Take your partners, New Age CIOs!

‘Abuse of terminology’ – that’s how one respected international research company describes the way we often use the P-word (partnering). And it’s true that many IT vendors talk of partnering when all they really mean is good old-fashioned procurement.

But does it matter? What’s in a word? In fact, clarity about the P-word can be important. If your notion of partnering doesn’t match your vendor’s, you can be in for some sharp disappointments. That applies to traditional players such as SAP, Oracle, IBM and to newer kids on the block like Amazon, Google and Ssalesforce.com. There are, however, two key differences between old-style and new-style partners/vendors, and those differences intensify the need to distinguish between partnering and procurement.

First, the new (usually web-based) services are often provided on a pay-as-you-go basis, so that you pay for what you use, flexing up or down as your needs change. That flexibility, and the budget-easing switch that it often entails from capital expenditure to operating expenditure, can be welcome news to hard-pressed CIOs. Second, the way your payments are measured is often by a business metric not a technology metric, so you no longer pay by MIPS of processing power or gigabytes of storage capacity but instead by (for example) number of transactions processed, or number of customers served, or number of call centre agents employed. And in these new – and for many CIOs unfamiliar – circumstances, there is a need to consider whether what you are buying is simply a bog-standard commodity, or something requiring in-depth understanding of your organisation’s specific needs.

How to do this? This in my view is the key question in an age of new-style vendors. My answer in one word: focus.

What do I mean by focus? Quite simply, identifying those areas and features of your business that bring value and differentiation in the marketplace (or, in the public sector, success in achieving key policy goals). And to also identify those areas where you cannot realistically hope to differentiate your business from the general run of competition.

Having made that distinction, you will then need to develop a three-tier IT strategy. For the market differentiating areas that make your organisation what it is, you need to provide IT support that is truly market-leading – better than your competitors today and getting better all the time to keep you ahead in the future. And for that, if you are going to take full advantage of the bright and creative minds across the IT vendor community, you surely need partners in the fullest sense – willing to invest time and trouble in understanding your business and its needs, and constantly investing money in the products and services that they supply to you.

The middle tier represents core strategic areas for your business and technology commodities. It is here that you work with vendors to standardise the way you deliver IT and focus on what you as a CIO are doing to optimise your delivery. This means looking at the roadmaps of partners and the delivery and support optimisations that you can work together on. These aren’t high-value relationships and are directly linked to a procurement cycle but you need to understand the future. This is an area where the dynamic CIO can partner with the business to drive standardisation and deliver increased cost saving in IT. The partnering here is with the business; the vendor relationship is about intelligence for the future and is managed with the juicy carrot of procurement not with a strategic relationship.

What about the remaining areas of IT, important ones, even mission critical perhaps, but areas where no real differentiation is possible and which don’t touch the core business? Surely for these areas your only real concerns are standardisation and commoditisation – for competitive quality at the lowest possible cost. The last thing you need is to waste focus on areas where you cannot shine, so here, you should forget ‘partnering’, and keep firmly on the procurement path. In other words don’t try to focus on everything – be selective.

Remember also that no single supplier can do everything. The world of IT just doesn’t work like that. You will need a number of key IT partners – maybe two or three, maybe far more – to get your differentiating and value-creating IT support at peak level and keep it there. And they need to work in harmony with each other, with you and with your business. Of course it helps if those partners can show they are already effective players in such an ‘ecosysytem’ for other clients. And because ensuring and promoting such close collaboration, managing contracts and resolving disputes can be a tall order, you might need professional help from a ‘ringmaster’ or services integrator, to keep everything in that ecosystem running smoothly.

Our new age of IT is opening up lots of new opportunities for alert CIOs intent on playing a proactive role in their organisation’s business success. To grasp them, CIOs must appreciate where and where not to focus, and when and when not to partner. Having the breadth of vision to understand that changing role is surely going to be key to success in the new age we have now entered.