Recently, a number of companies have endured high-profile outsourcing failures in service delivery, project execution, and realization of the expected value. These incidents have opened eyes to how business in moving into a decentralization of technology purchasing, and increased complexity in vendor pricing and licensing. Vendor management has gained prominence in the recognition that vendors need to be managed through the whole processes, not just at the end.
Within the procurement processes, there are three different departments that must represent a strong front to the vendor. This can be a challenge since the three departments have different sets of skills, methods, and processes. This is were a VMO steps in, facilitating contracts across the three departments and improving vendor relationships.
No wonder more enterprises are looking at establishing a VMO to help IT sourcing and make it more effective. A VMO get's more value out of existing suppliers and lowers overall costs via better rate negotiations and demanding consolidation.
A VMO's effectiveness depends on the ability to follow eight guiding principles:
1. Manage VMO as a business with in a business
2. Leverage consolidated purchasing power
3. Continuously manage contractual relationships with suppliers
4. Treat suppliers as an extension of internal resources
5. Use the minimum numbers of suppliers possible
6. Select the highest valued supplier; not the lowest purchasing price
7. Negotiate win/win deals with all suppliers that balance risk, speed, and performance
8. Actively monitor, manage, and improve supplier performance
A VMO can be a valued to asset to your IT procurement team.Lastly, it transforms IT sourcing from a reactive function into an advisory function that facilitates the attainment of business and IT goals through strong supplier relationship management.
Within the procurement processes, there are three different departments that must represent a strong front to the vendor. This can be a challenge since the three departments have different sets of skills, methods, and processes. This is were a VMO steps in, facilitating contracts across the three departments and improving vendor relationships.
No wonder more enterprises are looking at establishing a VMO to help IT sourcing and make it more effective. A VMO get's more value out of existing suppliers and lowers overall costs via better rate negotiations and demanding consolidation.
A VMO's effectiveness depends on the ability to follow eight guiding principles:
1. Manage VMO as a business with in a business
2. Leverage consolidated purchasing power
3. Continuously manage contractual relationships with suppliers
4. Treat suppliers as an extension of internal resources
5. Use the minimum numbers of suppliers possible
6. Select the highest valued supplier; not the lowest purchasing price
7. Negotiate win/win deals with all suppliers that balance risk, speed, and performance
8. Actively monitor, manage, and improve supplier performance
A VMO can be a valued to asset to your IT procurement team.Lastly, it transforms IT sourcing from a reactive function into an advisory function that facilitates the attainment of business and IT goals through strong supplier relationship management.
About the Author:
Joseph B. Kappernick specializes in helping Fortune 500 companies save money. He recommends that you visit NPI to learn more about IT expense reduction consulting
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