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By Andy McCue, 6 July 2006 11:25

NEWS

Small suppliers can be a more cost-effective source of innovation and cutting-edge technologies than the traditional big vendors, though there are also some risks involved, according to IT chiefs.

While silicon.com's CIO Jury said last month that big projects often force buyers to retreat into the safety of the big IT vendors - the 'never get fired buying IBM' syndrome - many also say they are prepared to give small and medium-sized suppliers a chance.

Ten of this week's 12-man CIO Jury IT user panel said they are comfortable dealing with small and medium-sized suppliers, with just two expressing reservations.

Steve Noyes, IT director at the Met Office, said that when the supplier is not taking a large financial risk the smaller companies can be valuable for innovative use of new technologies, bespoke software development, consultancy and quality assurance.

For buyers who become a key customer of a smaller vendor, that also means getting special attention. Rob Neil, head of ICT and customer service at Ashford Borough Council, said: "Normally the service is better than their larger competitors too, as our business is more important to them."

Some organisations even positively promote the use of smaller tech suppliers within their IT strategy.

Phil Young, head of IT operations at Amtrak Express Parcels, said: "I have been using smaller supplying companies within Amtrak for the past three and a half years and have seen the results from them provide real bottom line, measurable value to our business. The risks are around their financial stability rather than ability and therefore we do have to look at corporate protection such as escrow."

Paul Broome, IT director at 192.com, said he avoids the big tech names. "Ten web servers for the price of five brand names is a no-brainer for redundancy and throughput. We clock one million page views a day and 750,000 searches a week all run on non-household names."

As long as the appropriate due diligence on financial stability and track record is done, smaller suppliers can also be a source of innovation and cost-effective solutions, according to Rorie Devine, IT director at Betfair.com.

But not everyone agreed and Mark Saysell, IT director at Coutts Retail Communications UK, said he avoids smaller vendors unless the technology is extremely innovative and new to market.

He said: "I've had my fingers burnt with a few small suppliers where I've offered them business only to be let down by flexibility, buying power, project management and communication. This in turn has had a direct impact on my department's perceived performance in the company."

Nicholas Evans, European IT director at Key Equipment Finance, said he has no problems buying small for small amounts but said he has seen suppliers in a weak financial position using "desperate and borderline illegal methods".

Today's CIO Jury was...

Peter Birley, IT director, Browne Jacobson
Chris Broad, head of IS&T, UK Atomic Energy Authority
Paul Broome, IT director, 192.com
Rorie Devine, IT director, Betfair.com
Nicholas Evans, European IT director, Key Equipment Finance
Nick Masterson-Jones, IT director, Voca
Yawar Murad, CIO, GE Life
Rob Neil, head of ICT and customer service, Ashford Borough Council
Steve Noyes, IT director, Met Office
John Odell, group IT director, BBA Group
Mark Saysell, IT director, Coutts Retail Communications UK
Phil Young, head of IT operations, Amtrak Express Parcels

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