By Andy McCue, 22 June 2006 15:15
NEWS
Businesses are still largely not prepared to take a risk on small IT suppliers and instead opt to play safe with the traditional big vendors, according to IT bosses.
The famous saying in IT is 'You never get sacked for buying IBM' and more than half (seven) of silicon.com's 12-strong CIO Jury IT user panel said there is still pressure both internally and externally for IT chiefs to go for a big name vendor.
Adrian Hughes, head of IS at insurer Amlin, said: "This is particularly true of commodity IT, such as hardware, desktop operating systems and applications, and where users think they know what is 'best'. It is a brave CIO who goes against the flow."
The banking industry in particular tends to be more cautious than most when it comes to selecting IT vendors, according to Graham Yellowley, director of technology at Mitsubishi UFJ Securities International.
He said: "One of the biggest risks to projects is 'supplier risk' as often small outfits either get acquired and bought out or devote all their resources to a larger customer - or go bust - all of which leave your project with no realistic way forward. Choosing a 'big' supplier should reduce this risk and therefore is seen as a way of ensuring project success."
Matthew McGrory, head of IT at Fulham Football Club, added: "Those non-technical directors, who generally sign off projects, would rather put their name to a household brand than risk it on someone new."
Standardisation and integration is often another factor for playing safe with a known brand. Nicholas Evans, European IT director, Key Equipment Finance, said: "It isn't peer pressure - more the need to limit the number of suppliers and the vain hope that all a manufacturers' products integrate."
Michael Bufalino, IT director at architect and design company Sheppard Robson, said the big vendors have the advantage of huge marketing and advertising budgets to throw behind their products.
He said: "Aside from other reasons, the ubiquitous advertising influence typically associated with big vendors (costs being a barrier to smaller players) doesn't help - portraying features and functionality as being simple to implement and already in place at your competitors."
Mark Saysell, IT director at Coutts Retail Communications UK, said CIOs should always play safe with large capex investment.
He said: "Big IT vendors offer a level of investment security and corporate stability and reassurance, whilst also offering good support levels and clear strategic roadmaps for future development. These additional benefits not only help CIOs to manage today's IT infrastructures but also make future company IT strategies easier to design."
But others argued there is a place in an IT strategy for smaller and more specialist suppliers.
Victor Kemeny, group IS director at bookmakers William Hill, said: "Buying products and services from mainstream suppliers is often the easy option. Many niche and boutique suppliers are able to provide better tailored products and services representing better value. The trick is a professional IT procurement function."
Today's CIO Jury wasÂ…
Ian Auger, IT director, ITN
Ben Booth, European CTO, Ipsos Mori
Michael Bufalino, IT director, Sheppard Robson
Nicholas Evans, European IT director, Key Equipment Finance
Adrian Hughes, head of IS, Amlin
Victor Kemeny, group IS director, William Hill
Matthew McGrory, head of IT, Fulham Football Club
Nick Masterson-Jones, IT director, Voca
Luke Mellors, IT director, Expotel
Peter Ryder, head of ICT, Preston City Council
Mark Saysell, IT director at Coutts Retail Communications UK
Graham Yellowley, director of technology, Mitsubishi UFJ Securities International
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
Comments
There are 3 comments. Join the discussion
1. Stephanie Twigg
As a small firm specialising in IT and telecomms recruitment we at Stephanie Twigg Ltd are often ruled out of Preferred Supplier Lists because of our size. Many firms do not seem to appreciate that we offer a more personalised service than the large firms and also that large firms often do not offer all that they promise.
We have been trading since 1999 and have completed every assignment to the clients satisfaction, with the exception of one.
2. Peter Lascelles
A very interesting incite into prevailing buying strategy. The recent demise of Elonex would tend to suggest that big is not always rock solid and certainly when you buy services such as structured cabling you may be paying a very large organisation for work which is then subcontracted down two or three levels to “one man and his van”.
Quality is often an issue as is communication. A colleague of mine sells product for a very large communications company and he finds it very frustrating that when engineers turn up they are not known to him, know very little of the customers requirements and often cause ill feeling with their behaviour on site. He mentioned ladders being left leaning against the customers’ cars and water running in through the ceiling as recent issues.
I guess the point I’m struggling to make is it might just pay to give the local experts a shot. Start with something small and low risk and see how they do. Obviously, pre-qualify them well first, don’t go for a pair of lads working out of a leased van. Look out for cablers that have inadequate insurance in particular. Many use very basic policies that exclude work in Equipment Rooms and other sensitive areas. Check that they have access to standards and will be complying, find out how they dispose of site waste you don’t want your old MDF turning up in a farmers field. Most importantly check references.
You can bet that if you find a good firm they will bend over backwards to keep you happy. We certainly love our big clients, when asked to jump we ask can we come down now please.
3. anonymous
This is why company spending needs to be managed by procurement professionals. Total cost of ownership is key and some companies are more risk averse than others for good reason (I.E. a financial institution). Risk Management is part of the process and sole source relationships can be risky but more cost effective. Procurement needs to make sure this is a strategic relationship if it is a critical spend category.