Vendor Complexity Calls for Excellent Program Management

Over the past decade, there has been a significant rise in corporate reliance on third parties to deliver products or services. The challenges created by the state of the current economy have driven an increase in the number of agreements with offshore alliances, pursuits of SaaS solutions and staff augmentation contracts. These vendor relationships help meet the demands for increased capacity, a greater global presence, and bigger cost savings – but along with the benefits of an expanded enterprise come the associated management challenges. A recent consulting engagement underscored the importance of proper vendor management for me.

Just as the adoption of project management and the PMO has become standard for most progressive organizations, I am seeing an increased appreciation for an effective centralized framework to manage vendors. Considering the amplified dependence many companies now have on contracted resources, it is vital that processes and tools be put in place to establish service, quality, cost, and satisfaction goals. In addition, assistance and governance needs to be provided to support the selecting and managing of third party companies to consistently meet those goals. It is not surprising that we are seeing an increase in the creation of Vendor Management Offices (VMOs) to perform that function. Rather than spread responsibilities for vendor interactions throughout the IT, financial, legal and procurement organizations, the VMO is being established to support the organization centrally.

The successful company of the future not only will have established effective policies and processes for managing the performance and compliance of their internal employee base, but also will have implemented effective frameworks to monitor, measure, and report on performance and compliance of their vendors as well. Your thoughts?