The Keys to Vendor Management – The Make it or Break it Actions for Vendor Management

By Stephen Becker

ITAK V8 I3

An often-overlooked part of being an effective IT asset manager is the role we play in vendor management.  While some IT asset managers are tasked with the vendor management role completely, the majority of us only have an impact role with the formal vendor management team.

First and foremost, if you do not know what a vendor manager does, do not understand vendor management and are unclear about the benefits of developing this role, you are not alone.  Many companies do not dedicate full-time resources to vendor management.  So, what does a vendor manager do?

Vendor management is exactly what it sounds like; managing vendors.  Within this discipline, there are some key things that really make or break vendor management.   Regardless of the extent of responsibility that the IT asset manager has regarding vendors, it is important to understand what makes a vendor manager a success.

 

All about the Dollars

The rubber hits the road with how much you are spending with a vendor year on year.  A good vendor manager will know what the annual spend is and be able to break that down to new purchases, renewals, support, and other costs.  The best scenario is to know what your growth will look like for a given vendor’s products for the upcoming year.  Even a best guess is better than nothing.  Remember not to commit to any specific dollar amount of spending with the vendor unless you are authorized and ready to negotiate deeper to get a volume discount rate.

 

Understanding the Vendor

I think this goes without saying, but you must understand who your vendor is.  Are they the manufacturer, reseller, partner?  Who are you dealing with day to day?  What are their company goals?  What was their revenue for the last year?  You really need to get to know who your vendor is.  It will not only help you in negotiating with them, it will also enhance your relationship more than you can imagine.

 

Know Your Place with the Vendor

You have to know whether you are a large, medium, or small customer of theirs.  This is not to be undermined by how much you spend with them, but it will lead to a better understanding of where you fit in their eyes.  Once you know this information, you can use it to your advantage in negotiations, support issues, etc.

 

Communication

I can’t express how important good, clear ongoing communication is worth when dealing with vendors.  The more you develop a relationship with a vendor, the better your position with them.  You may find yourself getting better discounts, seeing fewer software audits, and working both your company and the vendor into more of a partnership than just a vendor/customer relationship.  Being a single point of contact for a specific vendor is beneficial to both sides.  When questions arise about billing, compliance or any other subject having to do with the vendor, you can facilitate getting answers quicker than if the vendor had to call many different people asking for answers.  An added benefit to being the single point of contact is that you get to stay on top of all dealings with the vendor.  Being “in the loop” on everything will allow you to keep an accurate scorecard on the vendor.

Documentation

You will want to document some key things when it comes to vendor management.  The primary things you want to have are a vendor profile and a vendor scorecard.

 

Vendor Profile:  The vendor profile will help you understand the vendors business position as well as your spending habits with the vendor.  The vendor profile should contain things such as the vendors name, address, phone, fiscal year end date, annual revenue for the last 3-5 years.  You will also want to include your company’s annual spend with the vendor on product and support/maintenance.  You can get a really good look at the vendor from your company’s standpoint when you know all the financials.

 

Vendor Scorecard:  You want to create a scorecard for each major vendor you have.  The scorecard will allow you to rate each vendor from your standpoint.  The items on the scorecard will vary, but there are some basics you will want to include.  Make sure you are collecting responsiveness to sales/support calls, communication frequency, billing issues/concerns, and ask them to review your effectiveness as well.

 

Wrapping Up

At the end of the day, a good vendor manager will have a completely holistic view of the vendor(s) that they manage.  When you understand your vendors, you will be in a better position with each of them when it comes to pricing, road shows and so forth.  Take good care of your vendors and they will take care of you.

About Stephen Becker

Stephen is an IT asset management leader. He is experienced in software and hardware asset management from an analyst role to a leadership role. Stephen has been instrumental in developing an ITAM program from the ground up as well as taking on complex customers in his current role who are inexperienced in ITAM as a whole and bringing them into a steady state in order to bring value to these companies. He has been published many times and currently holds the CITAM, CSAM and CHAMP certifications from IAITAM. His decades spent in IT have helped him gain an overall view of IT as well as specific disciplines that enable him to interact with all levels of employees and management along with executives in a professional and personal manner.