Sidebar: So You're Small. So What?

Small enterprises have an advantage when it comes to getting their provider to innovate

Sure, companies like GM and American Express may have a lot of clout when it comes to getting their IT service providers to innovate, but CIOs at small to midsize companies shouldn't despair.

"You may not have the negotiating leverage that a GM does," says Ed Hansen, partner in law firm Morgan, Lewis & Bockius's global outsourcing practice, "but you might have the ability to help the vendor break into a new market or build a new business model or become more global." As a bonus, small organizations may be more capable of working with providers to incorporate new ideas or systems - innovation. "[SMBs] may not have all the built-in procedural barriers to innovation that a lot of bigger companies do," says Hansen.

One trick Hansen uses to help small-business customers realize their own power is to turn the tables during the getting-to-know-you stage of negotiations. "During the RFP process, customers always ask: 'Why should I do business with you?' Instead, they should ask: 'What is it about us that makes this deal worth it to you?'" says Hansen.

If you're afraid you're too small to get the vendor's attention, say so and see how it responds. "The vendor may say: Let's be realistic. The money we make on this deal is less than a week's worth of revenue from GM but it's valuable to us because of X," says Hansen. Then, at least, "you know you're worth more to them than the fees laid out in the contract", Hansen says. And knowledge is power.

- S OVERBY