As IT grows, it becomes increasingly difficult to handle every aspect of your IT functional activities on your own. Companies outsource IT development and engage in IT managed services to reduce the workload of internal teams so they can focus on their core business.
Working with third-party IT vendors, however, has its own challenges from risk assessment and pricing negotiations, as well as building long-term vendor relationships and optimising cost. For this reason, the process can be complex and time consuming for many companies.
The good news is IT and Finance do not need to rely on spreadsheets and Power BI anymore to analyse vendor spending. They can also optimise their business and finance operations by investing in dedicated software for cost transparency for vendor management. Utilising process automation and enrichment of data across the enterprise provides defensible, spend analysis, along with timely data to apply best practices in manage vendors more effectively.
What is vendor management?
The term vendor management refers to the processes organizations use to manage their vendors or suppliers. In vendor management, vendors are selected, contracts are negotiated, costs are controlled, duplication and risks are reduced, and service quality is ensured.
Managing vendors more effectively in IT
If you are involved in the process of managing vendors in your company you already know it is not a simple task and the process can differ depending on departments such as Procurement, Finance, and IT.
Even when everything is going smoothly, there is a lot to do, from sourcing suppliers to negotiating deals and measuring vendor performance. Companies should develop a consistent and transparent process to handle vendor relations and contracts.
Here are some ideas to start:
1) Implement a clear vendor management policy: the company should have official documentation informing teams, leadership, and board members about vendor management policy, especially related to security concerns. It is important to review and update these policies over time to improve operations, performance, and costs.
2) Choosing the right vendors for your business is crucial: You can consistently increase your company's performance and competitive edge by using vendors that provide high-quality service at an affordable price and follow a set of standards.
3) Manage and nurture vendor relationships in a proactive manner: being transparent and specific about your expectations with vendors can generate bigger returns for both businesses in the long run. A vendor optimization strategy begins with targeting contracted and non-contracted spend so you can invest time and resources in preferred vendors and proactive negotiations.
4) Track and monitor vendor expenditures: taking control over your company’s spend is essential for sustainable growth. Companies that want to scale their IT vendor management processes struggle to manually track vendor spend but is possible to use vendor management solutions like IT Vendor Insights.
5) Evaluate vendor performance: identify relevant KPIs (key performance indicators) for your segment and discover new business opportunities by conducting in-depth reviews together.
Improve vendor management with smart spending and cost transparency
It is clear how complex vendor management can be without efficient teams and systems to support decision making. You can consolidate your IT vendor management processes using automation software such as Yarken Foundation and resources that achieve smarter spend management.
Using one central dashboard, finance teams and IT can understand, track and monitor spend to promote better conversations in the business, drive better results and reduce risk. Promoting cost & vendor transparency as an ‘ordinary’ activity across all business units creates a culture of empowerment among cost centre owners to ensure IT spend provides the value to grow the business.
Yarken Foundation provides an automated Software Service cost transparency platform with an integrated view of your vendor details so you can align your vendor portfolio spend, contract terms and performance to your IT strategy shifting spending from maintenance to growth.
To learn more about Yarken Foundation, visit our website.