In addition to your other responsibilities as the CIO, you are saddled with the selection of right vendors to match your business’ needs. So your vendor management best practices should focus on various aspects like evaluation, vendor negotiation, good working relationships with vendors, and optimally leveraging them to maximize your return on investment. This extensive guide is a compilation of useful vendor management thumb rules for your management arsenal.
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Once you have evaluated a vendor for your product, it’s time to craft a working relationship. This is essential to ensure that the vendor delivers on his promises. Hence, negotiating on even terms and making the most of the agreed IT promises should form an important part of your vendor management best practices. These five tips should put your relationships with vendors on a good wicket.
Negotiation is the next important part of vendor management best practices. To get the best out of deals, you should have answers to questions like the basics to keep in mind before starting IT vendor discussions, leveraging existing vendor relationships, and utilization of your peer CIO network for IT vendor negotiations. In this tip, we get veteran IT leader Anwer Bagdadi to answer these questions.
Most companies today have a set format followed which includes contracts and goals to be met. As part of your vendor management best practices arsenal, it’s critical that you understand relevant approaches and tools. This two part video interview with a Forrester Research analyst will help you understand the vendor management office’s (VMO) responsibilities, ROI on vendor management, a VMO’s pros and cons, as well as ways in which it can help CIOs meet compliance regulations.
Recession has taught companies an important lesson — that of strengthening bonds with the vendors. With this vendor management best practice, you can justify all technology purchases made in the company. A vendor management office (VMO) to monitor day to day interactions between users and vendors will go a long way on this front. A governance body can be a neat option for companies which can’t justify a full-fledged VMO. This body can oversee purchasing policies and access vendor technologies. This part of our vendor management best practices guide will discuss how you can build a VMO or standards body.
Generally, a user analyses the return of investment (RoI) during the technology planning/sales phase. However, once the decision is made to go with a particular vendor, plans to achieve desired RoI usually go for a toss. In this context, users should demand that vendors define, measure, and improve the quantifiable value of major initiatives. These vendor management best practices should help you maximize RoI in such situations.
When it comes to vendor management best practices that deal with failure of outsourcing deals, experts suggest a two pronged strategy — rigorous evaluation of all outsourced projects and in-house execution of the projects. According to them, outsourcing is necessary only when an organization doesn’t have the facility of time or capabilities. An outsourcing contract can fail in events such as transitions, system growth and other variables which might not be mentioned explicitly in the initial vendor contracts. So vendor management should be made a priority to ensure successful outsourcing relationships. This is the story of a CIO who decided to bring her outsourcing contact back in-house.
Under the new PCI DSS vendor due diligence requirements, your organization’s third party vendors should specify as to when the process operation will start before signing of the contract. As part of vendor management best practices, companies will have to review the vendor’s security program and ask follow up questions. In this tip, our expert discusses provisions of PCI DSS Requirement 12.8, and how optimal vendor management is important for compliance. He also discusses ways in which organizations can reduce risks created by third party vendors.
As the CIO, are you aware about the latest industry trends when it comes to management of vendors? Take the quiz below, after perusing our resources on vendor management best practices to gauge where you stand.