Most organizations today rely on a complex network of third-party vendors and partners to fulfill their business needs. From office suppliers to IT partners to outsourced marketing, it’s clear that no modern business is an island.
While working with vendors enables companies to access new skills and discover unparalleled efficiencies, opening up the enterprise in this way is not without its risks - especially when it comes to data security and compliance.
No organization wants to suffer a data breach or wind up with a compliance fine. The trouble is, when you work with third-parties, you are only as strong as your weakest link. If one of your partners suffers a security incident, you could feel the repercussions. This is why IT vendor management is so important.
IT vendor management enables you to carve out a strategic, intentional approach to procuring and managing third-party vendors. Not only does it help you to improve security, it also helps you to ensure you’ve picked the best systems at the most cost-effective price.
Vendor management is a strategy for managing costs, mitigating security risks and improving relationships when outsourcing work to third-parties. Within the IT arena, vendor management relates to choosing technology solutions and providers that the business needs to run efficiently.
Broadly, the process of vendor management centers around four pillars:
Vendor management has multiple steps and can be considered cyclical. It’s definitely not a once and done job. Effective management takes continual review and refinement. Here’s what that cycle looks like:
Start off by looking at your organization’s requirements. What do you need from your IT vendors and how much can you afford to pay? Keeping an end state in mind will help you to choose vendors wisely.
When you enter into a new business relationship, you want to make sure you’ve chosen the right guys for the job. So, think about your must-haves from the vendors you want to work with. Things like 25/7 availability, a company’s values and location can all be factors.
Next up, draft your bid document, describing what your company needs and including any questions you’d like answers from your candidates.
When you receive back your documents, compare them against your original strategy to make a level-headed, fair decision about which companies to choose.
Once you’ve chosen a vendor that fits your requirements, it’s time to get down to business! This phase is about negotiating the terms of your agreement, considering factors like price, the length of the relationships and other expectations. It’s wise to sort these out from the get go to avoid disagreement later on.
The most successful vendor management strategies occur in organizations that view their vendors as partners rather than providers. You’ll get the most out of a third-party when you communicate regularly, treat them with respect and try to mutually understand each other's organizations. All of these things help to build long-term trust.
While outsourcing IT is undoubtedly the future, many organizations fail to get the full value out of their strategic partners, even with a vendor management strategy in place. Most commonly, this occurs because organizations fail to look at IT outsourcing as more than a help-desk function. In line with this, Deloitte found that 65% of companies fail to measure the value of innovation delivered by their vendors.
To unlock the potential of IT in your organization, you must change your mindset about IT outsourcing. IT support isn’t just about troubleshooting and responding to ticket requests, it’s about unleashing the potential of digital transformation within your company.
Emerging technologies like artificial intelligence, automation, and robotics are revolutionizing business, enabling organizations to unlock new efficiencies, improve productivity and drive revenue. In fact, research from MIT Sloan shows that 92% of companies are achieving returns on their data and AI investments.
It’s clear that organizations need to rethink how they view their IT vendors. We’re not just here to help you make IT work. We’re here to help you use IT to make your business better than ever before.
At Vudu, we are technology wizards who want to bring IT magic to your business and achieve supernatural results.
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