Most small businesses covet the opportunity to supply goods and services
to the lucrative large enterprise market. But as little fish in a very
big pond, many are overwhelmed by the commitment of time and resources
they need to devote to just getting on an approved vendor list with one
large company–let alone actually winning a contract.
The good news is Supplier Connection, which IBM launched in 2010 with 6
other large companies, is warming up these waters for small business.
Supplier Connection offers small businesses access to a free portal on
which they can register their companies to gain
increased visibility to the procurement communities of large corporation–
and into consideration for large enterprise contracts.
This week, IBM announced that momentum is growing: 15 major U.S. corporations are now on board, creating the potential for small businesses to get their share of the $300 billion dollars that these companies spend annually on goods and services.
Small Businesses as a Growth Engine
Most people realize that small businesses fuel economic growth and job
creation in the U.S. But most people also underestimate just how important
small business is to our economy. According to the U.S. Small Business
Administration, small businesses:
· Represent 99.7 percent of all employer firms.
· Employ about half of all private sector employees.
· Pay 43 percent of total U.S. private payroll.
· Have generated 65 percent of net new jobs over the past 17 years.
· Create more than half of the nonfarm private GDP.
· Hire 43 percent of high-tech workers (scientists, engineers, computer programmers, and others).
· Are 52 percent home-based and 2 percent franchises.
· Made up 97.5 percent of all identified exporters and produced 31 percent of export value in FY 2008.
· Produce 16.5 times more patents per employee than large patenting firms.
The Supplier Connection, which was created and funded by a grant of $10
million dollars from the IBM International Foundation, recognizes
these realities and the importance of maintaining a vibrant and growing
business climate for small businesses and entrepreneurs. As such, it’s
designed to take some of the friction out of the process that small
businesses go through to win contracts with large companies that can make
or break their businesses.
At the same time, Supplier Connection can help member large corporations
grow and diversity their supplier capacity. The intended result is to help
catalyze job growth in the United States.
What the Supplier Connection Is–and Isn’t
Stanley S. Litow, IBM Vice President of Corporate Citizenship and President
of its Foundation, likens Supplier Connection to the Universal College
Application (something I’m quite familiar with as the mom of a high school
senior!). In a nutshell, small businesses need to fill out one core
document on the Supplier Connection web portal. This provides member large
corporations with the common information they need to consider these small
businesses for contracts.
In addition, small businesses can use Supplier Connection to identify other
small businesses that they could potentially partner with to be more
competitive and better able to respond to supplier opportunities.
What Supplier Connection is not is a commercial entity or marketplace. The
portal is designed to help large companies identify potential suppliers;
subsequently, all engagement activity is done independently (outside of the
portal) by the individual companies involved.
In addition, the data collected in Supplier Connection will be held private
and used only for procurement engagement activities. It will not be
aggregated, sold or used for other purposes.
How it Works for Small Businesses
The Supplier Connection portal is open and free to U.S. Small Businesses
· Less than $50M in Revenue OR
· Less than 500 employees
Today, businesses also need to fall into one of twenty areas that
current large enterprise members purchase from, but the category list is
dynamic and targeted to grow over time.
Small businesses visit the Supplier Connection Portal
to register. There are 9 different parts to the application,
but there is built-in help. For instance, if the small business
doesn’t have a DUNS number, the portal provides information about what it
is and how to obtain one. I’m told that most businesses can complete it in
about 45 to 90 minutes.
For small businesses that haven’t worked with large enterprises before,
just completing the registration process is an eye opener, as it gives them
new knowledge about what large enterprises require from suppliers.
Supplier Connection also offers educational services for SMBs to help them
in different areas, such as how to grow their businesses, how to diversity,
etc. Webinars on 9 on these topics are slated to kick off in April.
Currently, about 1,000 small businesses have signed up on Supplier
How it Works for Large Companies
Supplier Connection is also free and open to large businesses that have a
commitment to buy from smaller companies. Each individual company has its
own unique commitments and metrics for engaging small businesses, but
members need to sign an agreement to honor this commitment.
Once on board, participating large companies identify a lead person to
engage in Supplier Connection on behalf of the company’s buyers. This
person (or a team of people) register into the site as approved registered
buyers. Once registered into the site, approved buyers can access and view
all of the small businesses that have registered. The fifteen large
corporations participating in the program to date have registered more than
In addition to the founding large enterprise members of the group, which
include AT&T, Bank of America, Citigroup, IBM, Pfizer, and UPS, new members include AMD,
Caterpillar, Dell, Facebook, John Deere, JP Morgan/Chase, Kellogg Company,
Office Depot, and Wells Fargo.
Time to Dive In
SMB Group research shows that about 25% of businesses with 1 to 500
employees consider large enterprises to be their primary customers (Figure
1). Supplier Connection can help these businesses get considered by a wider
range of corporations and help other small businesses throw their hats in
Figure 1: Who Do Small Businesses Sell To?
Source: SMB Group
From the large corporation perspective, Supplier Connection provides an
actionable venue to walk the talk of supporting the small business
innovation that large enterprises depend on to fuel economic growth. The
streamlined approach takes a lot of the time and pain out developing a more
diversified supplier base.
And if Supplier Connection proves mutually beneficial to the companies
involved, it should also help catalyze some of the job creation that we all