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The IT Vendor Management Challenge
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ITM Vendor Relationship Management |
Vendor relationships have become a critical success factor for CIOs and IT organizations. In today's business climate, with an increased reliance on third-party products and services, it is more important than ever that IT effectively manage its vendors to meet its business objectives. IT must ensure that vendors are meeting commitments and delivering high-quality products and services at the lowest possible cost. The magnitude of vendor spend and its impact on mission critical initiatives dictates that the success of IT as a business is dependent on how well the organization can maximize the value of its vendors, while reducing vendor spend.
According to Meta Group, the typical IT organization in Global 500 companies will have relationships with roughly 800 vendors. In many cases, this number can be much higher. These relationships account for millions of dollars within the IT budget, primarily impacting the cost of sustaining operations. Vendor-related activities and interactions are mostly ad hoc, occurring only when contracts are about to expire or issues are escalated. This reactive, decentralized mode of operation limits IT management's opportunity to fully leverage vendor relationships. The magnitude of vendor spend and its impact on mission critical initiatives dictates that the success of IT as a business is dependent on how well the organization can maximize the value of its vendors, while reducing vendor spend.
The ITM Vendor Relationship Management (VRM) application module focuses on managing the single largest cost in sustaining operations in IT - vendor expenditures. Effectively managing vendor spend allows IT organizations to drive more investments into projects and initiatives that move the business forward. ITM VRM provides a comprehensive, single vendor management system that drives vendor costs down by reducing vendor redundancy, proactively managing vendor obligations, and establishing ongoing vendor performance metrics. VRM provides a framework for vendor management that allows IT organizations to:
- Create Visibility into vendor information
- Select the highest value vendors
- Manage and Measure vendors
- Optimize vendor business impact
ITM VRM is a comprehensive management system that allows IT to create a single source of truth for vendor information. Vendors can be tracked according to basic business classification, number of employees, contacts, agreements, and vendor status. With data in place, VRM enables IT managers to proactively manage vendors. Alerts can be associated with commitments and key milestones such as maintenance contract expiration dates, consistent processes for evaluating vendor performance can be established, and vendor spend can be more effectively managed. VRM can also integrate with other enterprise systems, such as purchasing and accounts payable, to bring valuable IT context to these important data sources.
ITM VRM supports managing the entire vendor relationship life cycle-from initial evaluation and selection to management of ongoing activities, issue management, obligation management, performance score-carding and management, and vendor consolidation.
The ITM Software IT-centric approach brings a deeper IT context to vendor management. As a part of the ITM Business Suite, VRM allows vendor activities to be managed in relation to the ITM Foundation as well as ITM Financial Resource Mangement, ITM Project Portfolio Management, ITM Human Capital Management and ITM Governance and Compliance Management (GCM) application modules. This integration allows IT managers to reveal the full impact of any given vendor on the IT organization. Ultimately, VRM allows IT to create the vendor accountability that is key to maximizing vendor value.
Like all ITM Business Suite modules, ITM VRM is built specifically for the needs of the CIO and the IT organization. Only functions that are important to running an IT shop are included. Unnecessary functionality and complexity required by other organizations will not get in the way of running IT. This all adds up to a solution that can provide a rapid time to value, one that fits existing processes and procedures and has a low training cost that promotes quick adoption.
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