Vendor management: The key to productive partnerships

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Vendor management helps organisations take third party vendor relationships from a passive business transaction to a proactive collaborative partnership

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4 June 2019 | 0

Vendor management helps organisations take third-party vendor relationships from a passive business transaction to a proactive collaborative partnership. While working with IT vendors can help ease the burden on IT, it also raises concerns, especially around data, risk and security. A sound IT vendor management strategy can help organisations determine which vendor best fits the company’s needs while keeping in mind relevant features, price, availability, risk and security, and compliance regulations.

As most organisations rely on multiple third-party vendors, complexities compound and juggling a large number of vendor relationships can quickly overwhelm an already-busy IT department. Plus, to ensure the best service, businesses should avoid falling into a trap where they stick with current vendors out of ease and convenience, even if the service, price, or features aren’t exactly what the company is looking for.

Instead, establishing a dedicated vendor management practice can help keep your organisation and your vendors on task after the initial contract is signed, and help establish processes for continually evaluating vendor performance to ensure the relationship remains beneficial.

Benefits

Left unmanaged, vendor partnerships can quickly fall behind. However, by establishing a point-person who is focused on managing that vendor relationship a strong dynamic partnership can be formed, and this is one of the main goals and benefits of vendor management.

Other benefits of an effective vendor management process include the following:

  • Creating more choices for your organisation and
    finding better choices to create a vendor strategy that best suits the
    company’s budget and needs.
  • Choosing between multiple vendors can create
    bidding wars, giving your company better rates and prices.
  • Building stronger relationships with vendors
    will improve collaboration and communication when implementing technology or
    outsourcing resources.
  • Vendor management can better support IT
    governance, helping organisations keep a close eye on compliance and risk management.
  • With a strong vendor relationship, businesses
    can quickly identify any vendor issues before they become a bigger problem.
  • Vendor management allows your organisation to
    remain proactive instead of reactive by staying on top of vendor performance and
    efficiency.

Skills and responsibilities

Successful IT vendor management requires a solid base of technical knowledge in addition to soft skills. IT vendor managers need to be able to understand the intricacies of each technology, process, software or tool that is being outsourced to a third party. However, it’s also a role that requires strong soft skills in order to communicate with vendors and to maintain that relationship.

The responsibilities of an IT vendor manager include anything involved in the process of researching, communicating with and deciding on a specific vendor to meet organisational needs. You may have to renegotiate contracts, find the best deals, deliver comparisons between products to executive leadership, manage long-term relationships with vendor contacts and keep an eye on how relationships evolve.

According to Job Hero, the most important skills and qualifications for an IT vendor manager include:

  • Sales skills to hire vendors and monitor
    industry trends.
  • Interpersonal skills to successfully interact
    with vendors and the main point of contact for that account.
  • Critical thinking skills to determine the best
    prices, features and products to meet business needs.
  • Communication skills to effectively write
    reports, perform vendor research and to share findings from sales data with
    other key stakeholders.
  • Negotiation skills to renew contracts and to
    make changes to existing vendor contracts.
  • Multi-tasking skills to juggle several vendors
    and varying product services.

Vendor management office

Companies that work with a wide array of vendors might go as far as to create an IT vendor management office (VMO), which is a department that specifically oversees vendor relationships. This department helps guide the organisation through RFP creation to final implementation of the service, and helps IT leaders stay on top of the relationship with regular performance evaluations.

Tools and software

Vendor management tools and software are available to help organisations manage a large number of vendor relationships. These tools can help IT leaders and vendor managers keep notes on different products, costs, services and contract details.

IT vendor management tools and software can be useful for something as simple as keeping track of vendor contact information, phone numbers and email addresses. Other tools may go as far as to deliver detailed reports on the cost-benefit analysis of certain contracts. They’re also useful for the research phase, as many also offer reviews and ratings on vendors or even offer lists of preferred vendors.

According to Capterra, here are some of the most popular and well-known vendor management software tools:

  • LogicGate Third-Party Risk
  • SAP Fieldglass
  • SecureLink
  • com
  • VendorINSIGHT
  • RizePoint
  • GateKeeper
  • Tradogram
  • Shortlist
  • Zoho Creator
  • Procurify

Salary

The average salary for an IT vendor manager is $125,714 (€111,760) per year, according to data collected by PayScale. Reported salaries range from $51,000 (€45,338) to $146,000 (€129,768) per year, with an average yearly bonus of $15,484 (€13,762).

Certifications

There are certifications you can earn to validate your knowledge with vendor management, including certifications specifically focused on risk assessment, contract management and relationship management.

Available certifications include:

  • Compliance Education Institute: Vendor
    Management Certification (CRVPM)
  • Supplier Relationship Management (SRM)
    Certification Program
  • International Association for Contract &
    Commercial Management (IACCM) Supplier Relationship Management (SRM)
    certification
  • Certified Third Party Risk Professional (CTPRP)
  • Certified Third Party Risk Assessor (CTPRA)
  • Vendor management education and training

There is a wide range of courses available, both online and in person, that you can take to develop or brush up on IT vendor management skills, including:

  • Global Knowledge Vendor Management Training course
  • PM College Vendor Relationship Management course
  • International Associate of Information Technology Asset Managers (IAITAM) Vendor Management Advanced Study course
  • The Training Associates (TTA) Vendor Management training
  • International Computer Negotiations (ICN) IT contracting boot camp
  • International Computer Negotiations (ICN) Cloud contracting course

Sarah K White is a senior writer for CIO.com

IDG News Service

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