Effective Vendor Management through Service Integration and Management

Many organizations work with multiple IT vendors in order to utilize the most sophisticated technology, and reduce the risks associated with relying on a single vendor. With the growth of the cloud service delivery model, cloud service providers who operate on a utility-based pricing model also have to be managed in addition to traditional vendors. It is important to effectively manage these vendors to ensure quality of service, reduce costs, and deliver the returns promised by the business case for multi-sourcing.

Challenges faced in a multi-vendor scenario

In the early days of multi-vendor management, each business unit had its own team for managing vendors through often divergent processes and governance frameworks. This approach resulted in an incomplete view of the IT estate, minimal transparency across business units, and a lack of integration between services. All of this caused operational redundancy, value leakage, and other operational challenges.

In a multi-vendor eco-system, the relationships between different vendors inevitably change over time, driven by the contractual framework, quality of vendor management, and vendor culture.  

Integration of Vendor and Service Management

SIAM drives effective collaboration among vendors. Such simplification is made possible by integrating the key aspects of vendor and service management under the SIAM function. The function is designed in such a way that vendor management is one of the core components of the set-up with the following sub-components built in:

  • Procurement and sourcing: This includes building a business case, sending out a request for proposal (RFP) or request for information (RFI), and finalizing vendors.
  • Contract management: This involves ensuring that the set of vendor contracts collectively remain aligned to business needs and continue to deliver value for money. This includes reviewing service delivery against the scope of work specified in the contract or agreement.
  • Performance management: It is important to monitor and manage vendor performance against agreed SLAs and OLAs, as well as identify and address reasons for non-conformance through one-to-one interviews and joint review forums.
  • Billing and invoicing: The organization should define a billing and invoicing framework based on agreed service and performance levels (penalties, service credit, and so on). The SIAM function will help generate the required bills or invoices to be submitted to organizational departments and support payment to vendors for the services rendered.

Integrating vendor management within the SIAM function will help organizations effectively manage multiple vendors. Organizations will realize business benefits such as standardized contract structures, easier vendor switching, reduced transition costs, and better collaboration among vendors. All this delivers higher, long-lasting business value to the organization.

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