Size matters - Cultural alignment

03 February 2017

As part of Embedded’s profiling of the suppliers we work with, we have asked some general demographic question of the supplier about turnover, profits and number of employees.  A few of the suppliers were less than keen to share this sort of financial information, which is quite telling, but I think it’s a key part of a client’s selection criteria.  This probably sounds obvious, but so many people ignore this.

Clearly understanding a prospective suppliers financial position is good practice from a risk management perspective.  Knowing whether a company has reasonable revenues is a simplistic, but good start, indicator of their likelihood of going bust.  Probably more importantly it can give an indication of the relevance of your spend to their business – too small make you “just another customer”, too big makes you potentially responsible for their downfall if you leave.  Neither is a good thing.

The one aspect that I think needs to be discussed as part of any supplier selection process is cultural alignment; which is to, a large extent, driven by a company’s maturity, but also considerations such as geography, size etc.  I find this aspect one of the most interesting.

 

The career of a typical IT guy is to start at a relatively small company and move on.  Bigger brands attract more experienced people (usually), and therefore you tend to find the skills and experience of smaller company staff is of a lower quality than the bigger brands.  This is an enormous generalisation; I know some very talented individuals who work for smaller companies, but holds true in the most part. 

That said, for what smaller companies lack in talented individuals, they make up for in freedom and hunger to please.  Bigger companies however tend to be bogged down in bureaucracy, process and politics – which frustrates the staff horrendously and can lead to a drop-in performance.  Bigger clients generally promote and value, process and structure in their services and therefore are more comfortable with bigger brand suppliers.  Likewise, smaller companies tend to work better with smaller suppliers.

Historically there was a phrase used in the industry along the lines of “no-one ever gets sacked for buying IBM”.  I don’t think that holds true now.  Bigger companies, global organisations with tens of thousands of staff, clearly will work well with bigger suppliers – but why the likes of IBM, BT etc. have Small and Medium Business divisions is beyond me. 

Part of the service Embedded offers is to find the right supplier for a particular client’s need.  Clearly, technical capability, service requirement and price point are the more obvious assessment areas.  But understanding the culture of the supplier, especially where it is likely to lead to a long-term relationship, I would argue, is as important as some of these.  Having a one sided client / supplier relationship where one values the other more; or even worse, where one thinks “they are only a small part of my world so who cares” will  lead to service issues.  Financial similarities are key (revenues), staff volumes are important.  Also, many suppliers have defined target clients who they are trying to woo – landing a new client in this space will gain a client significant focus, and therefore improved service.

If you are having supplier management issues, ask yourself whether they are important to you – or you are important to them.  Work out whether you are the sort of client they want, or how you make yourself that client, to get a better service from them and maximise the value you are getting from paying for their services.  Ask the sales guys how they get paid, understand what drives the team, and assess whether you can influence their personal benefits.  Then work out if there are suppliers out their more closely aligned to your requirements and work with them….. 

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