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Collaboration: Making the Relationship Work for Client and Supplier

19 Oct 2011 12:00 AM | Anonymous

When Sebastian Vettel stood on the podium at Suzuka in early October and held up, politely, two fingers to signify his second consecutive Formula One World Drivers’ Championship, he could equally have been indicating the two key partners who made his victory possible.

Without question, Formula One demonstrates the pinnacle of collaborative best practice between client and supplier. In Vettel’s case it is Red Bull Racing and Renault, but you could equally point to McLaren Mercedes, Williams with Honda in the past and Cosworth today; the list goes on. In fact, it’s not only engine suppliers, but also sponsors, tyre manufacturers and IT hardware and software providers that make up the collaborative F1 circus.

When asked to justify the millions of dollars sunk into cars racing round a track each year, all of those involved claim that developments at the ‘bleeding edge’ of car or engine design result in a trickle-down to the driver of an average saloon.

Sadly, F1 aside, the examples of collaborative success in the IT industry are generally less obvious. There are, of course, some stand-out exceptions. Without a famous meeting between the lately lamented Steve Jobs and his biggest rival, Bill Gates, Apple would have ceased to exist. Had there been no collaboration between Intel and most of the world’s personal computer providers, we might still be taking 15 minutes to download and process 250kb of data. Smartphones wouldn’t be so smart without collaboration between handset manufacturers and Google, Facebook or app developers.

However, at the less glamorous end of the IT client/supplier relationships, collaboration seems to be a dim memory. Portfolio theories, of which there are many, would suggest there are optimum methods of managing these relationships and the indirect organisational relationships around them.

Like Maslow’s Hierarchy of Needs, customer/supplier relationships range from the purely transactional for simple survival, with little or no contact between the two, to fully integrated, strategic alliances with a desire to change society.

There has been regular debate across the IT industry about the increasing commoditisation of IT. Essentially, this means a move ever further towards the transactional end of the relationship spectrum.

Needs must when the economy drives

Ironically, with the latest global economic pressures, the time may be ripe for a resurgence in collaborative best practice.

When it comes to outsourcing, for some years now cost has been one of the client’s key drivers and is currently almost exclusively at the top of the justification list. So, as clients consistently try to cut their costs or losses, innovation is one of the first elements to be cut by suppliers. Why? Because innovation is labour intensive and, therefore, expensive. This is where collaboration comes in.

By creating an ‘innovation gap’ the opportunity arises for single-idea collaboration. This means a different approach between client and supplier in terms of project development and use of technology.

Increasingly, technology is being designed with collaboration in mind; cloud computing is the perfect example. In a recently commissioned report for Xantus, a third of CIOs highlighted collaboration as a major benefit of cloud, with some even stating that a non-collaborative approach could become a significant competitive disadvantage. The collaboration may only be for a single application or data handling service, but it is collaboration nonetheless.

From a financial perspective, the ‘innovation gap' also requires a collaborative mindset. One example of this is where clients and suppliers have viewed service credits as a means of funding innovation and collaboration rather than seeing them simply as a revenue stream.

Lap of honour

So, as you watch another case of premium champagne being sprayed at the end of the remaining 2011 F1 races, it’s worth considering that the collaborative investment of money and time to develop innovative ideas may be the best way to pop the cork on successful, beneficial, long-term relationships between clients and suppliers.

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