A growing number of CIOs are working closely with external strategic partners to gain mutual benefits for their company and their partners.
By Peter High
Most IT departments of a certain size engage external strategic partners or vendors for a variety of tasks. Too often, however, CIOs view external partners as fulfillers of work instead of as sources of innovation and strategic advantage. Worse still, these CIOs do not share their plans with the external strategic partners upon whom they rely most heavily. The CIOs tend to think that if too much information is offered, it may fall into the wrong hands. A growing number of CIOs, however, have begun to recognize that creatively segmenting vendors and sharing a deeper level of insight with them not only proves to them the high regard the company holds them in, but puts the onus on the external strategic partners to deliver better products and services for the company. One of the key methods to gain from these executives is setting up “vendor days” with external strategic partners. Other similar best practices include:
- Sharing strategic collateral with external strategic partners so that the onus is on them to propose how they can drive the strategy forward.
- Create healthy competition among the external partners by rating them and, based on quantitative and qualitative methods, rewarding those who perform best.
- Expose vendors to business executives and business strategy in addition to IT executives and IT strategy.
- Encourage collaboration across vendors, even among those who are direct competitors.
Jeff Kubacki, CIO of Alliant Techsystems (ATK), a $4.6-billion aerospace and defense company based in Arlington, Va., has held vendor days in each of the two years he has been in his current role. He provides the nearly 25 external strategic partners with an overview of ATK's business and IT strategies for the approaching year. The idea is to ensure that as they suggest new solutions to the company, that they do so with ATK's plans in mind as opposed to the vendors' plans. Kubacki also uses an objective criteria to evaluate the efficacy of each relationship, apprises each vendor of where they rank, and provides a vendor of the year award to the top performer. All of this provides ample motivation for the external strategic vendors to find new ways to prove the value they are contributing to ATK's success.
Ken Piddington is the CIO of a $15 billion company, based in Waltham, Mass., that is engaged in purchasing, storing, transporting and selling refined petroleum products, renewable fuels and crude oil. At his annual vendor day gatherings, not only does Piddington present the IT strategy for the next year, but Eric Slifka, the company CEO, and other select executives present their business plans and highlight their expectations of what IT can accomplish for the company. This proves to be a major motivator for external partners. On the second day of the external partner gathering, Piddington sets up one-on-one meetings with each of the vendors, giving them an opportunity to ask questions and also encouraging them to identify creative ways in which the external partners' offerings align with the strategies of the company and of IT.
Michael Del Priore, the Global CIO of Church & Dwight, a $2.7 billion producer of household, personal care, and specialty products based in Princeton, N.J., also uses vendor days. Del Priore typically invites less than 10 external strategic partners to the event. One of the chief nuances to his vendor day is that he requires the vendors to collaborate with each other during the event. Del Priore asks them to divide up into small groups and discuss what Church & Dwight does well as a partner and where it can improve. Del Priore has found the resulting feedback is rather significant, with plenty of creative ideas—such as improvements in their shared client's IT operation-- being produced as a result of the external partners’ collaboration. The key, says Del Priore, is to provide the inputs and the environment so the external partners feel they are investing in Church & Dwight, rather than just selling their own products and services.
Given the number of critical technologies and processes that technology vendors manage in this day and age, not setting up these relationships is truly irresponsible. Developing vendor days, and engaging external partners in a new way, while stimulating collaboration and healthy competition, is the key to unlocking more value in these business relationships.