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Posted by Paul Warren on November 8, 2011
If you're with us here in Miami, you spent day one of Forrester's Sourcing & Vendor Management (SVM) Forum hearing about the business value SVM can deliver to the business. Stephanie Moore provided a blueprint for the SVM organization of the future — and the skill set needed for it — and Kerry Bodine told us that SVM is vital to the customer experience. Toward the end of the day, Navi Radjou urged you to partner with your suppliers and vendors to innovate. That's the thread we'll continue to explore today.
SVM can provide strategic value to your business. When I first spoke with Gary Wimberly, Senior Vice President and Chief Information Officer of Express Scripts, what struck me was his attitude toward suppliers, one that permeates through his organization. Gary believes in creating a true partnership with suppliers and developing them as “trusted advisors.”
I had a chance to catch up with Gary before the event, and he provided a preview of his keynote:
Paul Warren: Express Scripts has experienced significant growth in the past decade. How has Express Scripts balanced IT priorities?
Gary Wimberly: First and foremost, the IT department at Express Scripts focuses on systems reliability and data security. Introducing new capabilities becomes irrelevant if our systems go down or don’t function to allow Express Scripts to provide base services. Data security is an equal priority and something we approach with equal vigilance. To add new capabilities, we balance three types of projects: regulatory requirements, client requests/new functionality, and IT upgrades. Each project, regardless of type, must go through a rigorous screening process and be reviewed by a cross-functional group of executives charged with allocating IT funding. Typically, we set aside funding to ensure we meet known and anticipated regulatory requirements, then consider client-mandated IT improvements, followed by new functionality that either drives revenues or cost savings. IT improvements come out of a separate bucket and are administered by IT leadership. Honestly, the cross-functional team that approves projects has a very tough job to balance priorities within a fixed allocation of funds. They are stewards of the company and shareholders in this matter.
Paul: What role has Sourcing and Vendor Management played in your strategy?
Gary: One of the key tenets in our IT Strategy is to identify “Best Partners.” Sourcing and Vendor Management has been in the forefront of helping the broader IT team adjust to a greater reliance on external partners. Deeper, broader relationships with outside vendors has resulted in vendors having significantly more entry points and contact points into our IT organization. Vendor Management helps to coordinate across IT, ensuring consistency of message, of contracting mechanisms, of invoicing processes, and of quarterly feedback. Vendor Management is the area that thinks across all of IT to establish deeper relationships, while the specific functions within IT naturally focus on their specific tasks at hand. We view Vendor Management more as “Vendor Enablement.” The VMO helps to ensure vendors are successful and that Express Scripts’ teams get the value they need from the vendors.
Paul: What role has outsourcing played in your success?
Gary: Outsourcing has played a significant role in our success. Like many IT departments, we are tasked with doing more for the same and, sometimes, more for less. We considered how well our IT organization was positioned to do this and realized we needed to change. Broadly, our IT organization consists of Leadership, Subject Matter Experts, and Execution Teams. We realized that our future depends significantly on SMEs, and we decided to focus much of our investment in Express Scripts’ employees there. We still maintain highly qualified execution teams, but now supplement those execution teams with labor, outsourced from our IT partners. Some of that labor is onshore and the rest is offshore. Focusing on SMEs and relying more on outsourcers for execution has increased our cost per employee, decreased our cost for external labor, thus resulting in an overall decrease in cost per individual in IT. Thus, we can do more for the same and even more for less.
Paul: How would you define a true Partner as it relates to your vendor relationships?
Gary: This is a great question. We’ve come to realize that a partner is not defined by spend. A partner is not defined by criticality of services or product. We define a partner based on our ability to align success between the vendor and Express Scripts. A vendor needs to be invested in Express Scripts, as evidenced by the quality and number of their representatives, their investments in innovation, their willingness to establish senior executive relationships, and their willingness to share their key success metrics. Express Scripts, of course, must respond in turn with similar commitments, which we won’t want to do with every vendor. Long term, we anticipate that only some of our current vendors will become true partners. We may have vendors with whom we spend tens of millions of dollars. That’s ok. With others, however, we hope to move from vendor to partner to true trusted advisor.
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