Waverley Blog

Recently Waverley was invited to become a Microsoft Preferred Vendor (MSVP). This is a big deal for a company our size, especially since our work at Microsoft contributes directly to their software products. Microsoft has about 60,000 vendors, but only 1,000 of them have the Preferred Vendor status.

The list of Preferred Vendors includes software developers like Waverley that are hired to support Microsoft’s supply chain. It also includes all the other ancillary services that a big company purchases, for example security and food concessions.

Like all large companies, Microsoft is always looking to become more efficient in its purchasing. Each year Microsoft purchases about $12 billion of goods and services. Currently 75% of those purchases are funneled through Preferred Vendors. Microsoft is trying to increase that percentage.

Microsoft’s annual vendor summit

Microsoft hosts an annual MSVP summit in Redmond at its impressive corporate campus. I went up to Redmond last week to attend. I was expecting a day of dry presentations, but was pleasantly surprised.

Why? The first surprise was to see the level of effort that Microsoft puts into making vendor relations work. Most of the topics were predictable: what Microsoft expects from vendors, quality initiatives, payment logistics, and training. But I was impressed with the quality of the programs and the obvious desire to make them work for both Microsoft and the vendors.

Bill Gates and creative capitalism

My biggest surprise was to see how Bill Gate’s ideas about philanthropy and sustainability are finding their way into Microsoft’s vendor programs. As a full-time philanthropist Gates has spoken about the need for more integration between philanthropy and business, something he calls “creative capitalism.”

At the summit Microsoft encouraged its vendors to also start thinking about creative capitalism and the responsibility of all companies to think about their obligations to customers, employees, shareholders and the broader community.

The idea of responsibility not just to profitability, but also to customers and employees is not a new one for me. It’s a big part of why we founded Waverley.

But Microsoft’s encouragement to also consider responsibility to the broader community is a compelling idea. As a young and growing company it’s not something we felt we had the resources for. But my day in Redmond made us reconsider. It certainly gave me something to think about on the way home.

Overall, a useful trip.

An editor’s roundtable discussion produced some lively material today. We noted with interest how much attention is focused on large outsourcing deals at the expense of successful outsourcing stories from emerging technology companies. Richard Murphy, Assistant Managing Editor for Fortune Small Business Magazine, noted that small technology startups did not outsource because “economies of scale are not there” and continued with “manpower is not there to manage remote opportunities.”

Are emerging technology companies outsourcing? The answer is definitely yes. We see lots of startups working successfully with outsourcing firms, but they are approaching outsourcing from a perspective not completely aligned to that of the Fortune 500. Economies of scale are not really important to an early stage startup. True, they are indeed looking for cost savings, but most significantly, they are fighting for survival. New companies need top engineering and marketing talent to create early stage products or services to convince investors to fund growth and entice their first customers. ROI is probably not even measured and startups are not comparing a before and after situation to see how well their outsourcing experiment worked. Startups are finding that they can harness world-wide talent and bring the advantages of working with an experienced partner to help them drive towards success.

A dreary day outside in New York, day one indoors here at Outsource World was not much more exciting. The most memorable comment was made by Tsvi Gal, CTO, Deutsche Bank Asset Management. When asked what he would not outsource, Tsvi stated “we will not outsource problems”. Tsvi makes the point that you can’t rely on another organization to step in and fix your homemade mess. You need to be ready to work with a partner and being ready means being able to do a great job executing inside your own shop and using partners to augment your business, not to save it. Equally important, your partner needs to maintain a great organization and pay particular attention to keeping attrition rates as low as possible. Great partnerships are not made when the outsourcer is replacing people all the time.