Preferred Supplier Lists (PSLs) are archaic and hold businesses back

I met up with tier-two Indian IT services firm ITC Infotech for a catch-up on its progress in Europe. Back in June Hardeep Garewal, who is the head of Europe, told me some of the company’s plans.

ITC Infotech has an interesting history. It was previously the internal IT department at Indian conglomerate ITC Ltd (originally Indian Tobacco Company), which has revenues of $7bn and is focused on fast moving consumer goods, hotels, paperboards, paper & packaging and agri-business.

ITC Ltd still owns ITC Infotech and is a major customer but spun it out in 2000 to serve other clients.

Although the company has big name customers Garewal told me as a tier two supplier ITC Infotech is challenged winning business in large companies even if the IT leaders there want their services. This is because many of the big companies have Preferred Supplier Lists (PSLs) and they can only buy from companies on these lists for a set period of time.

Garewall believes in today’s IT and business environment where businesses want to be quick to market with new products, need to be innovative, or need to adopt new technologies this model doesn’t work.

“We often speak to CIOs about our services and they tell us they want the service but can’t even consider it for a year because of the PSL,” he says. He said a system should be created where a CIO can buy certain services that are not on the list if it meets a business need.

Obviously this is good for companies like ITC Infotech, but it is a valid comment. New technologies from new suppliers that have the potential to change business come out regularly these days. Business need to update their procurement rules to allow them to benefit from rapid IT changes.

Smaller suppliers are innovative and can offer services that might not be available at bigger players on preferred supplier lists.

Garewall told me about a service ITC Infotech offers to customers, which I found interesting. It involves creating appstores for businesses.

For one of its customers in Holland, a large corporate, the company has introduced an app that means IT departments don’t even have to get involved in setting new starters up

A new employee joins the company and has a job profile assigned to them. When they log in they are automatically presented with all the software they need and are approved to use. They simple check boxes and are given access to cloud based software such as SAP.
This sounds good particularly with the increasing take-up of BYOD schemes, which threaten to put pressure on busy IT departments.

This makes me think that appstores will replace PSLs.