Are you paying your vendors enough?

Many of my colleagues think that we are spending too much on IT. I disagree. In some ways, we are spending way too little.

Lest you think that I am spouting crazy talk and advocating a career-shortening approach that would bring down the wrath of your CEO and CFO, consider this exchange, which occurred at a meeting of a major aerospace and defense company’s senior executive committee. The CIO was saying that he was going to “squeeze money” out of his vendors. The CEO’s response: “When you talk about ‘vendors,’ I think of the people who stock candy in the vending machines. As the CIO, you work with technology suppliers, who help us keep our nation’s fighting men and women safe.” As for squeezing money out of such suppliers, the CEO said that the focus of any enterprise he led would not be cost reduction but value optimization and mission enablement.

Not every CEO is so enlightened, but we are reaching a point where many executives will realize that it is time to embark on a new relationship with technology suppliers. Here in the 21st century, the economy is dependent on information technologies. Technology suppliers are key to any IT leader’s ability to deliver value to the enterprise. And yet IT suppliers are frequently portrayed as some kind of value villain. That has to change.

IT leaders need to stop spanking suppliers and start thanking them. In Drive: The Surprising Truth About What Motivates Us, Daniel Pink contends that “you have to pay people enough.” If a supplier believes it is not being paid enough, it “will do the minimal amount necessary not to be replaced but not a peppercorn more.” One of the best uses of money, says Pink, is to pay people enough to take the issue of money off the table; then they will be focused not on money but on the work. If we could change the focus of our attention from what we pay (the cost) to what we receive (the value), we would be taking an important step in materially improving supplier management.

Seth Godin, in his brilliant new book, Linchpin: Are You Indispensable?, posits that “we are moving . . . to an economy where the people who win do so by doing stuff we didn’t expect and didn’t ask for.” Don’t you want to go there? Think about it. When was the last time a provider did something good that you didn’t expect or ask for?

But change has to come to both sides of the equation. One of the major reasons technology suppliers fail to be perceived as value linchpins is poor messaging. Can you recall the last time you saw a vendor presentation at a trade show that made you lean forward and take notes? Sadly, at most events these days, as soon as a supplier takes the podium, the audience assumes the “BlackBerry prayer” position and starts processing e-mails. At the end of the presentation, there are rarely any questions. Is that the fault of the smartphone? To some extent, perhaps, but I think a compelling message would still make everyone sit up and listen.

What’s more, suppliers need to re-examine the platforms they select for delivering their messages. Case in point: For the life of me, I cannot see how a technology supplier that sponsors the Olympics or hires expensive pro-athlete spokespeople is doing anything that improves your ability as an IT leader to deliver value to your enterprise. Wouldn’t those millions of dollars be better spent establishing knees-under-the-table, substantive conversations about how to exploit the amazing technologies available to us today?

In other words, both the buy side and the sell side of the IT value equation need to jettison some long-held beliefs and behaviors. Thornton A. May is a longtime industry observer, management consultant and commentator. You can contact him at [email protected].

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