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Tap the Full Potential of Outsourcing with Advanced Vendor Management
By David England, Managing Consultant , Alsbridge, Inc. , Derek Toone, Senior Consultant, Alsbridge, Inc.

Advancing your organization's vendor management practice is essential to tapping the full strategic potential of your outsourcing investment and leveraging continuous improvements in your vendor's process and technology capabilities.

CIOs today are depending on vendors to deliver a larger portion of their IT service portfolio and play a pivotal role in improving corporate IT practices. Because critical business processes are now more tightly coupled with IT services than ever, it's imperative for CIOs to create a core competency for managing vendors and maintaining a productive vendor relationship. An advanced vendor management capability can help an IT organization avoid the risk of being held captive or reliant on any one provider or by paying rates that are not in line with the market.

Today's outsourcing deals are of shorter duration than in years past. At present, deals are typically signed for 3-5 year terms whereas 10-15 year terms were common in the not-so-distant past. Given the need to rapidly and efficiently integrate and leverage a vendor's services into an IT organization, it's important to develop an advanced vendor management capability. Otherwise, an outsourcing buyer never realizes the true value of their investment and is ill-prepared to monitor the market (price, service levels, etc.), renegotiate, or efficiently migrate services to another outsourcing provider without taking a step backwards.

The new directive on outsourcing for CIOs is to look beyond the traditional advantages of labor arbitrage to ensure they leverage their vendors for innovation and sustainable transformational efficiencies. The internal IT organization must become more effective at integrating vendor capabilities and continually aligning them to reinforce changes that enable the business to adjust to dynamics in their economic environment. For CIOs to be successful in this endeavor, it requires advancements in vendor management capabilities, both in terms of leadership and structure.

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