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Life is simpler with fewer business suppliers

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In a previous article we looked at how organisations could consolidate data assets to support the business better.

Many organisations have to deal with multiple IT suppliers, each delivering only part of the answer. Reducing the number of suppliers makes for a simpler life, but how beneficial is it to IT delivery?

Having a larger number of suppliers can be seen as a good thing. It is like having a broad financial portfolio – if one company fails, the others will perhaps hold firm.

Reducing the size of the portfolio increases risk, so you have to be more careful about who you source from, asking questions about reputability, credit ratings and so on – in other words, carrying out due diligence.

When it comes to IT delivery, however, whittling down the list also means you will have a closer relationship with those that remain.

Who loves you, baby?

If your organisation sees IT as a pure cost (and plenty do), then there will be little point thinking beyond the catalogue. Do suppliers offer the products and services you need and are these competitively priced?

Many organisations want to get more business value out of their IT, and this is where suppliers can play a bigger role.

In the example of application consolidation, we referred to parts of the business using different terminology, the importance of user training, and so on. Such issues are what make IT as much about the business as about the technology.

Vendors or partners that can help you do things in the right order can become critical to helping IT deliver on its objectives.

Shopping around

Not all suppliers are interested in this level of engagement, nor should they be – a place exists for companies selling commodity items at the lowest cost.

There is room for consolidation here as well, however, as many such suppliers provide a broad range of products that they don't necessarily carry in their own inventory. In these cases, the onus of consolidation falls on them as they look to other links in the supply chain to deliver the products they do not stock.

This requires a heavy dose of automation, as procurement needs to be as seamless for customers as buying direct from a single supplier.

“To automate the supply chain requires prior decision making about who are to be preferred suppliers,” says Nigel Griffiths of Sage reseller FD Systems.

“You can’t make such choices without accurate information such as performance data and a detailed understanding of your supplier portfolio.”

Just the type

Of course, it is always possible to put the two models together and consolidate both customer- and supplier-side, working with organisations that understand your business.

Suppliers are quite capable of building shop fronts for individual customer groups. “You can present a different experience depending on the customer type in terms of products, pricing models, and so on,” says Griffiths.

The integrator is less likely to stick to the corporate line

Building stronger relations with suppliers requires effort on both sides. If you have decided on a single company to provide your applications, say, then it is for you to judge whether it is offering the levels of service and responsiveness you need.

Sometimes you will be better off working with a smaller integrator partner than directly with a vendor. The integrator will have fewer distractions and is less likely to stick to the latest corporate marketing line.

Short and sweet

Sometimes a savvy supplier will turn down a sales opportunity because it isn’t seen as appropriate to the business. It takes a brave organisation to do this, as the idea that it will translate into a better long-term relationship may be less compelling than the urge to hit quarterly sales figures.

Suppliers will be better able to respond to your needs if you are prepared to open up about your business strategy, its problems and how the supplier might be able to help.

The supplier will of course be looking to benefit financially from the arrangement, but equally, it will want to add value and grow its importance to you as a customer. The end result should be a win-win for both sides.

Even the largest of companies have only a handful of companies they would see as really strategic, and there are risks in any relationship. Having fewer throats to choke is no help if a supplier fails to deliver, but at least the signs are easier to spot if the list is kept short. ®

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