Christine Ferrusi Ross serves Sourcing & Vendor Management Professionals. See the full Analyst bio. Visit Forrester.com to learn how we make Sourcing & Vendor Management Professionals successful every day.
Sourcing and Vendor Management professionals aren’t known for their high risk tolerance. In fact, most focus a significant portion of their time reducing risks in their supplier base, protecting the business from supplier-related risk.
That’s admirable and necessary. Of course the business shouldn’t be subjected to predictable and preventable risk events. But let’s think for a minute about what risks we’re really avoiding: Are we avoiding the unnecessary risks that we could see coming? Or are we so focused on reducing any risk that we’re not able to take advantage of new opportunities that could transform our businesses?
Innovation has once again become a business imperative — because of the shaky economy, not in spite of it. Many SVM professionals tell me that being innovative in both what you buy AND how you buy it is what will make sure their businesses stay viable regardless of the economic situation. Innovation requires us to think about new technologies, and most likely new suppliers. It also requires us to think differently about how we manage those supplier relationships.
So what are the new supplier-related risks we face in this innovation-focused environment? We asked Jason Busch, Azul Partners, one of our keynote speakers at the SVM Forum this week, this question. He recorded his answer for us here:
And if his response leads you to have follow-on questions, don’t forget to tweet them with the hashtag #SVM12. We’ll ask him for you during the forum.
Do you have a plan for how your team will add value to your business’ objectives in 2012? I don’t mean serving user requirements or meeting their expectations. I mean helping them achieve their end goals. The chances are good that your business executives have some hot priorities for next year that include initiatives like grow faster than their key competitors, bring new products to market, acquire or divest a business unit, serve customers better, and be more profitable.
And whether they succeed or fail at those initiatives could depend on what sourcing and vendor management does. Pick the wrong suppliers, and the initiative doesn’t get implemented properly. Sign a bad deal, and the ROI your executives were counting on evaporates. Manage the supplier relationship ineffectively, and the initiative stalls.
That’s a lot of pressure for sourcing and vendor management (SVM) professionals. It also explains why all of the SVM pros I know are smart and tough – SVM is not the place for wimps.
As the leader of Forrester’s SVM Council, which will meet at Forrester’s Sourcing & Vendor Management Forum next month, I get to see first-hand how senior SVM pros take that responsibility seriously and how they work every day to bring more value to their organizations. We recently as a group spent time discussing 2012 strategic priorities. While there was a fair amount of detail, here are the top-level priorities for SVM executives in 2012:
Too often at Forrester, sourcing and vendor management (SVM) professionals tell us things like, “oh, we’d never implement a Bring-Your-Own-PC program. It would increase our risk and reduce our negotiating power with our PC vendor” -- only to find out later that their colleagues in the infrastructure team have in fact already implemented such a program.
The reality of today’s environment is that your end users have wildly different expectations of technology, and of the people who procure it for them. These users are mobile, empowered to make their own technology decisions, impatient to get what they want, and have multiple new technology options like BYOPC and cloud that make consumer-like enterprise purchases possible. Yet too often, SVM professionals hide behind their corporate sourcing policies rather than try to get ahead of user needs.
You know the risks of denying a trend – users going around SVM with loopholes in the corporate policy to buy what they want, while selecting new vendors that don’t meet your risk criteria. And I know many of you are trying to avoid this fate. You’re already expanding your efforts beyond IT to work more with your marketing teams and spending more time giving guidance to individuals sourcing SaaS contracts rather than trying to take over responsibility for those contracts yourselves.
But even as these issues have been gaining steam for a while, 2011 is the year that the trends accelerate and converge. Why? The recession is mostly behind us and the effort to grow quickly brings out the natural tendencies of end users to focus on speed over risk or total cost.
2011 is the year you need to stop slow-pedaling new models of sourcing emerging technologies and instead put your foot on the gas. Get out there and be more proactive with your stakeholders about social technologies, mobile devices and applications, and:
I met a client a while back who told me “I’m just getting back into working with Forrester again. Years ago, like 15 years ago, I used to have these great, animated conversations with an analyst there. John McCarthy. Do you know him?” This man remembered 15-year-old conversations. And having been in my share of meetings with John over the years I know why. He is one of my best friends, a great mentor and amazing analyst. His mind works so quickly, and he is knowledgeable about so many topics it’s almost impossible to keep up with him intellectually.
Why am I blogging about this story? Because this year John McCarthy celebrated his 25th anniversary with Forrester. He is in fact the first employee that George Colony hired. In an environment where people like to talk about rock star analysts, John McCarthy is John, Paul, George, and Ringo rolled into one (with good measures of Elvis and Johnny Cash too). He’s been on TV many times and has been the key spokesperson in his share of press conferences (notice the above photo of the Indian media interviewing him during a recent trip to that country), been featured on the front page of the Wall Street Journal with one of those rare sketched photos, and quoted on the West Wing. I’m not kidding – years ago John wrote a major piece of research titled “3.3 Million Jobs Go Offshore,” and a few months later it was referenced in the TV show. That’s influence.
John’s been an important part of the research and insight we’ve provided to Sourcing & Vendor Management clients over the years so I wanted to celebrate his anniversary with all of you in the community. There are a few ways we’re doing this and we encourage you to contribute too.
That’s Michael Chaney’s vision for procurement at Cisco in an era of Empowered users. Next week at Forrester’s Sourcing & Vendor Management Forum in Chicago, Michael, who heads up Cisco’s procurement relationship group at Cisco, will talk about procurement’s role in the innovation engine at Cisco. I recently caught up with Michael, who is also a member of Forrester’s Sourcing & Vendor Management Council, to discuss procurement’s role in innovation at Cisco.
Ross: How has your role evolved in the past year and how do you see it changing over the next?
Chaney: At the beginning of 2010, I was running the global IT VMS (Vendor Management Services) team. My team and I are now part of Global Procurement Services (GPS) helping to drive the value we created within IT across all of Cisco’s global enterprise. Though the operating models are similar, the challenges in connecting with all business functions, developing a broader set of suppliers and actioning a significantly higher level of spend are different. And other groups have also been consolidated in to drive the new GPS model. Our goal this next year is to recreate the way we work and still deliver the incremental value Cisco needs from procurement (like re-building the airplane in flight).
Ross: Empowering technologies – mobile, video, cloud, and social – are introducing new vendors to the business. What challenges do you face bringing new vendors into your business?
I like sourcing and vendor management professionals for all of the reasons they drive others crazy. Business and IT executives like to complain that SVM teams care only about getting the lowest cost (this complaint usually comes after said sourcing team tells the business user his vendor of choice isn’t the best option). Vendor sales people are taught to avoid SVM professionals whenever possible because they keep asking questions like “Why is your product worth this much money?” and “Show me how you bring value to my company.”
The SVM executives I deal with are a tough group (and don’t think I get off easy: Forrester is a vendor to these executives too, so I’m not immune to the same challenges as other vendors). They’re a practical group, and not inclined to be swayed by idealized visions of innovation, for example. They accept nothing at face value, they question everything in painstaking detail, and they resolve conflict instead of working around it.
So why is this pragmatic, sometimes cynical, group talking about emerging technologies, new services models and other innovations? Because in their pragmatism they know that they need to move their organizations forward to take advantage of opportunities presented by new technologies and services. And they know if they don’t, the business will do it without them – opening their firms to increased costs and higher vendor-related risks.
While I’m not claiming SVMs have abandoned their focus on reducing cost, the need to take advantage of new opportunities is critical. As a result, there are three key areas where Forrester sees SVM investing:
Clients frequently tell us how much they value connecting with their peers. A few years ago we created the Forrester Leadership Boards Sourcing & Vendor Management Council to serve that need. But in the age of social technologies and interconnectedness there are valuable conversations you can have with peers who aren’t part of that private community. So this week we launched The Forrester Community For Sourcing & Vendor Management Professionals.
The community is open to all Sourcing & Vendor Management Professionals, whether you’re a Forrester client or not. Check out the community and you’ll see conversations focused on the key business challenges that you face every day. The community is a place for you to exchange ideas, opinions, and real-world solutions with each other. Our Forrester Leadership Board teammate Sara Dupuis is managing the community, helping facilitate the discussions. Forrester analysts will also participate and share their views.
Here’s what you’ll find:
A simple platform on which you can pose your questions and get advice from peers who face the same business challenges.
Insight from our analysts, who weigh in frequently on the issues.
Fresh perspective from peers, who share their real-world success stories and best practices.
Content on the latest sourcing and vendor management issues and trends — from Forrester and other thought leaders.
Today we found out our great friend and colleague Andrew Parker passed away. It’s difficult to relay such personal news in a public forum, but so many of you know him and worked with him, that we felt it was important to share this news with you.
Many CIOs, sourcing professionals, vendor strategists and analyst relations executives have told me over the years that Andrew was the key IT services and sourcing analyst to know in EMEA. They valued him because they found in Andrew someone who could challenge their existing ideas and engage them in creating new ideas.
Andrew was a wonderful analyst – always willing to aim for the stars with a controversial or ambitious idea. And he knew how to support those ideas with great insights, deep knowledge of clients’ situations, and a broad perspective on the world. Andrew won many internal Forrester awards for his reports and was justifiably proud of his analysis. He had a genuine love for analyst work and was always excited about his research. Below are some of his personal favorites:
Forrester's new blog platform went live -- we still have a team blog for Sourcing & Vendor Management, but now each analyst also has an independent blog. Check them out. In the meantime, here are some thoughts from Cliff Condon, the project manager. And of course, feel free to add your own thoughts in the comments.
Hey everyone. Here it is – Forrester’s new blog network. We made some changes to improve the experience for readers and to encourage more analysts to blog. Feel free to poke around and let me know what you think.
There are a few things I’d like to point out to you:
Everyone’s welcome here. Forrester analysts use blogs as an input into the research they produce, so having an open, ongoing dialogue with the marketplace is critical. Clients and non-clients can participate – so I encourage you to be part of the conversations on Forrester blogs.
We still have team blogs focused on role professionals. Our role blogs, such as the CIO blog and the Interactive Marketing blog, are a rollup of all the posts from the analysts serving that specific role professional. By following a role team blog, you can participate in all the conversational threads affecting a role.
And now we’ve added analyst blogs as well. If you prefer to engage directly with your favorite analyst, you can. Look on the right-hand rail of the team blog and you’ll see a list of the analyst blogs. Just click on their name to go to their blog. Or type their name into “Search”. An analyst blog is a place for the analyst to get reaction to their ideas and connect with others shaping the marketplace. You’ll find the blogs to be personal in tone and approach.
You can monitor analyst tweets. On role team blogs, you will see the recent tweets on the right-hand rail from analysts serving that role. On analyst blogs, the tweets shown are specific to that analyst.
We recently finished some research into what clients need from our research – role “deep dives.” Those of you who are clients of the sourcing and vendor management (SVM) role might remember having done one for us a while back. When SVM piloted that research last year, we used the information to refine our research strategy and create an SVM Roadmap. We then shared that roadmap with our clients in a teleconference to get more feedback into what you needed (and didn’t) from us.