When I was at EDS Australia, I recall a sales executive once explaining to me — in a surprisingly solemn demeanour — that EDS had just won a major contract with the Australian Government.
Puzzled by the executive’s disappointed tone, I asked why the long face?
He explained that, while he’d certainly won the cake, EDS had missed out on a niche piece of work that would have been the ideal cherry on the top.
I jokingly replied, “if it’s any consolation, that cherrywas probably the entire cake for the winning firm.”
There we were: a globally renowned information technology (IT) firm that had been outfoxed by a local small-to-medium enterprise (SME).
Upon reflection, that SME had won because it was a subject matter expert, which simply had a more intimate understanding of the customer’s unique challenge.
It also won because the agency CIO was shrewd enough to recognise he required focussed niche expertise alongside the services of EDS.
It was smart business by the SME and it ended up delivering great value to the customer.
I often tell that story in my capacity as IT Supplier Advocate because it nicely illustrates where SMEs are delivering most value.
And the story is a pertinent one, with recent AusTender data showing that Australian Government IT contracts are consolidating, as agencies seek efficiencies from prime contracting larger firms on strategic deals.
While prime contracting may deliver contracting efficiency, CIOs still need to remain vigilant towards identifying those all important cherriesthat the SME sector do best.
I recently spoke with some of Australia’s CIOs to see what benefits they derive from working with SME suppliers — I wanted to see if there were any common motivating factors leading CIOs to direct certain cherriesto the SME sector.
Indeed, there appear to be three motivating factors. By and large, CIOs are turning to SME suppliers when they require:
- flexible solutions;
- first-mover innovation; or
- tailored service.
CIOs tell me they greatly value the way SME suppliers are flexible and willing to tailor their solutions to customer needs.
It seems SMEs are an ideal supply option when customers want a unique technology solution suited to them, and not the other way round.
For customers that want to enhance but still ultimately preserve their existing business processes, SMEs often present a flexible supply option that can help avoid drastic organisation change.
Timothy Clark, CIO at Myer, tributes the great speed, nimbleness and flexibility of his SME suppliers with enabling the delivery of a number of Myer’s business solutions.
Likewise, Bruce White, Greater Building Society CIO, likes working with SMEs because he finds their solutions tend to be more easily customised.
In addition to supply flexibility, CIOs also tell me they place a high value on the SME sector’s first-mover innovation.
Whether it’s improving internal business processes or enabling better ways to serve customers, many CIOs view their SME suppliers as trusted allies when it comes to exploiting new technologies.
Many CIOs actively look to the SME sector for unique and creative solutions that take advantage of new technologies.
Discerning CIOs seem to recognise that first-moving innovations are born at the smaller end of the spectrum by passionate people who have branched out down a niche path.
David Hall, Group Executive of Technology at Qantas, praises his SME suppliers with devising a range of innovative solutions to Qantas’ complex business needs.
Similarly, Craig Pennifold, CIO at the Federal Government Department of Innovation, cites SME suppliers as important partners in achieving business process innovation. His SME suppliers have found innovative ways of linking larger vendors’ technologies to the Department’s business needs.
The SME sector’s reputation for high levels of tailored service also draws commendation from CIOs.
For buyers, the age old strategy of being a blue ribbon customer to a smaller vendor remains a recipe for tailored service.
Rather than fit into the hierarchy of a larger organisation, CIOs are finding they can build closer working relationships with the key people of an SME.
This bodes well when one considers that building relationships is key to getting good service from an IT supplier.
With greater access to management, James Scott, Toyota Australia CIO, has found SMEs responsive and able to quickly turn projects around at the first sign of things going off-track.
Similarly, Wayne Saunders, Australia Post CIO, has observed that Australia Post’s brand is an important motivation for his SME suppliers.
And John Wadeson, Deputy Secretary and CIO at the Federal Government Department of Human Services, has found his dealings with SMEs to be characterised by close working relationships between technical staff and a very high level of supplier responsiveness.
As IT Supplier Advocate, I think it’s important to draw attention to the defining traits of the SME sector — its flexible solutions; its first-mover innovation; and its tailored service.
That’s why the SME sector and the Supplier Advocate Program had a strong presence at CeBIT Sydney promoting the commercial benefits of working with SMEs.
A group of SMEs exhibited as members of the Australian Government’s stand to showcase the IT capabilities they supply to government, and we unveiled some marketing material to publicise CIOs’ experiences with SME suppliers. Customers of all sizes are deriving great benefit working with the SME sector and it’s important their successes are told.
I hope Government customers will diligently and strategically identify those all-important cherries that the SME sector does best. CIOs would do well to make sure focussed subject matter expertise is brought to bear on their IT implementations and challenges.