Posted by Christine Ferrusi Ross on October 18, 2010
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:
- Empowering users with emerging technologies. Consumer-led technologies are storming the firewalls of companies today. And SVM professionals want to help their users get access to these technologies – before users self-provision them and potentially open up the firm to unforeseen risks like unstable vendors and unprotected data. If you read Forrester’s book, Empowered, you know this is pervasive in your organization.
- Sustaining competitive advantage from their existing relationships. Most large organizations have been outsourcing for years. But what was once an advantage can become a hindrance if SVM teams don’t take the time to continually reassess their deals to incorporate change and take advantage of new delivery models like managed outcomes.
- Innovating through vendor management. Forrester’s research over the years has found that satisfaction with vendors is more closely correlated to strong daily governance than to a good initial contract. And now vendor governance is evolving to incorporate new approaches like multisourcing. By using these new approaches, SVMs can change the direction of their vendor relationships and create innovative opportunities that wouldn’t otherwise exist.
I hope you can join us for Forrester’s Sourcing & Vendor Management Forum, where there will be several speakers discussing how they’ve grown into partnership with the business by focusing on these themes and helping their firms achieve business objectives.