Organizing and managing supplier relationships in information technology procurement

This paper begins exploration of the broad question: how should the relatio nship between IT suppliers and customers be organized and managed? It repor ts the results of an empirical, exploratory study which investigates the or ganization and management of IT supplier relationships in large North Ameri can firms. A sample of 518 large corporations was surveyed to determine the degree of formalization of IT supplier-management practices, the extent of discretionary collaborative behavior (DCB) on the part of information tech nology customers, and the relationship between formalization, DCB and perce ived effectiveness in influencing supplier performance. Findings indicate t hat most companies surveyed continue to manage their supplier relationships in a relatively informal way. Formalization of the supplier management fun ction appears, unsurprisingly, to be a function of the size of the organiza tion and the number of suppliers it utilizes. Relatively high levels of rep orted discretionary collaboration indicate that IT buyers find value in tak ing positive, relationship-building action toward their suppliers. Discreti onary collaboration appears unrelated to supplier management formalization, company size, or number of suppliers. Thus these results suggest that comp anies may employ two independent strategies for managing supplier relations hips, formal and informal, which both lead to perceived influence over supp liers. (C) 1999 Elsevier Science Ltd. All rights reserved.