Posted by Christine Ferrusi Ross on October 4, 2011
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:
· Delivering Cost Savings
· Reassessing Outsourcing Strategies
· Achieving Breakthrough Vendor Governance
· Rethinking Core Activities
· Addressing Emerging (And Not So Emerging) Technologies
· Managing Vendor Risk
These might look like any SVM’s priorities, for any year. But they’re not. Why? Because these professionals see these priorities as a means to an end, not the end itself. Each council member related why he or she was focusing on a particular priority and what value it would bring to the business. Here are a couple of examples:
· Delivering cost savings means helping the business live to fight another day. For companies that are struggling with tough or declining markets, the ability to cut costs appropriately can become the difference between reporting a profit or loss to the street next year. SVM pros also know that they got a lot of the low-hanging fruit during 2008’s recession, so the 2012 variation is cutting costs by better demand management. Working better with internal stakeholders will become the hallmark of high performing SVM teams next year.
· Rethinking core activities means acknowledging that what worked before may not carry your business into the future. SVM executives are taking nothing for granted and are looking at everything from whether they need to take worksteps out of their vendor selection processes to rewriting business rules that govern when users can self-provision products. It’s not an intellectual exercise in reengineering; it’s a strategic move to improve performance and make hard decisions about what parts of your job don’t work anymore.
· Managing vendor risk means protecting your businesses from risks they didn’t know they were taking. Business users want what they want now. And they often don’t think about the risks of working with new vendors or buying untried technology, etc. They just know the product does something cool that they want done. SVM pros I know are planning now to make sure their business users understand the risks of suppliers – not to stop the users but to help them take bolder steps. After all, the business can feel more comfortable implementing its strategy when it knows that potential risks have been mitigated.
So, I’ll ask again: How will you spend 2012? Will you spend it becoming closer to the business by tying SVM’s value to the success of overall business objectives? Or will you waste the opportunity by taking an old-school mentality of “our job is to negotiate contracts”? I hope you use that good old SVM toughness to rise to the challenge and push yourself beyond the comfort zone and into the heart of the business.
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