Business and IT supplier relations must improve

Most IT directors want to build strategic relationships with suppliers, but current arrangements are not living up to expectations for both parties.

Over...

Most IT directors want to build strategic relationships with suppliers, but current arrangements are not living up to expectations for both parties.

Over two thirds of businesses expect to spend more on outsourced technology and services in 2009, according to a survey of 40 CIOs and heads of procurement.

The report compiled by international legal firm Norton Rose said IT leaders want procurement to be central to corporate strategy.

A massive 83% of users said they wanted to build strategic partnerships with their key technology suppliers, but suppliers and users agree that in reality their relationships often do not live up to expectations.

Norton Rose lawyers questioned executives at businesses that spend a total of £8bn annually on IT and outsourcing. Over a third of these firms spend more than £100m a year individually.

Mike Rebeiro,partner and head of sourcing at Norton Rose, said that if IT products and services are to meet business requirements customers and suppliers must be open about their objectives.

"Customers and [suppliers] need to take a more considered approach to identifying the risks associated with projects and a more realistic approach to the allocation of risk between themselves."

This is more pressing as the financial uncertainty arising from the credit crunch is likely to lead to many outsourcing deals being re-negotiated, reduced in scope or terminated in 2009, warned international law firm Pinsent Masons in July.

Pinsent Masonsalso says that long-term transformation projects may be delayed or terminated, in part because businesses will look to short-term cost cutting rather than to longer-term benefits.

Read more on IT outsourcing

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