Vivo

I speak to many people in the industry and I hear the same complaint when it comes to supplier management: too many and too little time with which to manage them all. While the ideal may be to limit the number of suppliers, that is not always a realistic option. If anything, the realities of a globalized business climate  result in an increase in suppliers. Not only do we source globally, but many of us also provide goods and services to an international marketplace. With no hope of reducing supplier numbers in sight,  the solution lies instead in focusing on the right suppliers where you can achieve the greatest value. By categorizing  your suppliers and focusing most of your attention on one group in particular– the Strategic supplier—you can manage the unmanageable.

4 Categories of Suppliers

Categorizing your suppliers into four groups is the first step in getting your arms around your supplier base and understanding where money is spent and the product, and/or service for which each supplier is paid. The four categories that are known throughout the industry are Strategic, Tactical, Emerging, and Legacy, in no particular order.

Strategic – high-dependency, high cost exposure vendors, as well as vendors that the IT organization wishes to increase business with over time

Tactical – technologies or solutions that are typically point solutions that may or may not have a long-term role within the business environment

Emerging – developing and/or new technologies which will or are substantially altering the business.  Technology developments and innovations that continue to be on the upward swing

Legacy – part of an organization’s computing heritage and continue to serve a vital role in the enterprise computing infrastructure

The Strategic Supplier

Focusing on the Strategic suppliers provides  the greatest ”bang for the buck” . This is where the company has most likely invested the most money and on whom it has the highest dependency for continued  support and growth of the business.

The issue remains  that too many times the list of strategic suppliers is the largest of all four categories, diminishing any benefit that categorizing suppliers in this manner should have offered.  It is important to define what a Strategic supplier is, as not all suppliers are or can be Strategic.  Ask yourself:

• Spend: Which are the suppliers where the company spends the most?
• Risk: Which suppliers (goods and technologies) are deeply entrenched within the company and would be extremely difficult to remove and/or replace?
• Business: Which suppliers does the company utilize for increased business

Obviously there are others triggers and indicators that can be used but these are the simplest and easiest that will help whittle the list down to a manageable size.  Using this extremely simple approach to categorizing suppliers drives extreme value.

The Value – it’s About Leveling the Playing Field

As we discussed, you’re not likely to decrease suppliers in any meaningful way, at least not for any significant period of time. The likelihood of increasing staff to retain vendor-management-staff-to-supplier ratios is unrealistic as well. But, the results that can be achieved by concentrating the bulk of your team’s efforts on managing the full lifecycle of the relationship with  the correctly grouped Strategic Suppliers are great.   Without this focus, unmanaged suppliers raise prices, miss SLAs, slip in renewals, swap out key resources, etc. Simply put, some vendors are betting on you not having time to hold them to that which was sold.

This is not something that happens over night or can be done on an ad hoc basis.  The whole idea of managing the Strategic suppliers is to try and level the playing field (between you and the supplier) so that you can drive and achieve the value  told and sold by each supplier.  If you do not manage the relationship the imbalance will remain, and you, as the buyer, will assume all risks from this unbalanced relationship.  Consistent, focused management will change how this tier of suppliers view you as a customer – from  “cash cow”  to key customer/partner.

Ultimately, from the new focus on Strategic Suppliers you can expect a renewed focus from your account team, gain better insight in the account and be on the road to achieving and retaining the value you were sold at the creation of the relationship.

WE Magazine featured CEO Marilyn Weinstein’s article “7 Tips for Workshifting” http://wemagazineforwomen.com/7-tips-for-workshifting/ in which she shares her thoughts on the newly coined term as well as some suggestions for making it work.

Marilyn’s article is on CIOinsight.com!  In the article she talks about how, “Every CIO knows his or her organization’s business, inside and out. But what about the rest of your IT team? In order to make a strong case that IT is ‘part of the business,’ it’s important that the entire IT organization knows the business inside and out. If you’re nodding your head in agreement, but aren’t sure how to establish this model, follow these four guidelines and you’ll be well on your way.”  To read these amazing guidelines, go to http://www.cioinsight.com/c/a/Innovation/How-To-Achieve-a-Culture-of-Innovation-in-IT-140864/

Every quarter, Silicon Valley Network and Infrastructure executives get together in an informal setting to network and discuss real-world problems that are common to the group. Yesterday, we were privileged to host another SVNiE luncheon.

During the meeting we welcomed Bill Chan, a Vivo partner, as he facilitated a discussion on The Strategic IT Organization: Optimizing Your Team For Business Success . Bill has implemented his proven methodology at numerous Silicon Valley-area companies, and we knew this would be a highly interactive session.

Participants shared common issues such as how to handle situations when you are asked to deliver more with less or when your CFO announces the edict to “cut all contractors”.

But what happens when you really don’t have the ability to cut these individuals? The issues and risks associated with maxing out the team when contractors are already placed in key roles persisted throughout the discussion as participants expressed a desire for insights and examples. Bill and the group walked through scenarios for proactively addressing these issues and the importance of managing up, as appropriate. He sent everyone away with some simple checklists for making immediate strides.

All in all another great SVNiE event. We remain proud of our involvement and excited to underwrite this important group!

This article is sure to get people thinking and talking!

The Power of IT Drives Businesses Forward

Platitudes can be common in our line of business and I oftentimes get asked, “What are the most overused phrases that you have heard over the past three-plus years as CEO of an IT consulting and staffing firm?”

It’s an easy question as the phrases typically involve “alignment”—either that “IT must learn to align with the business” or that “smart CIOs know that, to succeed, IT must align with the business.” Not only are these phrases overused and condescending (the implication that CIOs lack business smarts or proper business education, that is), they are also statements with which I wholeheartedly disagree. If you are merely aligning with the business, you are not doing enough. IT drives efficiencies. IT enables business.  IT powers business success. The goal is not merely to align, but to get in front of the business goals and spearhead growth through next generation products and customer service.

“Alignment” Defined

According to Webster’s , “align” means to fall in line. To get behind.  It suggests that “the business sets the pace. It sets the strategy. In aligning, IT must fall directly behind, and keep pace with, the business.”

Why it Matters

Traditionally, this discussion comes up in one of two ways.  Either, we’re discussing corporate respect and reporting structures within an organization– the IT department’s lack of leadership representation or a “seat at the table”—or we’re discussing the common view that IT is merely a “cost center.”  While I am not suggesting that these problems and perceptions will instantly disappear, the shift in mindset can happen if you understand its scope and take the lead in making the necessary changes.

If Not Alignment, Then What?

IT does drive and enable business. It’s time for IT Leadership to drive that point home.  Consider two Vivo clients – one a multi-national insurance company, one a leading financial services provider.  The insurance company’s IT group proudly touts its efforts enabling the use of handheld claims adjustment devices. Proudly, IT rallied others to join them in their efforts during Hurricane Katrina to issue checks in real-time, and to deliver much-needed funds to those most critically in need. In this case, IT led that effort. IT delivered this technology. The business grew stronger, and benefited from this leadership.

In the second example, our financial services client’s IT group developed a cutting edge analytics product to offer to their banking clients.  In both instances, there is no talk of leveraging IT to merely “keep the lights on,” and no one talks about IT in raw SG&A numbers. IT leadership has a seat at the table, and the top layer of IT management knows how to drive innovation from their teams.

These simple examples of innovation and IT-generated efficiencies are likely the reason most of your staff went into IT in the first place – the idea that there is a better, faster, more efficient way of doing things, and that IT can make that happen.  Yet, somewhere along the way we lost track of this connection and reduced their influence.

Creating a Culture of Innovation

True leaders are bold and take risks. In order to develop this culture of innovation within your IT organization, you must put yourself out there with the rest of the business. Sell your ideas for innovation, then execute. After even a single small win, it will be easier to continually steer these innovative ideas up the organizational ladder.  Reward creativity. But, most importantly, market your accomplishments.  Positive PR will spur additional creativity, one win at a time.