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CIO Jury: Tough enough to negotiate with suppliers?
'Odds are stacked against us - especially when it comes to outsourcing'

By Andy McCue

Published: Thursday 13 October 2005

Increasingly complex contracts and licensing models are making it tough for IT departments to get a fair deal when negotiating with and managing suppliers.

Two UK universities are looking at offering MBAs that cover outsourcing to deal with that very problem and half of silicon.com's 12-man CIO Jury IT user panel said the odds are often stacked against them during the procurement and contract negotiation process.

Peter Pedersen, CTO at Blue Square, said: "As the pressures for budget savings and service level improvements continue, I do think it is an issue to manage and maintain the administrative parts of supplier management. This is largely due to reduction of administrative staff in order to maintain operational staff levels at status quo."

In some cases this has led to the introduction of specialist staff to help the IT department. Victor Kemeny, IT director at William Hill, said: "It is getting more difficult for line managers to negotiate with suppliers.  However, the introduction of professional IS supplier managers to support and guide IS staff helps."

Luke Mellors, IT director at The Dorchester Hotel, said terms and conditions are too often a vendor, rather than customer, safeguard. "Is this a vendor problem or an IT management one?"

But others said contract negotiation is just another skill set that today's CIOs have to either learn or buy in.

Rob Neil, head of ICT at Ashford Borough Council, said: "It depends on the CIO. If a CIO wants to succeed in an environment where outsourcing is the norm then they need to develop or obtain that skill set. And, to a certain extent, the old adage is still true that if you need to resort to the contract terms and conditions then both sides haven't succeeded in building the business relationship."

IT bosses also need to take some of the blame for failed deals. Neil Hammond, IT director at British Sugar, said: "Often when contracts break down it is because of a lack of understanding of our own IT requirements or an inability to communicate them to third-party vendors."

Ric Francis, operations director at the Post Office, said the high expectations on both sides of the outsourcing fence are maturing and helping to strike better deals while Henry McNeill, CIO at Telstra Europe, said: "A CIO should understand the basics of outsourcing. They should know when to call upon specialist help to ensure the contact works to their advantage."

Today's CIO Jury was…

Neil Bath, IT director, Brewin Dolphin Securities
Ric Francis, operations director, Post Office
Neil Hammond, IT director, British Sugar
John Keeling, Director of computer services, John Lewis Partnership
Victor Kemeny, IT director, William Hill
Christopher Linfoot, IT director, LDV Vans
Henry McNeill, CIO, Telstra Europe
Luke Mellors, IT director, The Dorchester
Rob Neil, head of ICT, Ashford Borough Council
John Odell, group IT director, BBA Group
Peter Pedersen, CTO, Blue Square
Peter Ryder, head of ICT, Preston City Council

If you are a CIO, IT director or equivalent at a large or small company in the private or public sector and you want to be part of silicon.com's CIO Jury pool, or you know an IT chief who should be, then drop us a line at editorial@silicon.com