UK.biz gets tough on IT suppliers

I want 10% off, and a free cuddly toy

Businesses are getting better at buying technology, driving harder deals with suppliers and investing more cleverly, according to a study of the UK's financial services sector. Offshoring is also becoming more important, as managers look for ways to improve their margins and cut costs.

The study, conducted by the University of Brighton, found a shift in buying patterns towards services, rather than isolated systems. This should not come as a surprise: the financial sector has to comply with a whole raft of regulations, all of which are driving spend on IT.

The wave of regulation is also forcing companies to take a wider view of how IT can support their work: it is no good buying kit that will only help you with Basel II, for instance, if you then have to go out and buy another system that will deal with Sarbanes-Oxley.

The study - carried out with trade body Intellect - concluded that tighter internal controls are also forcing companies to get tough with their suppliers. IT is seen increasingly as a business issue, too. This means the whole procurement process is more diciplined, and companies take more external advice before investing in systems and services.

Dr. Stephen Flowers, who led the research at Brighton University, said that the findings confirm a shift in the balance of power in favour of the buyer. He predicts that the same behaviour will soon emerge in other sectors.

Beatrice Rogers, Head of Private Sector at Intellect counselled suppliers to respond by looking at their own internal processes, and by re-evaluating their external relationships. Suppliers that fail to re-shape their business to suit the changing marketplace, or respond too slowly, will soon be in trouble, she warned.

The full report can be downloaded here. ®

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