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Capture and Market the ROI of Your VMO

Quantify the impact and demonstrate the value that your VMO delivers to your organization.

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Contributors

  • George Bordon, Director, Contracts at Spirit AeroSystems
  • Jason Epstein, Head of Procurement, SecureWorks, Inc.
  • Deepak Bansal, CPA, CISSP, COP, Enterprise Head of IT Procurement, Sourcing Advisory & Vendor Management (VMO), Envision Healthcare
  • Pat Campbell, CLU, CPCU, FLMI, Vice President of Strategic Sourcing, Nationwide Insurance (Retired)
  • Donald Hopkins, Interim Director of the Master of Information Systems & Master of Science in Logistics and Supply Chain Management Programs, Wright State University
  • 8 anonymous company contributors

Your Challenge

  • All IT organizations are dependent on their vendors for technology products, services, and solutions to support critical business functions.
  • Measuring the impact of and establishing goals for the vendor management office (VMO) to maximize its effectiveness requires an objective and quantitative approach whenever possible.
  • Sharing the VMO’s impact internally is a balancing act between demonstrating value and self-promotion.

Our Advice

Critical Insight

  • The return on investment (ROI) calculation for your VMO must be customized. The ROI components selected must match your VMO ROI maturity, resources, and roadmap. There is no one-size-fits-all approach to calculating VMO ROI.
  • ROI contributions come from many areas and sources. To maximize the VMO’s ROI, look outside the traditional framework of savings and cost avoidance to vendor-facing interactions and the impact the VMO has on internal departments.

Impact and Result

  • Quantifying the contributions of the VMO takes the guess work out of whether the VMO is performing adequately.
  • Taking a comprehensive approach to measuring the value created by the VMO and the ROI associated with it will help the organization appreciate the importance of the VMO.
  • Establishing goals for the VMO with the help of the executives and key stakeholders ensures that the VMO is supporting the needs of the entire organization.

Research & Tools

Start here – read the Executive Brief

Read our concise Executive Brief to find out why you should calculate and market internally your VMO’s ROI, review Info-Tech’s methodology, and understand the ways we can support you in completing this project.

1. Get organized

Begin the process by identifying your VMO’s ROI maturity level and which calculation components are most appropriate for your situation.

2. Establish baseline

Set measurement baselines and goals for the next measurement cycle.

4. Report results

Report the results to key stakeholders and executives in a way that demonstrates the value added by the VMO to the entire organization.

Guided Implementations

This guided implementation is a seven call advisory process.

Guided Implementation #1 - Get organized

Call #1 - Review VMO ROI maturity level.
Call #2 - Discuss measurement categories selected.

Guided Implementation #2 - Establish baseline

Call #1 - Review data sources and baseline tools.
Call #2 - Discuss ROI goals.

Guided Implementation #3 - Measure and monitor results

Call #1 - Review tools and templates available for calculating and tracking ROI and value creation.

Guided Implementation #4 - Report results

Call #1 - Review measurement and reporting frequencies.
Call #2 - Discuss the attributes of good reports.

Onsite Workshop

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Book Your Workshop

Onsite workshops offer an easy way to accelerate your project. If you are unable to do the project yourself, and a Guided Implementation isn't enough, we offer low-cost onsite delivery of our project workshops. We take you through every phase of your project and ensure that you have a roadmap in place to complete your project successfully.

Module 1: Get Organized

The Purpose

  • Determine how you will measure the VMO’s ROI.

Key Benefits Achieved

  • Focus your measurement on the appropriate activities.

Activities

Outputs

1.1

Determine your VMO’s maturity level and identify applicable ROI measurement categories.

  • VMO ROI maturity level and first step of customizing the ROI formula components.
1.2

Review and select the appropriate ROI formula components for each applicable measurement category.

  • Second and final step of customizing the ROI formula components…what will actually be measured.
1.3

Compile a list of potential data sources, evaluate the viability of each data source selected, and assign data collection and analysis responsibilities.

  • Viable data sources and assignments for team members.
1.4

Communicate progress and proposed ROI formula components to executives and key stakeholders for feedback and/or approval/alignment.

  • A progress report for key stakeholders and executives.

Module 2: Establish Baseline

The Purpose

  • Set baselines to measure created value against.

Key Benefits Achieved

  • ROI contributions cannot be objectively measured without baselines.

Activities

Outputs

2.1

Gather baseline data.

  • Data to use for calculating baselines.
2.2

Calculate/set baselines.

  • Baselines for measuring ROI contributions.
2.3

Set SMART goals.

  • Value creation goals for the next measurement cycle.
2.4

Communicate progress and proposed ROI formula components to executives and key stakeholders for feedback and/or approval/alignment.

  • An updated progress report for key stakeholders and executives.

Module 3: Measure and Monitor Results

The Purpose

  • Calculate the VMO’s ROI.

Key Benefits Achieved

  • An understanding of whether the VMO is paying for itself.

Activities

Outputs

3.1

Assemble the data and calculate the VMO’s ROI.

  • The VMO’s ROI expressed in terms of how many times it pays for itself (e.g. 1X, 3X, 5X).
3.2

Organize the data for the reporting step.

  • Determine which supporting data will be reported.

Module 4: Report Results

The Purpose

  • Report results to stakeholders.

Key Benefits Achieved

  • Stakeholders understand the value of the VMO.

Activities

Outputs

4.1

Create a reporting template.

  • A template for reporting ROI and supporting data.
4.2

Determine reporting frequency.

  • A decision about quarterly or annual reports.
4.3

Decide how the reports will be distributed or presented.

  • A decision regarding email, video, and in-person presentation of the ROI reports.
4.4

Send out a draft report and update based on feedback.

  • Final ROI reports.

Member Testimonials

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After each Info-Tech experience, we ask our members to quantify the real time savings, monetary impact, and project improvements our research helped them achieve. See our top member experiences for this Blueprint, and what our clients have to say.

Client

Experience

Impact

$ Saved

Days Saved

Statistics New Zealand

Guided Implementation

6/10

$2,647

N/A