Make Your Vendors Work For You

What have your vendors done for you lately?

Once you’ve deleted those expletives that came to mind first, your answer probably included some familiar laments about overpricing and under-delivering, lousy service or inadequate support. Given the number of tech suppliers who do their best to slip around IT and deal directly with business units, those feelings are probably mutual.

No wonder so many CIOs roll their eyes when the talk turns to “partnering” with vendors. By its very nature, the buyer-seller relationship in something as complex and costly as enterprise IT is practically designed to be adversarial rather than mutually beneficial.

Yet as CIO Alan Matula of Royal Dutch Shell notes in our cover story (“CIOs Forge Vendor Collectives to Extract Business Benefits”), traditional methods of vendor management tend to hobble business benefits and crush creativity. He set about changing that tired dynamic by creating an ecosystem of 11 major IT suppliers who share R&D discoveries and collaborate with each other to help Shell solve its business problems.

“We wanted the best in the industry and we wanted access to scale and reach. We also wanted new ideas,” says Matula, who formed his collective in 2008 out of sheer frustration with Shell’s difficult vendor relations.

Our story also highlights similar setups at Hilton Worldwide and Procter & Gamble, where both CIOs created deeper, more mutually supportive relationships with key vendors who bring much greater brainpower to bear on their business issues. At Hilton, for example, CIO Robert Webb sets aside funds for exploratory work on analytics with IBM and location-based services with AT&T. At P&G, CIO Fillipo Passerini holds an annual event that brings CEOs from major tech firms such as Cisco, HP and SAP together to discuss the consumer giant’s core business needs.

You may be thinking, “Hey, if my IT budget was in the billions, I’d have that kind of clout, too.” But the techniques behind these vendor collectives also apply to smaller enterprises, and they’re starting to gain traction as the IT leader’s job gets more complicated due to the rise of cloud computing, consumption-based pricing and mobility. “CIOs will increasingly have to rely on ecosystems to do the work they need done,” says Chris Andrews, an analyst at Forrester Research. “This is a big shift.”

So what have your vendors done for you lately? Imagine if that answer was something extraordinary.

Maryfran Johnson is the editor in chief of CIO Magazine & Events. Email her at mfjohnson@cio.com.