Back in the day, CIOs would often respond to criticism that they were unwilling to take a risk on using small or niche technology suppliers with the shibboleth that “nobody gets fired for buying IBM” or “nobody gets fired for buying Microsoft”. Whatever major vendor’s name is invoked, though, the underlying assumption has always been the same: it is too risky to use untested or unproven technology suppliers.
Increasingly, though, CIOs within large organisations are realising that the judicious use of small or niche technology suppliers can offer significant benefits in terms of improving agility, reducing costs, allowing them to tap into innovation and – by extension – helping them to gain an edge over the competition. How they do so without putting their organisations at risk, however, remains a challenge for some.
The Winmark CIO Network is a global CIO organisation that counts some of the UK’s top corporate and public-sector IT leaders among its members. At a recent meeting to share insights on selecting suppliers (conducted under “Chatham House” rules, which guarantee the anonymity of participants), a majority of the CIOs present agreed that smaller suppliers could sometimes be a better bet than a big name.
One said: “Smaller companies seem to get what you want much more quickly. They approach things in a very fresh and agile way, which is extremely compelling. The question for potential customers is whether they have a big enough appetite for risk to opt for a small supplier, who understands what they want and can deliver it within weeks at a competitive price. Or if they’d rather go with the safe and easy option that will take three months to do the same thing.”
But some CIOs from large organisations said they would not be prepared to take that risk. “We only want the finished article,” said one. Another noted that finding suppliers with a similar culture was the real key to successful partnerships – and this nearly always meant organisations of a similar size to his own.
“It’s about getting the right fit,” he said, adding that the company’s appetite for risk when it came to new technologies was low. “We tend to be more of a ‘me too’ company: we wait for another large organisation to prove something works before we do it ourselves.”
Many thought the answer to the question of risk was to have a two-tier procurement process. The more rigorous top-tier process should kick in for contracts above a certain size, value or importance, with a lighter, more risk-tolerant process for smaller-scale projects, or those where agility is essential.
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A discussion of the "risk perception gap", its implications and how it can be closed