Are your supplier management processes keeping up with changing business models?

CEO olive technology. I write about leadership and B2B technology.

Effective supplier management enables organizations to control costs, drive service excellence and reduce risk to maximize supplier value throughout the life of the contract. Thanks to the adoption of SaaS cloud applications, strategic IT leaders can now consistently evaluate the right technology for their business.

If someone isn’t constantly evaluating their toolset in the current era, they’re falling behind. Most of the IT leaders I talk to tell me without hesitation that, honestly, they barely review their technology stacks often enough. Mainly because reviewing risk is rarely mission critical, but more often, companies take a “wait until something goes wrong” approach. In an age where everything is hosted locally and investing in software changes is a daunting task, “wait and see” makes more sense. Today, it’s like not going to the dentist until a tooth falls out.

The subscription model emphasizes constant vendor innovation, which puts the onus on IT leaders to keep their technology abreast of innovation.

The ability to switch suppliers more easily (note tomorrow easily, not easily), coupled with a large number of excellent best-in-breed single-point solutions, formed a perfect storm to improve the leverage ratio of enterprise technology.

Just as vendors themselves need to stay ahead of the curve in order to remain relevant, buyers must realize that waiting two to three years to review their technology stacks will inevitably leave them behind competitors in terms of innovation.

The economic impact of innovation has skyrocketed over the past 10 years, doubling every 18 months, with roughly 90% of all big data collected in the past six years. These startling statistics underscore the importance of businesses focusing on innovation. With the low cost of starting a startup these days, building custom systems in-house that require expensive in-house maintenance is also becoming less and less advantageous than having a third party build it and making them responsible for maintaining and innovating. The spending habits of Alphabet, Google’s parent company, help support this, as even their army of engineers spends around $27 billion on acquisitions.

It can be difficult to know which suppliers are truly driving value, which can bring additional impact, and which can be replaced or even cut out entirely. However, you must avoid procrastinating on this work, as it can slowly eat away at progress and, in some cases, possibly ruin the business. There are some simple steps to follow to ensure thorough due diligence while maintaining speed.

First, you must identify your business goals and find out which vendors are helping to drive one of those goals. If not, it’s time to evaluate their effectiveness. The easiest way to find this out is through surveys of internal users and suppliers, ideally stored in a central tool so that values ​​can be easily adjusted as needed. After losing some fat, you may notice two things:

1. Some of your existing suppliers have overlapping values. In many cases, you’re using a larger platform with additional functionality that you’re not aware of, and you’re paying for an a la carte solution for that too.

2. Certain business goals and use cases are currently unmet or cannot be resolved through spreadsheets or manual processes.

The first point is where you can drive integration. But be careful, because some unique core functions of a certain department are likely to be lost. It is important to perform a thorough requirements gathering before cutting suppliers or changing suppliers. The second point is your opportunity for new innovations. If you look at spreadsheets as a solution, there’s usually (but not always) an opportunity for growth.

So, knowing that companies must constantly innovate, and that third-party vendors are a faster, more cost-effective way to bring this innovation to market, why are so many CIOs and technology leaders still buying and selling like it was 1999? Update technology? Are old habits die hard, or is it just an effort to evaluate technical decisions?

Taking this path first requires a change of mindset.

1. You must develop the habit of always being at the top of the technology stack. Think of it as a department. Do you only review marketing results every few years? Do you only have performance reviews with your VP of Product every three years? you will not. With software having such an impact on your business these days, why should it be treated any differently?

2. Once you have an idea for monthly ROI reviews with your suppliers, it’s time to do it. Find a place to store your business needs and identify which needs are addressed by vendors – just like you do with business KPIs and departments. When multiple vendors are addressing the same problem, survey internal users to find the vendor with the best ROI and weed out the others.

3. Look for technical gaps in the process proposed for your current KPIs. What are some of the key things you want to achieve that are executed today with little or no technology involved? For example, maybe the financial projections are still on the spreadsheet. This is your chance to innovate. Time to quickly scan the market and find a solution.

Of course, this is easier said than done, but so is staying in shape. If you make it a habit to regularly check the health of your tech stack, you can stay ahead of the curve.

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