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The Corporate IT Forum, originally founded by David Roberts in 1996 for user organisations to counter the power of IT suppliers, is publishing a guide to supplier relationship management (SRM) next week because, said its executive director Joanna Poplawska, member organisations have sensed a guidance gap in the discipline.
“We started the project about two years ago,” she said. “Our members identified a gap, in that none of the existing frameworks – ITIL, Prince2, Six Sigma – really covered supplier relationship management. And so they wanted a frame that was based on their own practical experiences.”
The Forum has been running member-led workshops and masterclasses, led by SRM specialist consultants, for the two years, she said. The SRM events programme has been structured around what the Forum calls a “lifecycle” of relationship management, starting with the relationship with a supplier, a legal contract, and a strategy statement.
The guide, Maximising mutual value from supplier relationships, will be issued to delegates at an event in London on 28 February. It analyses four stages of supplier relationships: purchase decision, supplier onboarding, “in-life management” and “moving on”.
Virgin Atlantic, Centrica, Wesleyan Assurance Society and Amey Construction are among the organisations who have contributed to the guide. But the guide’s editor, John Barrett, said it has had other input from user organisations “who have strong alignment between the business and IT”.
Julian Turner, IT commercial manager at Virgin Atlantic, is one Forum member who has declared himself “proud to have contributed to this guide – it is full of practical help for SRM teams and is a really valuable asset”.
Barrett said the guideline’ point of departure is to segment suppliers in a similar way to how marketers segment their customer bases. Suppliers identified as strategic, not merely transactional, are those where the spend is significant, and/or where the switching cost is high, or if they are “required as a long-term partner for another business reason”, he said.
“Risk management is then applied to decide where to focus effort. There are only so many hours in the day, so use them wisely to get the best result,” he added.
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This emphasis on applying the discipline of risk management is especially germane to dealing with enterprise software suppliers, said Barrett. “That always requires extra care. Their risk profile is relatively higher.”
An example of this might be said to be the indirect licensing dispute between SAP and Diageo, on which a High Court judge ruled last week.
The case concerned Diageo’s use of mySAP enterprise resource planning (ERP) software in relation to two new third-party systems it put in place in 2012, based on Salesforce technology.
The judge confirmed the reach of SAP’s licence fees for “indirect access” by Diageo’s business customers and sales representatives.
This sort of area is where human relations can trump the strict legality of a contract, said Barrett. “When flaws in an initial contract cause difficulties, say our members, they can be overcome with good relationships.”
CEOs see the light
Poplawska said getting SRM right is more important than ever to corporate IT because CEOs now tend to recognise the “enormous potential of IT” in ways that were less evident three years ago. “The feeling among our members is that it is IT’s responsibility to understand the business, including its cost base, and not just IT cost,” she said. “IT is also accepting responsibility for business growth. The tone has definitely changed in the past three years.”
This change could be said to have been confirmed by a similar observation made recently to Computer Weekly by Laura Ipsen, general manager and senior vice-president for Oracle Marketing Cloud. She said: “There was a time, about three years ago, when marketers were saying: ‘you go your way, I’ll go mine’. But data privacy, scalability, difficulties in implementation, integrations and so on mean that is not realistic.”
The advent and rise of cloud has changed the supplier relationship management picture, said Poplawska. “Most of our members have a hybrid environment [of cloud and on premise IT], so they are looking at existing structures, finding the best fit for each of them. They are in a state of flux about how to change the profile of the IT team and the IT leadership team. And they are, understandably, always quite cautious.”
There is still more caution, among the Forum’s public sector organisations, she said. Also, there can be a special challenge for civil servants in developing “meaningful relationships” with suppliers, such are the imperatives to avoid the appearance of preferential access to government IT programmers.
And there is always the danger that the very long-term nature of some government IT projects can leave them exposed to technology moving on, she added.
But just as the private and public sectors can learn from each other, so, too, can smaller companies learn for the large corporates who make up the Forum, said Poplawska. “Dealing with suppliers overseas, for example in India or Ukraine, is not just for big corporates now.”