TORONTO, Nov. 30, 2022 /PRNewswire/ - As digital transformation continues to be a priority for many IT leaders, effective vendor management has become more critical than ever. To support technology teams navigating shifts in vendor relations, Global IT research and advisory firm Info-Tech Research Group has published a new research advisory note titled What Is Vendor Management? This new research note provides IT professionals an overview of vendor management, its challenges, benefits, and best practices to help organizations develop a practical approach configurable to any situation.
Vendor management has become especially popular in the last five years, despite a history going back more than 25 years. However, the firm's research indicates that although vendor management has evolved over time, its definitions and perceptions are still limited by archaic views.
"Vendor management can mean many different things and is a broad topic," says Steve Jeffery, Principal Research Advisor at Info-Tech Research Group. "Simply put, we define vendor management as a proactive, holistic, and strategic approach to interacting with vendors from onboarding through offboarding."
According to the firm's research, many organizations are unable to implement a robust vendor management office (VMO), as it can be a large-scale and resource-intensive project. The research found that while many IT teams apply some level of vendor management during their vendor interactions, there is a lack of consistency as each team member's processes, interactions, and negotiations can differ.
To help IT teams create a more consistent and efficient approach to vendor management, Info-Tech developed a Five–Towers–of–Excellence framework. Each Tower is comprised of a process that is separate but complementary to the other Towers.
"Vendor management is the unifying foundation for the five main Towers of Excellence," says Phil Bode, Principal Research Advisor at Info-Tech Research Group. "While it is not necessary to incorporate all of the Towers, the more elements and Towers present in a vendor management initiative, the more strategic and impactful it can become."
This concept breaks down vendor management into five sections, or Towers, of excellence, segmented into the following categories:
Risk Management Tower – Historically, cybersecurity has been the risk most organizations have focused on. However, when the pandemic hit, third-party risk management and supply-chain risk, including the availability of parts and human resources, also came to the forefront.
Contract Management Tower – Vendor management includes participating in negotiating the initial contract, amendments and other modifications to the contract, statements of work, and other contract-related documents.
Financial Management Tower – Collecting and understanding historical, current, and projected expenditures is the first step to exploring a vendor ecosystem and establishing the baseline for tracking forecasted and actual savings, cost avoidance, and value-creation activities.
Performance Management Tower – Most organizations have at least one underperforming vendor. Without adequate vendor management, organizations are forced to expend more resources to manage the fallout from inadequate remedies.
Relationship Management Tower – This tower bridges the expanse between the customer, vendor, and the other towers. Relationship management encompasses other topics such as market intelligence, conflict resolution, and vendor alignment with the customer.
According to Info-Tech's research, organizations implementing a vendor management initiative can expect a significant return on investment, more value from their vendor contracts, reduced organizational risk, and improved communication, collaboration, and efficiency.
To learn more about vendor management, download and read Info-Tech's complete What Is Vendor Management? advisory note.
About Info-Tech Research Group
Info-Tech Research Group is one of the world's leading information technology research and advisory firms, proudly serving over 30,000 IT professionals. The company produces unbiased and highly relevant research to help CIOs and IT leaders make strategic, timely, and well-informed decisions. For 25 years, Info-Tech has partnered closely with IT teams to provide them with everything they need, from actionable tools to analyst guidance, ensuring they deliver measurable results for their organizations.
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SOURCE Info-Tech Research Group