Boardroom Despatches: Eager suppliers, supine buyers

Continuing a recent silicon.com theme of large organisations being brave enough to use smaller suppliers, Rene Carayol this month explains why seemingly playing safe with IT procurement is ultimately dangerous for all of us.

I have done a lot of consulting recently where I have been looking at procurement, especially procurement of IT. My view is that there have been big changes. We have moved away from being haphazard and unprofessional. We no longer lack process and rely on cliquey relationships.

Instead, we now have well-defined IT procurement processes. Sound good? Not if you’re a small or medium-sized technology business in the UK. The subject was raised last week in an analysis article by silicon.com editor Tony Hallett. To the average SME, this modern approach is almost bullet proof. It’s impenetrable.

We should care about this. The SME is the lifeblood of our economy. It is where we find energy and innovation. It might just have what your organisation needs.

So what does UK Plc do? It tends to buy from the big boys. This is the case with IT services companies and systems integrators (Accenture, Cap Gemini Ernst and Young, CSC, EDS, IBM and others) as well as technology vendors. The lists are long.

Some buyers naturally question the viability of smaller suppliers. That’s fair enough. But even if plenty of SMEs are only around for five to 10 years – maybe even less – what a glorious few years they can be.

So we’re faced with the situation where SMEs will jump through hoops, meeting all the requirements to get on preferred supplier lists. But it only takes one failure or a knock-back for peers around them for the bosses at such companies to decide it’s too much of a risk - and one they won’t take again.

UK buyers are left with a list of suppliers that is inevitably big, safe – and North American.

Let me get on to the case for supporting local businesses in a moment (after all, despite how easy it is to be international these days, SMEs are more commonly within a single country). First I want to mention a recent event I was at.

I found myself listening to three procurement managers on a stage, talking about their use of reverse auctions. The concept is simple. Through use of the internet and some software, suppliers bid for business, each putting in lower and lower bids that satisfy certain criteria, often over a predetermined timeframe.

Now these three users thought the approach great. They were happy it was driving down prices. But as for the audience of IT suppliers – well they weren’t making a sound. I felt concerned we were becoming buyers aware of the price of everything and the value of nothing.

How many business relationships have been destroyed by such an approach? How many SMEs have been ignored – and possibly driven out of business?

It is the IT buyers – a community I still very much feel part of – who can make a difference for SMEs and the wider home economy. This is not a xenophobic approach. It is about diversity and choice. Look at any high street where all but the biggest chains exist. That's where we're in danger of heading with our IT choices.

And this is also not just about central government or the public sector. It's food for thought for the private sector too.

Let's buy local. Let's foster creativity. Are you up to the challenge?