IT suppliers: Size does (and doesn't) matter

Are IT chiefs missing out on big benefits by avoiding small tech vendors? Sylvia Carr hears what the little guys have to offer.

CIOs and IT directors have vendors knocking down their door to sell them their latest kit, software or services. Given that IT heads generally have their pick of suppliers for any given need, what role does size play in deciding which companies to work with?

The general perception is that most user organisations - especially the large multinationals - prefer to go with the big-name IT suppliers. A recent poll of silicon.com's CIO Jury confirms that indeed many IT chiefs do feel pressure internally and externally to choose the usual suspects.

This is partly a desire to minimise risk while CIOs also admit the big players' heavy spend on advertising and marketing does get the message through to them in a way small players never do.

But it is possible for the little guy to get in on some big deals.

A further poll of our CIO Jury reveals that many IT heads are happy to work with smaller suppliers for the many benefits they provide, including competitive costs, innovative technology and good service.

Service, it seems, is often the clincher for IT chiefs - as they realise their business means a lot more to a small supplier than it would to a large one.

David Supple, head of IT and creative services at development consultants Ecotec, said: "Small works well when we are looking for quick agile solutions - our small suppliers can and will burn the midnight oil for us and they have a much higher record of delivering to budget and on time."

Others agree. Matthew McGrory, IT director at Fulham Football Club, said small IT suppliers "tend to be better at pulling out the stops to meet deadlines" while Graham Benson, IT director at Play.com, said they are "more attentive, responsive and hungry for the business".

Building relationships is key to getting good service from a supplier - and this is an area where small companies both excel and fall short. IT chiefs point out there are fewer people to get to know at a small supplier and that the chances are better you'll work with the same individual again and again than at a large vendor.

However, this can leave the client stranded when that individual moves on.

Gavin Whatrup, IT director at advertising agency Delaney Lund Knox Warren & Partners, said: "Small vendors have an eye for the longer game as they don't tend to be able to afford to constantly recruit new clients. At the same time, you do then become reliant on an individual at the small vendor, which doesn't guarantee continuity of service should they move on."

The major caveat to choosing a small IT supplier is that the selection process must be rigorous. CIOs must perform due diligence on the company - almost like a venture capitalist would to a start-up - to make sure the supplier will be around for years to come. It's also smart to figure out what to do should they fail to live up to their promises.

Alan Brown, director of information management and technology at West London Mental Health Trust, said: "I am comfortable using [small suppliers] within my IT purchasing strategy provided I know and have assessed the risk. This may involve having contingency plans for replacing them at short notice, escrow agreements in place, etc. It depends on what is so unique about their product that makes them better than larger companies."

Not all IT chiefs are comfortable with small suppliers, though, especially for long-term accounts. Les Boggia, IT division head at insurer Carole Nash, said: "Small vendors are great for small one-off purchases. However, when you need to start buying equipment on a regular basis you want to know your vendor is doing what it can to support you in pricing and add-on services."

Still, some argue that it's not size that matters but rather how much experience the supplier has in delivering a particular technology or solution - and how many other customers will vouch for them.

Christopher Linfoot, IT director at LDV Vans, said: "Size isn't an important factor in most cases. What we look for in any supplier is a financially sound organisation which is demonstrably (through references) capable of delivering. This tends to mean that we will favour an established business over a new one but size has little impact in most cases."