The changing relationship between suppliers and clients

Next week I’m chairing the Customer Advisory Board meeting for a big IT and BPO supplier. I won’t name them here because it’s unfair to give them a bit of free media promotion just because they are paying me to chair an event, but I thought I would describe some details of the event because it interests me to see how far we have progressed in the relationship between those who buy IT services and the suppliers. This supplier has managed to get 8 or 9 of their top customers to come to a nice hotel to spend a day talking not about the service they receive – this is not a session where they hit the supplier with a mallet – but to plan the entire future corporate strategy for the supplier. That’s right, the supplier is asking all their top customers what they should be doing over the next year, and starting the day by reminding their clients what they asked for last year, and what has been achieved during that time. For most of the day, the supplier executives won’t even be allowed in the room where their customers are debating the future of their company. They plan to introduce what has been achieved over the past year and then will leave the room and allow the customers to decide what the supplier should do in the year ahead. My job will be to steer discussion away from operational criticism and back to strategic recommendations, so by the end of the afternoon I can come up with a bullet-point list summarising what the key customers want from their supplier. I know that suppliers have turned to their customers for advice in the past, but to facilitate a meeting like this and to trust the customers, without even being present in the room to defend any criticism is a refreshing approach. But this should not be unusual in a modern-day business. Outsourcing has always been talked of in the same breath as procurement and one day this will change. Think of the way outsourcing is usually described, within the context of cutting costs, within the framework of a strong client and weak supplier, in terms of purchasing services. Of course, outsourcing does involve purchasing, but it’s not procurement. Think about the procurement manager charged with sourcing 100,000 post-it notes a year for your company. There is a standard quality in the market, so every variable, except price, can be eliminated. So the supplier can be chosen based on price, the transaction takes place, and the product is delivered. Outsourcing is an ongoing relationship. I believe that it is better described as lifting up the boundary of your organisation and placing the supplier inside. The boundary of where your company begins and ends has to be redrawn. An IT supplier hosting your infrastructure may legally be a third party, and is still a supplier to you, but the service they provide is ongoing and is critical to your own supply chain and success. So how can the power games over client and supplier relationships continue in this environment? For a supplier to outsource their own strategy to the leaders of their main customers is an interesting reversal of responsibility and it demonstrates that the supplier is fully aware of their own importance to the client. I hope that these clients embrace the opportunity to shape the future direction for their IT partner.

The changing relationship between suppliers and clients

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