by Jane Dudman

ComputerWeekly.com

Wednesday 9 February 



Choosing the right supplier and products need not prove onerous as long as sound principles are followed. Jane Dudman finds that the right cultural fit between supplier and customer is just as important as the cost and quality of products and services

For smaller businesses, the process of selecting IT suppliers, products and services can all too easily turn into an extra management burden, although the aim is, of course, to make their organisation more effective and productive. Unlike their larger rivals, SMEs often cannot afford the time and personnel needed for complex contract management or selection procedures.

There is certainly no shortage of information for SMEs choosing IT products and services. The challenge is to weed out the guff and get to what is relevant. Fortunately, there are well-established guidelines from a range of well-regarded organisations that will help small businesses assess their needs in terms of the size, scalability and cost of investment, as well as providing advice on financial considerations, how to put a business case together and training for new systems.

Even in SMEs with in-house expertise, the IT director is often best served looking for long-term partnerships with reliable suppliers to provide fast, responsive support, rather than a series of one-off deals where they would have to take on more of the maintenance and integration burden themselves.

This means SMEs will need suppliers or partners that will be around for the long haul. Although it might at first seem logical for smaller firms to work with smaller suppliers for whom their business will be important, many SMEs have found it more effective to choose well-established bigger suppliers.

This, in turn, means a cultural fit is crucial. An SME will not be the most important customer for a supplier in terms of financial return, so it is essential to work with those companies that treat them as important customers, rather than as a sideline.

Nigel Hedley, managing director of systems house Azur, which has implemented business systems for SMEs for 20 years, says experience counts. It helps for the supplier to recruit staff from industry so they understand the issues facing customers.

"We appreciate the significance of the IT project to the SME's business," says Hedley. If projects go wrong, the business can be at risk. The aim for a supplier, he says, should be to form a lasting relationship with customers by not treating their projects as one-offs.

The selection criteria used by most SMEsin assessing potential suppliers are practical and straightforward. Technical expertise is a must, but SMEs also need to look at reputation, financial stability, market position and track record.

"Market position is important," says Alan Downs, financial director of Scottish textile manufacturer J & D Wilkie. "It helps if I know a firm is highly rated. You cannot get rid of financial insecurity altogether, but it is more comfortable." When Downs opted to use Azur to implement a new accounting system, the supplier's knowledge of the product was important, but also crucial was the reseller's expertise in the manufacturing sector, which meant the firm was able to gain benefits from the system very quickly.

So SME IT directors should not be afraid to ask prospective suppliers whether they are properly resourced in terms of finance, expertise and support and whether they offer any favourable finance deals in general or for SMEs in particular.

Reference sites are useful, but are taken up less often than one might expect. Those making the purchasing decisions within SMEs are often owners of the business or senior managers. They may have IT experience, but may not have formal training and might rely more on their own "feel" for the market.

"The research we have done in the past suggests that among the companies that do take up IT, it is not the small companies but the medium-sized companies that tend to be more wary," says Jeremy Beale, head of e-business at the Confederation of British Industry.

"Many medium-sized firms are still privately owned and there is often a greater scepticism about making unproven investment, especially when economic conditions are tight. The attitude in firms of this size is that they will probably be OK. So there can be some fairly conservative attitudes in some cases."

Beale also says that the level of in-house IT expertise does not always depend on the size of the business. Many very small firms have considerable expertise if they are working in technical areas themselves.

Medium-sized educational institutions also tend to have greater IT expertise. Plymouth College of Further Education has an in-house IT team of 23, providing the college with substantial internal resources when it comes to drawing up specifications for new projects.

Chris Zisimides, the college's network manager, takes a robust view of his suppliers. "The companies we deal with are very good," he says. "They are not the only suppliers we could deal with and they know that. We use Dell a lot, but as good as it is, it is not the only fish in the sea. Our Cisco resellers are brilliant if we phone with a problem. They get their teeth into it and they keep in touch. I think suppliers have to be like this because the market is cut-throat."

The college likes to use local firms where possible. "We try to use local businesses, because they can usually provide equipment for us quickly, off the shelf," says Zisimides. "That may be a bit more expensive, but we get the kit that day." When placing larger orders, Zisimides usually looks for up to five quotes. "The main criteria are price and delivery," he says.

By being flexible the college was able to manage in a situation many SMEs fear. One of its suppliers, which was providing components from an international manufacturer for the college's wireless network, went out of business. Zisimides says, "I went to the manufacturer's website and they put me in touch with their UK distributor, who could not supply us directly, but gave us the name of four or five resellers, one of which, Skynet Systems, we were already using. So it worked out fine."

Comparing products and services can be carried out in a range of ways. Downs, of J & D Wilkie, uses reviews and articles in papers and magazines to give him an idea of the background for specific areas and also talks to colleagues in similar firms for advice. He has used consultants in the past, but prefers to carry out supplier selection himself.

"Consultants can be very expensive," says Downs. "It depends on how much time you have. With our latest purchase, I felt I had the time to carry out the process."

Whether they enjoy in-house IT resources or not, smaller companies are becoming more demanding customers with the same needs as larger firms. They are looking to IT to make their businesses more efficient, and with a keen eye on the costs, they are well-placed to take advantage of a highly competitive market. Suppliers take note.



Case study: Partnership in practice at J & D Wilkie

Alan Downs, financial director of Scottish textile manufacturer J & D Wilkie, has two guiding rules when it comes to working with IT suppliers: use one-stop-shops and don't put all your eggs in one basket.

Since the two tend to cancel each other out, Downs has found a balance. He uses one partner for his firm's core accounting and administrative systems and another for all the e-mail and internet support. "That works very well," says Downs. "They do not cross paths, but they know each other. I have had bad experiences in the past with suppliers blaming one another for faults, which is why I like a one-stop-shop, but I also like to have more than a single resource."

J & D Wilkie has little in-house IT expertise, which is another reason for choosing supportive, reliable partners. "Partnership is vital," says Downs. "I want to be able to ring a supplier who is familiar with us and what we do."

When selecting partners, Downs has a number of criteria. "Usually I go to about five companies and get some quotes," he says. With a rough idea of his budget, Downs will whittle down on price, but other factors then come into play. "I will then tighten up on my criteria," he says. These include one-stop-shop support, a good track record, the size of the business, whether it has a broad knowledge base and how professional the company is when presenting itself and its products.

When it comes to getting advice on IT products and services, Downs talks to existing suppliers, his peers in the accounting world and the company's auditors. He has little or no contact with business organisations such as the Confederation of British Industry or a local chamber of commerce. "I probably should do that but I don't."