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.
The VMO has to be able to work in three different departments, that have different skills, methods, and processes, and make them function as one in the procurement processes. The facilitation of contracts through these different groups helps vendor relationships, both in the organizational and strategic levels. The "oneness" can only be established if the right players are at the table at the conception of the bill, with the promise to see it all the way through the end.
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.
The VMO has to be able to work in three different departments, that have different skills, methods, and processes, and make them function as one in the procurement processes. The facilitation of contracts through these different groups helps vendor relationships, both in the organizational and strategic levels. The "oneness" can only be established if the right players are at the table at the conception of the bill, with the promise to see it all the way through the end.
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 management solution
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