Get Ready for the Evolution of Vendor Management

VM needs to advance to cope with the evolving and changing business/IT environment.


Your Challenge

  • The business/IT environment that demands the vendor management (VM) we have today is evolving and changing, thus VM needs to change with it.
  • With more core services being outsourced or hosted in third-party cloud environments, IT is increasingly involved in relationship management, rather than technology management.
  • Those IT departments that are becoming dependent on cloud providers must take VM skills to the next level. Maximizing the performance of your vendors can be the difference between extraordinary success and catastrophic failure.
  • Adopting SaaS solutions changes business operating procedures and makes the organization highly dependent on the solutions. As a result, the SaaS vendor has a stronger position in, and is in complete control of, the relationship – particularly from a pricing perspective. Organizations need to plan adequately to avoid SaaS vendor lock-in.

Our Advice

Critical Insight

  • VM will evolve from the traditional transactional model to become an integral component of IT operations.
  • In the future, VM will be a core component of service management, and the role of vendor manager will converge with that of service manager.
  • VM will become bigger! VM’s scope of responsibilities will expand to include new tasks, while the importance of traditional VM components will increase. Their implementation and integration into IT operations will be critical to the organization’s success.
  • Third-party vendor managers will play a major role in IT service management.
  • Organizations will still need sufficient knowledge of vendor management and sourcing to effectively direct, control, and monitor a third-party VM provider.

Impact and Result

Prepare for the short-term future:

  • Inventory your team’s VM skills, and identify and address gaps by increasing your team’s VM competency.
  • Segment your vendors to prioritize and direct your VM effort.
  • Develop required capabilities to address changing VM goals and priorities.
  • Consider using VM tools and/or supplier networks to improve your VM function.

Prepare for the long-term future:

  • Revisit the vendor segmentation approach and re-segment the vendor portfolio.
  • Rationalize VM tools and systems.
  • Consider using a third-party VM service provider.

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Get to Action

  1. Understand the trends that are shaping the evolution of vendor management

    Prepare for the short-term and long-term needs of the organization’s VM function.

  2. Create a VM capability improvement plan

    Determine the starting point and the action steps needed to improve VM capability.

  3. Establish the fundamentals

    Understand the processes involved in VM.

  4. Build in cloud-proofing

    Set and address new VM goals and priorities.

  5. Pilot third-party VM services

    Measure success of VM providers.

  6. Future-proof VM

    Renew your definition of strategic vendors.

Guided implementation icon Guided Implementation

This guided implementation is a three call advisory process.

  • Call #1: Create a vendor management capability improvement plan

    Self-assess the capability of your vendor management processes and determine the next steps to improve your vendor management function.

  • Call #2: Pilot third-party vendor management services

    Assess your organization’s suitability for third-party vendor management.

  • Call #3: Future-proof vendor management

    Move from vendor management capability level 3 to levels 4 and 5.


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