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Commercial Insight: Managing strategic suppliers – every bit of spend is an opportunity to save

How do you manage operational costs? Do you know who your strategic suppliers are? Are there suppliers that you are dependent on and do you have plans in place to mitigate this risk?

Positive answers to these questions suggest you are already engaged with your strategic suppliers and spend, which is great, but what about the remaining tail spend? How many suppliers do you actively manage renewals with? What do these suppliers provide and do you still need that software or service?

As we come out of the most unprecedented economic shut down in history, everyone’s focus will be on getting started again. This is an exciting time as we have all spent months in lockdown, unable to live as we once did but equally experiencing a new sense of freedom.

Future investment decisions

Economically we are not sure where we will head, we haven’t been here before, but for sure we need to be prepared because we don’t know what will happen next. A big question facing businesses reopening is whether now is the right time to start investing again; many projects will have faltered, stopped or been cancelled, and there are still the ongoing overheads to consider and how these can be right-sized for the business moving forward. One area of overhead often not considered material is that of technology support – there is a budget but in general it remains steady over time. Many contract terminations bring a new project go-live and new products to support but this is often secondary in the project team’s mind behind the up-front investment.

The benefits of managing your strategic suppliers

Wherever you are spending your budget in this new financial year, there is the opportunity to reduce the spend. We work with clients to review all areas of spend, identify answers to these questions and use that information to drive tangible savings and meaningful change in the management of their supplier portfolio. At the strategic, high spend tier we implement governance to improve your engagement with the suppliers and drive a partnership approach to the relationship that drives value. The benefits this can bring are technical roadmap alignment, supplier and contract consolidation, contract renegotiation, and questioning the need for the services at all. These are all areas that can significantly improve your commercial position.

We find that one of the larger software houses will usually appear as a strategic supplier in most organizations, but generally they are not given the attention they deserve in terms of management and awareness of the scope and scale of the engagement. This is where exploring your license and contract estate can bring hidden benefits. Engaging with a Software Asset Management partner in these instances will bring expert knowledge and enable you to better understand the content of your estate, any potential risks and identify savings opportunities. The alliance of such partners within ITAA provides a wraparound service covering SAPOracleMicrosoft and IBM amongst others. Please contact us for more information.

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