
  

The pattern is clear: when organizations find themselves repeatedly in reactive mode, struggling to articulate benefits, or facing stakeholder resistance, the issue is not technology – it is delivery.

Overcoming the Short-Term Bias

Perhaps the greatest challenge executives face in vendor selection is balancing short-term pressures against long-term value. Leadership tenure is compressed; boards demand quarterly impact. In this environment, it is tempting to select the cheapest provider and focus on immediate savings.

Gustas warns against this trap: “If you do not invest in meaningful change, your competitors will, and they will gain the strategic advantage you passed up.”

Research backs him up. McKinsey’s Corporate Horizon Index demonstrates that companies oriented toward long-term strategy significantly outperform peers: 47 percent higher revenue growth, 36 percent higher earnings growth, and stronger job creation. In other words, organizations that prioritize sustainable investment rather than short-term cost avoidance are rewarded in the market.

The problem, of course, is that IT transformation requires patience, and many projects are initiated under duress – regulatory deadlines, platform obsolescence, or security risks. Leaders must recognize these as opportunities to invest strategically rather than treating them as compliance exercises. Otherwise, they sacrifice differentiation while spending anyway.

Collaboration Models That Build Trust and Long-Term Value

If the difference between a vendor and a partner lies in governance and alignment, then the collaboration model is the vehicle through which that difference becomes real. The wrong model reduces vendors to order-takers. The right model embeds them in the client’s strategic machinery.

“Clear responsibilities, client commitment to change, and transparent governance are foundational,” says Gustas. “Joint ventures can work best because they create shared accountability – but only when those principles are firmly in place.”

This point reflects a broader truth: structure determines behavior. Transactional contracts with narrowly defined outputs incentivize vendors to “check the box,” even if the client’s underlying business problem remains unsolved. Shared-outcome models, by contrast, tie incentives to client success, which forces alignment not just in delivery but in strategy.

Gustas points to the example of LITIT’s joint venture with NTT Data, where shared responsibility allowed both sides to invest in long-term outcomes rather than short-term deliverables. Similarly, platforms like Skillit, which Reiz Tech has launched recently, can embed practices that make collaboration scalable and transparent.

The lesson for executives: if your vendors are structurally incentivized to minimize cost and maximize billable hours, you will get exactly that – cost minimization and billable hours. If, however, you design collaboration models that embed transparency, accountability, and outcome-sharing, you create the conditions for trust and long-term value.

A Strategic Choice, Not a Procurement Exercise

Executives often view IT vendor selection as a tactical decision to be delegated to procurement. The evidence and experience say otherwise.

Poor vendor choices result not only in budget overruns and project delays but also in lost trust, stalled growth and strategic disadvantage. McKinsey’s data makes clear that the baseline odds of success are against you: most large IT projects will fail to deliver their promised value. To beat those odds, organizations need more than a supplier – they need a partner with the experience, governance, and integrity to align technology execution with business outcomes.

As Gustas concludes, “Behind every partnership is a team. Reliable, competent, and adaptable. That’s what makes the difference between a vendor and a strategic partner.”

The leadership imperative is straightforward but profound: treat IT vendor selection as a strategy choice, not a cost-cutting exercise. In doing so, you are not just choosing who delivers your next project – you are choosing the delivery approach that will determine your company’s ability to compete, grow, and endure.

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Executive Imperatives for Leaders

Before making your next vendor decision, ask yourself:

• Are we treating this as a procurement exercise or a strategic choice?

• Have we interrogated experience – both positive and negative – and demanded evidence of lessons learned?

• Are we structuring collaboration models that align incentives with outcomes, or defaulting to transactional contracts?

• Do we have the patience to prioritize long-term value over short-term savings?

  
  

The answers will determine not only the success of your IT initiatives but the resilience of your business.

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About Giedrius Gustas

IT and business operations leader with over 12 years of international experience in data platforms, process automation, and PMO management. Proven track record in driving digital transformation, operational excellence, and scalable growth across technology and business functions.