Supply Chain

Who’s Buying How?

IT and non-IT executives rely on totally different criteria when choosing suppliers.
CFO StaffMarch 17, 2003

How do companies decide which IT suppliers to do business with? That depends on who’s doing the deciding — and on who’s assessing corporate practices. According to Jupiter Research, non-IT executives tend to favor companies whose products meet business requirements, while IT executives put the emphasis on performance and reliability. So much for teamwork. To be fair, both camps put total cost in the top spot, but after that they tend not to see eye to eye. And given that 89 percent of the executives (both IT- and non-IT-focused) surveyed by Jupiter said they help select technology vendors, that disconnect could be serious.

The company found that IT and non-IT execs tend to blame each other for dominating the selection process. Worse, they dominate based on totally different approaches: IT executives tend to rely on tools and research that focus on technology criteria, while two-thirds of non-IT execs rely on (brace yourself) word of mouth. Jupiter recommends a dual focus: on business value (which includes absolute cost and cost predictability, quality, and usability/effectiveness) and market suitability (that is, vendors’ overall stability and focus on a given market or technology). Often these two criteria are at odds: the best technology may come from new and unproven vendors, for example, so companies may have to use a matrix to decide.

Yet perhaps CIOs and other IT execs aren’t as focused on technical specifications after all. Nicholas Wilkoff, an analyst at Forrester Research Inc., says that IT executives do in fact put features and functionality at the top of their list of buying criteria, particularly when creating a “short list” from which to make final selections. Final choices are also influenced by cost and ROI considerations. Could it be that CFOs and CIOs are cooperating after all? Maybe not. In Wilkoff’s survey, 59 percent of respondents said the CIO/CTO makes software-buying decisions, with little input from other execs.

Top Technologies for 2003

  • Information security
  • Business-information management
  • Application integration
  • Web services
  • Disaster-recovery planning
  • Wireless technologies
  • Intrusion detection
  • Remote connectivity
  • Customer relationship management
  • Privacy

Source: AICPA Survey