During the course of my interviews with CIO’s over the past couple of years I’ve witnessed the growth of a worrying trend - the fact that many CIO’s feel that their suppliers are becoming increasingly irrelevant to the success of their goals and their organisations objectives.
I’m always aware just how easy it is to misinterpret things which is why I round the conversation we have about suppliers off with the following specific question “Do you think your Supplier Layer is broken?” and in every case the answer has been an unequivocal Yes. Now by broken I don’t mean programs are at risk of failing we’re talking about the alignment and the amount of additional value that suppliers bring to the ICT teams, the organisations and their engagements.
Finding the Gold Standard
I argue, and many CIO’s agree that the Supplier Layer should be home to some of the organisations most valuable and strategic relationships. After all every ground breaking innovation – from our ability to reverse paralysis and end famine through to our ability to build and deploy new innovative products and services that upend industries and create new ones are either enabled by technology or underpinned by it and in todays world the evidence shows us that it’s often technology that’s the source of an organisations competitive advantage.
Set against this backdrop it’s easy to argue that when suppliers combine a view of the future – the art of the possible if you will, with insights, entrepreneurship and their own portfolio and pool that with a CIO’s own vision what you should be able to create is a team that can not only support the organisation today but also help it prosper and out compete it’s competition.
In most cases though it looks like many suppliers are nowhere near that level of relationship or capability but with the right insights, guidance and leadership many of them could turn the tide in less than a quarter.
Start from the Beginning
In the Red Corner we have every suppliers object of desire - the CIO. The person endowed with top level decision making authority, the vision and the budget. In the Blue Corner we have the Hunter Salesperson armed with campaigns, a product portfolio, a stretch quota and a smart phone.
The days of unsolicited calls and E-Mails - something that CIO’s, their PA’s and their teams all appear to hate with a passion are still alive and kicking and now it’s spilling onto social media. Under these circumstances most CMO’s I speak to tell me they’d give their first born for a hit rate of more than 3% and a conversion rate of more than 5%.
Putting that into context for every 1,000 cold calls an organisation makes they will typically get 30 qualified leads – note the word “Qualified” here versus the word “Number of” which can often stretch into the hundreds. As these leads move through the sales funnels on average only two or three will close and with over 99% of your effort resulting in zero sales that should make you cry.
If you think these numbers are the exception rather than the rule then CIO studies and reports from Gartner, Harvard and a plethora of other Universities and agencies, as well as your own sales data should convince you otherwise.
So what if there was another way? One where CIO’s and their teams didn’t stare at the phones with dread and one that was more likely to generate a Win – Win for everyone? First some background…
The informed CIO
One of the reasons why cold calling works less than it used to – and it never worked especially well is the fact that todays CIO’s and their teams are more informed and this has changed the way they interact with both existing and potential suppliers. With faster, easier access to peers and information they often know more about you and your company than you do.
By their own admission most CIO’s, their PA’s or their ICT teams will bash aside almost every inbound solicitation preferring instead to reach out to engage suppliers only when they have a need and only when they’ve already done their own searching.
On average most teams will already be around 60% of the way through their buying cycle before they reach out to potential suppliers and when they do in over 60% of cases they’ll already have a good feeling for who they’re going to transact with.
It’s a classic don’t call us we’ll call you but we all know that leaving first contact to chance simply isn’t an option for suppliers.
The CIO’s changing role
Over the past few years the CIO’s role has changed and it’s still continuing to change, driven by a desire to change the status quo from one where they predominantly support the business to one where they predominantly enable it and help it prosper by combining technology and Entrepreneurship to create competitive advantage.
Consequently this is one of the reasons they now spend on average only 20% of their time with suppliers, delegating supplier management and engagement to other members in their team. When CIO’s do meet with suppliers the vast majority of them feel that over 60% of their time is wasted and if nothing else all of this should be a wake up call for suppliers - many of whom are still employing lead generation and relationship management strategies that haven’t changed much since the eighties.
What makes the situation worse though is the fact that many CIO’s, aware that suppliers have an important role to play volunteer their time to talk to senior supplier executives trying to coach them on the best was to engage – albeit, ironically to little effect.
What’s a CIO to do? Ignore the phone perhaps?
A tale of two camps
Whether it’s coincidence or not when asked every CIO I’ve met splits their suppliers into two almost identical camps one of which appears, for the most part to be broken and the other which shows promise of things to come.
Firstly there are the large Tier 1 vendors, system integrators and aggregators who have the broadest portfolio of solutions, the best training programs and operations teams whose execution prowess should rival those of the finest US Navy Seals teams. Arguably, if any companies have the delivery breadth and the skills to build lasting, valuable outcome based relationships with their customers then it’s this group.
Despite that purvey though the vast majority of CIO’s consistently use the same words and phrases to describe them. They lack authenticity. They’re quarterly driven. They lack empathy. They have little or no understanding of our vision, culture or objectives. Their industry knowledge is poor. They’re slow. They consistently fail to look at things from our perspective. They operate in broadcast mode and so the list goes on.
Secondly there are the remaining 99% of companies - smaller Tier 2 and 3 vendors, resellers and start ups who have narrower portfolios, are often resource constrained and whose operations teams are used to wearing three or four hats just because they have to.
In this day and age where every organisation is under pressure to consolidate their suppliers it’s easy to see how these suppliers could be the most at risk of loosing their place at the table but if they did they’d earn many a CIO’s ire. They’re empathetic. They’re agile. They involve us in product development and focus groups. They get our culture. They work hard to build lasting relationships and they offer innovative solutions to our problems.
In the battle of David Vs Goliath it looks like we’ve just chalked another win up for David.
CIO’s take the MC
So where do potential new suppliers go from here, cold calling sucks and don’t call us we’ll call you simply doesn’t fly and what about the incumbents, what do they do to move the dial? Let’s pass the mic over to our friendly CIO’s and quote verbatim:
“Dear prospective and existing suppliers… we realise that building new relationships is hard but cold calling and invading our social networks is just not on and we really don’t like it. You might say we hate it. In most cases we know more about you, your organisations, your culture and your portfolios than you do and, BTW we’ve already spoken to many of your so called references because they’re in our peer network.
That said we realise the value suppliers could bring us and while we think the supplier layer is broken we’d like to fix it because, if you listen and exhibit the right behaviours we think that some of you could really help us drive our businesses forwards and set us aside from our competitors while at the same time helping us show the business how vital we and our entrepreneurial teams are to their operation, product and service development and their future prosperity.
If you want to get a meeting with us socialise and come and meet us at networking events but be authentic. We’re increasingly innovative and entrepreneurial so be selfless and put yourself in our shoes and see things from our perspective. Our goals should become your goals. Leave your title and quota at the door, bin the sales scripts and stop quoting jargon we’ve heard a million times before. Listen but don’t be afraid to share your own insights and opinions but if you do be prepared to evidence them. Try to understand our organisation, our culture, our vision and our industry as though it was your own.
Failing that make sure your SEO is up to scratch and boil your value proposition down into a two minute video.”
Suppliers take the MC
“Dear CIO’s… we love that you want to engage with us but there are a few of you and a lot of us and we’re all trying to be louder than the next. Some of us sell tactical point solutions while others sell solutions and services that can, under the right conditions and with the right cooperation help take your organisation into new markets with you at the helm.
That said though engaging you is hard. We want to meet you at events but we don’t know your diary. We want to understand more about your culture, your vision and your goals but without talking to you it’s hard to gauge from the outside. Your annual reports, interviews and press clippings are great reads but they only paint a partial picture and as for the procurement portal you built it’s a bottomless black hole that sucks all our communiqués in and never spits anything out.
You want us to show you how we can be relevant but we don’t think you make it easy for us so junk in junk out. The more we know about you, your goals, your motives, your challenges and your politics the more we can tailor our approaches and meetings and the more relevant we can be in both the short and long term.
We know there’s a lot of noise for you to work through but we know why you don’t get the best value from us. Not all of us will listen to you and we all have different experience levels but for those of us that take heed – and you’ll know who we are by the style of our engagement, we’ll show you that we’re invested if you give us a chance and the insights we need.”
The arbiters view
The majority of organisations want the same thing.
CIO’s want their suppliers to be relevant and help them deliver against their visions while suppliers want to be involved in helping shape and deliver against those visions so the fact that so many CIO’s feel that the Supplier Layer is broken suggests we need to change the status quo.
Supplier days are fun but they’re often the equivalent of going on a first date where your date whips out a Powerpoint deck. Sure suppliers like the vision statements and the enterprise diagrams but they don’t really convey much else, such as the culture of the organisation or its heartbeat. It’s a start though.
We live in the Information Age so what if ICT teams were tasked with curating and posting information and insights into the organisations inner workings and aspirations – running journals if you will, whether it’s via blogs, videos or other artefacts that give suppliers insights into what it’d be like to be a native. The tools already exist and they’re free.
That said though it’s rather ironic that it’s perhaps the CIO’s organisation that could, perhaps should, take the first step in changing the status quo because so far this approach only looks like it benefits the suppliers so here’s the wrinkle. If suppliers finally have the first person insights they wanted then they no longer have any excuse for crafting low brow, generic campaigns or approaches. The bar to entry gets higher, the propositions and time to value should get sharper which in turn should keep the incumbents on their toes – especially those Tier 1’s.
There is never going to be an easy way to get the most value from your suppliers, or provide the most value to your customers because it requires insights that many organisations either don’t have or don’t have access to but by adopting a more open approach to information sharing there’s potentially a way for both sides to win.
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