Suppliers under pressure as CIOs get tough

Suppliers are set to come under more pressure this year as CIOs turn the screw and get tough in an attempt to get better value for money, according to the CIO Census 2007 report.

Most of the 110 CIOs questioned by IT user group CIO Connect said they still find it difficult to locate the ideal supplier despite the high degree of effort they put on tighter vendor management.

As such, 83 per cent of respondents said negotiating tougher terms with suppliers of commodity systems and services is a top priority in order to free up investment for strategic software development and business change programmes.

Ian Buchanan, CIO, Alliance & Leicester, said: "All CIOs have been getting tougher with vendors on cost. The challenge now is how you get more value out of those relationships and getting smarter with the way you work with vendors."

CIOs have gained more experience and savvy in dealing with suppliers over the past decade, according to Myron Hrycyk, CIO of NYK Logistics UK and Ireland.

He told silicon.com: "I'm a damn sight tougher. Vendors are going to come under pressure."

Nick Kirkland, MD at CIO Connect, added: "It's about the vendors understanding it needs to be a strategic relationship and asking why is this product going to be beneficial to their business."

The CIO Census also found there is still a disconnect between the business and IT functions - with IT viewed as a 'keep the lights on' function rather than a strategic part of the business, according to the CIO Census 2007 report.

Two-thirds of CIOs (66 per cent) said their board is predominantly tactical, rather than strategic, in its attitude to IT. More than 80 per cent of CIOs also said IT projects are under increasing financial scrutiny from the board.

Despite that there is a slight increase in board representation of CIOs - up from 50 per cent last year to 56 per cent this year.

The three key "critical success factors" for CIOs in the current climate were delivering improved service at a reduced cost, aligning IT services with business strategy and facilitating business change and new ways of transacting business, according to the survey.

Alliance & Leicester's Buchanan said: "I'm one year into this role to lead a fairly major IT-enabled business transformation. I'm not just facilitating but leading business change. We tackle retail banking where margins are very tight and technology can differentiate. My agenda is around re-engineering a lot of our systems and business processes so that our customers can do it themselves or our customer service people can deal with it."

NYK Logistics' Hrycyk said: "I think it's going to be a great year for business in 2007. Certainly the logistics sector is growing at a good rate and we are well-positioned to take advantage of that. From an IT perspective it's putting pressure on me to ensure we have got the right level of investment in the technology platform to achieve that growth."