(See The End of the Drought on page 28). Recent surveys in the U.S. show a similar trend. One, a monthly poll by sister publication CIO, shows a significant upturn in its June poll over previous months.
There’s no group more anxiously awaiting a recovery than the IT vendors. For the last couple of years, most CFOs have been keeping a very tight hold of the corporate purse strings. For better or worse, IT budgets have been squeezed, and with them the vendors of IT products and services.
It’s in an economic climate like this, while vendors are competing for very limited opportunities, that CIOs can make their best deals. Indeed, some choose – or are encouraged by corporate leadership bent on cost cutting – to squeeze every last drop of margin from suppliers; to squeeze, in fact, until it hurts.
I’ve spoken to more than a couple of vendors recently who are feeling a bit resentful, not just about the current IT climate, but also about some of the concessions they’ve been forced to make to close deals with clients – some of them long-standing clients.
There’s nothing wrong with cutting a better deal, and there are those who would argue that the vendors have had it their own way for too long. But there’s also value in the relationship a company and its CIO has with suppliers, and that value can quickly be eroded by a too-clever deal that leaves a vendor feeling optionless and ill-used. They may bow to the inevitable while their survival depends on it, but it’s only natural that they will want to recover some profit somehow – and, perhaps, some face – when the opportunity arises.
In each deal you make with vendors, it would probably be wise to weigh carefully the value of that particular relationship, and consider it while you negotiate. While we don’t see any reason to think there’s a return to the boom of the late ’90s due in the foreseeable future, there is reason to think a return to ‘normalcy’ may not be far away.
When the pendulum starts to swing, as it inevitably will, what kind of relationship would you like to have with your key suppliers?