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Manage Vendor Performance

Manage Vendor Performance

In order to deliver excellent service to the organization, IT must ensure that the services delivered by key vendors are of adequate quality and meet time commitments. Achieving a high level of service or product delivery from vendors generally requires three components: establishing a set of performance targets with the vendor, measuring performance against these targets, and promptly addressing issues and gaps between the actual and the target performance.

Manage Vendor Performance has three steps:

Establish Performance Measurement Process.
Evaluate and Improve Performance.
Renew, Renegotiate or Terminate Contract.

When you have completed the first two steps, you will have a solid basis for ensuring that the vendor is meeting their obligations and that any issues are resolved in a timely manner. The third step will ensure that the organization maintains contracts only with vendors that deliver to agreed standards.

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Steps		Tools	Related Research
Step 1: Establish Performance Measures Process A process should be in place to measure and review vendor performance regularly relative to service-level targets. Either the vendor or the customer may provide the measurements. The individual responsible for ensuring proper vendor service should raise major issues with the vendor and track their resolution. There should be an escalation process if issues are not resolved in a timely manner. Info-Tech Tip: Avoid setting too many performance metrics. Focus on a few metrics that are real indicators of performance. Too many metrics can be confusing. Info-Tech Tip: Avoid targets to which the vendor is unwilling to commit. You will very likely be disappointed.
	1.1 Establish Vendor Management Responsibility The Key Vendor List is OptimizeIT’s tool for keeping track of key vendor relationships. Use it to document all vendors providing products and services to IT, and the individual responsible for maintaining each vendor relationship. The Vendor File tool is a more in-depth repository of information about a single vendor, services provided, targets established, and the performance review process. It is appropriate for vendor relationships that are significant for the enterprise.	Key Vendor List Vendor File
	1.2 Establish the Performance Review Process There are three OptimizeIT tools to support Performance Review. The Performance Metrics Guide suggests the types of targets and measurements that are appropriate for various types of vendor services. Record the vendor’s performance to targets by using the Performance Metrics Tracking Document. In addition, use the Escalation List template to identify who to call if issues take too long to resolve. The performance review process is an advanced activity that is recommended when a vendor relationship is significant for the buyer and also for the vendor.	Performance Metrics Guide Performance Metrics Tracking Document Escalation List Template	Five Steps to Guarantee That Suppliers Deliver the Goods
Step 2: Evaluate and Improve Performance Contracts or service-level agreements do not cover all situations. The vendor manager should identify all issues promptly to the vendor, whether there is a contractual commitment or not. Info-Tech Tip: Vendors will allocate better resources to those clients that have a disciplined performance review process. The result is better service.
	2.1 Maintain a Record of All Issues and Manage Their Resolution Use OptimizeIT’s Issue Log template to record major issues and to track their resolution. Active issue management is a major contributor to good service achievement. Use the Issue Log for all services and products where service quality or timing is important and there are real performance risks.	Issue Log Template	Five Steps to Guarantee That Suppliers Deliver the Goods
Step 3: Renew, Renegotiate or Terminate Contract Contracts, by their nature, have finite lifetimes. They can conclude successfully when the job completes. The customer can terminate a contract prematurely if service fails to meet expectations. The customer can renew the contract when it expires or look to an alternative solution at that time. In any case, an accurate and complete record of the vendor’s performance is an essential component of the decision-making process. Info-Tech Tip: Do not let contracts automatically renew. If the service from the vendor meets or exceeds targets, determine whether the organization should renegotiate the pricing for the contract. Remember that many IT costs decrease over time.
	3.1 Establish Process and Responsibility for Checkpoint Review and Decision Making Establish a Contract Management Policy, using the template in OptimizeIT. The organization will make better decisions as to what to do before contracts expire or automatically renew.	Contract Management Policy
	3.2 Manage Ongoing Contractual Obligations and Renewals with Vendors Use OptimizeIT’s Contract Management Tool to track location, status, and expiry dates of ongoing contracts. The tool provides advance warning of checkpoint dates for timely contract renewal decisions.	Contract Management Tool	Contract Management Adds Value to Enterprise Suites Maximizing Returns from Contract Management

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Steps		Tools	Related Research
Step 1: FastTrack Manage Vendor Performance This FastTrack Tool is a simpler, less rigorous approach to completing the program. Nonetheless, FastTrack addresses the fundamental elements of the program and is expected to support your efforts to improve the IT function. FastTrack is intended for organizations who have reasonable, simple and straightforward IT environments. Because it is simpler, FastTrack is an accelerated program, designed to be completed in a short period of time.
	1.1 FastTrack Activity	Manage Vendor Performance FastTrack