Member Article

British business stifling innovation by failure to ditch old-fashioned ways of working with suppliers

UK firms could get a better deal by buying services via an online platform (or exchange) but are put off by fear of upsetting their existing service providers.

Across the country, businesses are putting their competitive edge at risk by failing to seek out the best deals on offer online, according to findings unveiled today.

When it comes to sourcing professional services, most firms say they are reluctant to choose new suppliers over existing ones, even though they could be paying less and getting better service.

Despite this, while nearly everyone (94%) is comfortable in their personal life shopping via an online platform for goods such as Amazon or Ebay, less than half (39%) are willing to embrace buying services in the same way in their business life.

Half of those polled by blur Group said they could expect to save up to 20% from sourcing services online but three quarters (75%) also admitted that ‘peer group pressure’ inside their organisations prevented them from doing business with service providers outside their existing networks, stifling fair competition.

The study, which surveyed 300 decision makers within UK businesses and 141 UK service providers, found that whilst 89% of business buyers believe there are better service providers available than their existing network, the vast majority (89%) were still likely to approach their existing service providers when a new project arose.

In contrast, 93% of decision makers admitted they would like to find a service provider offering a more innovative and fresh approach to those they currently work with, however 83% revealed that procurement processes often prevent them from doing so.

As a consequence of constantly working with the same network, two thirds (66%) of decision makers felt that service providers often got jaded before projects were finished, leading to unsatisfactory results.

This approach to awarding contracts by decision makers was echoed by the service providers themselves. Eight out of ten (81%) found that most pitches are won by companies with existing relationships rather than the best ideas, whilst 93% admitted they had participated in new business pitches where they stood ‘no chance of winning’ as the client had a clear favourite from the outset of the process. 86% believed they had been added to pitch lists simply to make up the numbers.

A: Interviewer

B: Phillip Letts, CEO Blur group

C: Richard Alvin, Business Matters

A: A new study shows that businesses will go to extreme lengths to win new clients and contracts but how far is too far? Phillip, can you just tell me a little bit about the survey that you conducted and just how close to the edge some companies are getting in terms of trying to win new clients and contracts.

B: The study by Blur group showed that eight out of ten small businesses found most pitches were being won by companies with existing relationships rather than the best ideas. We also found that ninety three per cent of respondents admitted they had participated in new business pitches where they stood absolutely no chance of winning whatsoever as the client had a clear favourite from the outset of the process. Eighty-six per cent believed they had been added to the pitch list simply to make up the numbers. So clearly there is a need to make a much more levelled playing field.

A: And Richard what can you tell us about perhaps some of the slightly stranger activities of some individuals?

C: Well some companies have actually gone to the lengths of hiring clients’ members of staff and their daughters to try to get a sort of leg up in the process. Also other companies actually hire offices or virtual offices with London based phone numbers if they are not based in London to try and portray that they are much larger, five or six times larger than they physically are.

A: Now it is one of those things isn’t it, where we have a fairly deep rooted sense of level playing field as you say or a sporting chance at least but it does seem that we haven’t really got that.

B: Yeah clearly there is a lot of frustration with the existing set up. I think a lot of the procedures and practices are really antiquated. There is a bit of a kind of jobs for the boys’ culture. There’s a lot peer pressure, holding people back from using more open fluid mechanisms so certainly there really is a fair and easier way with winning new business and there is other ways of doing things it all requires a more levelled playing field.

A: Richard, what can you tell us about some of the other options that are available to companies when it comes to securing and nailing down that business?

C: With the sort of modern technology as it is, platforms such as the one that the Blur group operate. It actually enables a widening pool of talent to actually come in and actually work with projects so if you’re always going to the same potential client base and on your tender roster your always pretty much only going to get the same ideas back where as if you use social media and other activities you’re then going to start to get a greater pool of talents actually coming in and actually getting more creative ideas and potentially drive down the costs as well.

A: Seems to be all about sort of networking and making new contacts. Phillip, what can you tell us about s-commerce and how it can help a business?

B: S –commerce is all about moving this process online and doing it more efficiently so it is a short hand for services commerce and just as e-commerce changed the landscape for product buying and selling for all of us consumers and really changed our behaviours and opened up new worlds for us. S-commerce is already doing exactly that for business services and projects not just in the UK but around the world.

A: Where can we go to find out more information about this?

B: You can go direct to blurgroup.com or you can support the campaign that we’ve developed around this research and around a lot of these issues that have been unearthed to us by the thirty five thousand plus businesses that use our platform which we call liberating business from the tyranny of tradition. You can visit that if you want to get involved facebook.com/liberate business or on twitter by tweeting #liberatebusiness.

This was posted in Bdaily's Members' News section by Broadcast Exchange .