Collaborate to Win

A set of repeatable processes, documentation and governance at every step of the way is critical.

The quest for effective vendor management is fraught with challenges, some obvious, others not quite so. One such challenge is institutionalising vendor management as a standard practice in the organisation. On the surface, it may not seem like much, in reality however, it is much more difficult to accomplish. But before one talks about how a standard-based practice for vendor management can be implemented in an organisation, it wont be such a bad idea to first establish why it is important to adopt a holistic approach to vendor management and treat it from an end-to-end, lifecycle perspective.

Take a holistic Approach

The single biggest reason why IT managers must try to establish vendor management as a standard practice is because only then can it be sustained over longer periods with tangible business benefits.

Doing vendor management on an ad-hoc basis can result in inconsistencies in terms of the overall existing ecosystem of vendors and service providers that an organisation might have in place. Such inconsistencies can not only result in strained relations with certain vendors over time, but can also lead to relationships which may not necessarily be in the best interest of the IT organisation.

Manish Bahl, Vice President & Country Manager (India) at Forrester Research therefore recommends a more iterative approach that begins and ends with business. More specifically, he advocates a continuous vendor framework approach which can help organisations ensure that they extract maximum business value from their strategic partners.

So how does one actually accomplish this?

Well, the ideal solution can be setting up a formal IT vendor management office (VMO) which can be tasked with the responsibility of ensuring a standardised approach to interacting with vendors. However, seeing as how not all organisations would have the necessary resources to set up a VMO, those entrusted with leading IT ops can put in place certain processes to be followed in every interaction with a vendor, service provider or a third party.

Perhaps, the single most important piece in this puzzle is ensuring a standardised RFP process and putting together a template which ensures a good RFP document. Nilesh Sangoi, Senior Vice President & Chief Technology Officer, Meru Cabs says that as unappealing a process as it might be because of the complexities involved, a good RFP can often be the difference between a long-tern, mutually beneficial relationship and a short term, unyielding contract between IT and a service provider

A good RFP doesnt necessarily have to be extremely long and exhaustive. Basically it should lay down, in clear terms, ITs expectations from the vendor. Also, IT managers need to ensure that the man-hours spent in the RFP process do not go to waste once a contract is signed and sealed. Many organisations tend to forget about the RFP after a while, when in fact, it can be used as a reminder of the commitments made by the vendor at the time of evaluation. It can even be preserved for later usage during vendor performance reviews.

The next key element for institutionalising vendor management is in having a transparent comparison metrics for choosing a product or a service from a certain vendor. Says Ranjeev Tiwari, Senior Manager-IT, at Max Hypermarket India, It is important that transparency is maintained when qualifying vendors and selecting a product or service offering. This can be done by involving business stakeholders and taking their inputs during evaluation stage. One should also do the required amount of industry research so as to identify competitive candidates to zero-in on the best options.

Involving non-IT stakeholders and business functions such as finance and legal also helps the cause in that it structures the conversations better. Collaborating with people from across such business functions can not only help IT garner the support it needs to formalise the process but also put together a more balanced set of deliverables, metrics and SLAs for the vendors in question, adds Tiwari.

A holistic approach to vendor management also mandates a good governance process in place. The scope of this governance shouldnt be restricted to a specific aspect of vendor management rather it should encompass everything starting from assessing internal requirements, drafting RFPs, evaluating and negotiating with vendors, contract signing, to service fulfillment and even performance reviews.

In the absence of a formal VMO, individuals can be identified and tasked with the responsibility of reviewing different aspects at different stages of vendor interactions. By documenting various activities in the entire lifecycle, not only can one increase transparency but also ensure repeatability of processes.

In essence, institutionalising vendor management requires increased collaboration and a set of repeatable processes among functions including legal, finance, procurement, IT, and line-of-business. Start with the people, get processes agreed upon, documented, and formalize governance and you can be on your way!

Nike Air Max 90