When Customers Talk, IT Innovation Happens

by Tony Kontzer, May 2010

The fact that Oakwood Temporary Housing’s procurement portal and data analysis solution even exists is a testament to a growing trend in business: the role customers play in spurring IT innovation.

More than ever, especially in business-to-business settings, customers have a louder voice in getting suppliers to make it easier to conduct business with them. And in the case of Oakwood, it was the loud voice of the company’s biggest customer that led to the creation of Oakwood’s solution.

It was spring 2008, and Oakwood was already thinking about ways to package the abundant data analysis it was generating as a way to create more value for its customers. It was at this time that the customer in question came to Oakwood with a highly motivating ultimatum. “They came to us and said, ‘We really want to take a look at the services you provide for us, and we want to put an e-commerce procurement platform in that will help us really take advantage of the overall market offering so that we can make sure we’re best serving all of our clients,’” recalls Chris Ahearn, senior vice president of corporate sales and marketing at Oakwood.

Although Ahearn’s description sounds innocent enough, make no mistake—there was a veiled threat in the request. And given that other, smaller suppliers were scrambling to try to meet the customer’s request, Ahearn knew that Oakwood was the right company to make it happen. “They really wanted to go with us because they knew that we could deliver, because we’d always delivered on programs that we’d developed for them in the past.”

What followed was a textbook case of IT collaboration. Ahearn, Oakwood’s executive sponsor on the project, assembled a small team to work with the customer on requirements. Meanwhile, the customer also named an executive sponsor and made a number of users available as a sort of focus group. Plus, the customer’s vice president of procurement drove the timeline of the process, managing contracts and generally making sure the system was finished on time. Even partner suppliers were involved sporadically. “It was a very cross-functional effort,” says Ahearn.

Such collaborative IT innovation efforts are becoming more commonplace as cheaper, more efficient technology becomes the norm and as customers gain increasingly powerful voices with their suppliers, says Jon Doherty, a member of the Technical Insights Group for research and consulting firm Frost & Sullivan.

Giant companies “can still make their supply chain bend at their will,” says Doherty, so it’s no surprise that Oakwood’s largest customer exerted such influence. Likewise, as the dominant player in its industry, Oakwood was the most likely suspect to build something, and the decision to roll out customized versions of that solution for customers, partners, and even industries—thus expanding its influence—is a smart move, Doherty says. “If you’re the big behemoth, and you set up this technology, you want to get as much reuse as possible,” he says. “It might open up new doors to new revenue that you didn’t have before.”

The possibility for opening up new business opportunities was a big driver for Oakwood. “Do you want to be the company that strategically is on the other end of other systems,” asks Ahearn, “or do you want to be the company that owns the volume coming in, so that you can begin to dictate a little bit about what goes on in the market?”

For Oakwood, the choice was simple: innovate at the behest of its largest customer or watch the business walk out the door.

For More Information
The Customer Is Always Right
Siebel CRM
Siebel Partner Relationship Management

Tony Kontzer is a freelance writer based in Albany, California.


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