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Buying Information: The Perfect Storm

Stephen Phillips considers some of the opportunities and challenges of getting to grips with your organizations’ habits when it comes to buying third party information.

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I was recently speaking to a senior manager at a large international financial institution. Our freewheeling conversation touched on a range of topics when we landed on the theme of centralized information buying. A common issue for managers at large organizations, I recounted the challenges I experienced when trying to centralize ownership of products from what I came to call my “over-enthusiastic” colleagues.

“It was very easy for us,” he told me, “we created and implemented a policy that all purchases should come through my team”. “Hmmm” I thought. My hesitation clearly signalled my skepticism. He continued, “I went to the heads of division and asked: if you want a new desk or a software package, do you contact the relevant department or go to IKEA or and expense it?” The very suggestion that anyone would act unilaterally in such matters made no sense. “But why” he added, “are third party data and information providers any different?”

He had an excellent point that any good corporate citizen would find it hard to refute. The strategic sourcing of goods and services is an established practice and the benefits are well recognized. Centralizing spend enables the organization to balance strategic and tactical priorities; exercise effective financial planning and management; implement consistent processes; and discourages the proliferation of micro relationships with marginal suppliers driven by user preference or loyalty. Why have some organizations found it so hard to implement when buying information?

Could this economic climate be the catalyst to introduce a successful, centralized buying policy that everyone can embrace? As organizations navigate these uncertain times, they will “double down” to ensure their teams are focused on at least one of the following imperatives:

  • Making money
  • Saving money
  • Reducing risk

Most organizations will use third party information to support all of these priorities. Yet, in my experience, most information management functions are in “cost centers” so the corporate focus will be on cost cutting. This means transparency and accountability are critical when demonstrating value; identifying opportunities, building scenarios and demonstrating delivery of agreed savings targets. Information managers need to consider how they are going to meet these expectations.

However, these targets must be set against the background of increasingly demanding users who are more likely to be working remotely. They will expect to have information products readily available to prosecute their business. These demands can render cost saving targets unattainable. Reductions in the workforce may offset demand but may delay savings as excess capacity is remaindered in the agreement often with no options to optimize the contract or reduce spend until renewal.

Meanwhile, information providers are struggling to maintain, let alone increase revenues. Existing clients are reducing commitments; valuations that underpinned mergers, acquisitions or private equity investments presume attractive returns; supplier consolidations are reducing competition and choice; redefining products, increasing bundling with inevitable increases in pricing; traditional publishers need to offset lower advertising revenue; and suppliers are increasingly assertive when exercising their intellectual property rights.

I believe information managers can capitalize on this situation by proactively securing or renewing management support to define the strategy to manage suppliers and products. There are several challenges to delivering this vision, including capacity, process and infrastructure. Engaging a trusted partner is a quick and cost-effective way to bring in expertise, build capacity, develop best practice and deploy supporting technologies. The full potential of the relationship will only be realized if the client and supplier work in partnership, to deliver a fully functioning vendor management strategy that furthers the interests of the information manager and their organization.

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About the author

Stephen Phillips

Stephen Phillips

Director, EMEA Business Development

Stephen Phillips is a global leader, influencer and advisor with over 30 years of experience in knowledge and information management, document services, analytics, and vendor management.