The Observer: Loyalty To The Bottom LineThe Observer: Loyalty To The Bottom Line
IT managers are paying increasing attention to ROI. What effect does that have on the vendor community? muses Lou Bertin.
January 22, 2002
Sportscaster Keith Olbermann occasionally would refer to an athlete suffering with a minor injury as being "listed day to day... as are we all." While Olbermann's fatalistic phraseology amused, it also captures the current state of affairs in which incumbent vendors are concerned (albeit in reverse). They're in there day-to-day, but with absolutely no guarantees that such will be the case in the future.
It's no surprise that incumbency--once among the most powerful of forces--should be so remarkably devalued. There's not much tolerance for loyalty, at least in commercial relationships. If you have any lingering thoughts about that, just think of the whys and wherefores that led to your last stock sale. Or look around your shop and count those who were there last year and are missing today. Such are the realities.
Should the head of the incumbent lie uneasy? Hardly. But I've learned from my conversations that the advantages of incumbency are being counterbalanced by some pretty significant obligations. They go well beyond the traditional expectations of continuing superb service and the like.
Foremost among these is the expectation--always prominent but now quite dominant--that any vendor should be as much a thought leader and source of insight as a provider of products or services. That may strike you as an insight worthy only of a "Duh!" response, but think about it for a second.
If you're on the product- or service-provider side of the equation, how often do you pay self-serving lip service (admittedly for the most understandable of reasons) to the notion of client counsel? And if you do, why should you? Your job is to capture revenue, to hold up your end of service-level or warranty agreements, and, as time permits, to check in occasionally.
For years, this model worked wonderfully. To quote George S. Kauffman's summation of the relationship between writers and movie studios, "I throw a script at them, they throw money at me, and we both walk away happy." So it was for years where the relationship between vendors and users was concerned. And if it works, why fiddle with the model?
The reality, though, is that the model no longer works, at least not where it counts. TMP Worldwide Inc. CIO Jane Aboyoun's observation, in a recent issue of InformationWeek, gave voice to the thinking of everyone I've spoken with recently. She said that she's only pursuing projects with a measurable ROI. Moreover, when she said, "This year will be focused on smart spending," Aboyoun hit the nail on the head; smartness, in this case, is measured as much by provider selection as by the acquisition of specific tools.
More pithy were the comments of a VP-level attendee at a recent InformationWeek roundtable in New York, who said everything in his sphere of influence is being put up for bid at the financial services company where he works. "Hardware, software, maintenance, services ... you name it. And if somebody comes to me with a proposition that makes sense, I'm going to listen."
He went on to say, "The time was, I wouldn't give lots of vendors the time of day. I didn't have the time, and I frankly didn't have the inclination. Now, my loyalty is only to the bottom line. There are drawbacks to that, and it makes my job a little harder, but there's just no tolerance anymore. Talk to me about cost and talk to me about ROI. Make me look smart for having selected you, and I don't care who you are, so long as you prove to me you can deliver."
Does incumbency have any advantage? Not according to my banking friend. "I take what a new supplier says with a big grain of salt, but I've got to take what any vendor that has product in my shop says with an even bigger grain of salt." An incumbent has plenty of motivation to propose upgrades, but it has to mesh with what's already in the shop. "I'm not saying I'm going to nuke what's here and start all over again, but if something or someone out there can help me do things even a little better, I'm going to listen and listen hard."
Does incumbency still sound good? It should, if you're running for office in jurisdictions without term limits. It seems, though, that there aren't any such jurisdictions any longer when it comes to the IT community, where we're all "listed day to day."
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