David Lester, chief information officer (CIO) of the London Stock Exchange (LSE) believes the best way to gain value and service from supplier relationships is to manage and develop them into deep partnerships.
Lester was hired in 2001, the year the LSE demutualised and became a public company. With shareholders to answer to, there was suddenly more focus on costs and value.
A handful of big names, including Accenture, Microsoft, Verizon, Cisco and HP, provide all the LSE’s services.
‘We’ve worked hard on both sides to turn the relationships into one of partnership,’ says Lester. ‘In the past five years, all of the relationships have matured into one of mutual understanding around the LSE’s business strategy and where it needs to take technology. The experience here is a shift from arm’s length, contractual outsourcing of various functions to picking a handful of key relationships and developing them into partnerships.’
The LSE is nearing the end of a four-year programme of major technology change. ‘When there’s a success or a milestone, we give credit where credit is due. I believe the suppliers want to succeed as much for themselves as they do for the LSE,’ says Lester.
‘We celebrate successes, so when we launch a brand new product or service that’s a significant milestone on a technology plan, we have joint celebrations across both the LSE and the supplier teams. They’re pretty much an extension of the LSE itself. They feel involved and passionate about what it is we’re trying to achieve.’
Many suppliers are keen to be involved with the LSE, not least because it enhances their brand reputation. But potential suppliers need to do their homework before they make a pitch.
‘It’s got to a position now that I’ll only get engaged in something that will add a lot of value,’ says Lester. ‘Unless they come with what’s in it for me, it’s just a waste of their time and mine.’
The incumbent suppliers have come to know what Lester’s hot-buttons are and what he needs from them. ‘If I focus on the collection of relationships that we have, and spend enough time listening to other large suppliers who are keen to work with us – just to keep the guys that we have honest – the hard-selling will not work. Provided those relationships continue to deliver value and innovation, I don’t feel the need to switch suppliers.’
And Lester’s tip for successful supplier relations? ‘Understand on both sides and be open. Try to operate on this partnership line. In my experience, deep partnerships work.’
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