September 02, 2019
September 02, 2019
Contributor: Rob van der Meulen
This systematic, three-step approach will help IT vendor management leaders get maximum value from their strategic vendors.
Before you take on a new vendor, stop and consider the impact the relationship will have on your organization — will the vendor will be engaged in your most critical initiatives, systems or business processes? Think beyond scorecards and costs. Do the service and solution strategies align with your architecture and goals? Does the vendor exhibit partnership-like traits?
“Relationships with strategic vendors are increasingly key to business performance, but many IT vendor management leaders struggle to compel their most important vendors to be proactive, collaborative and innovative,” says Joanne Spencer, Gartner Senior Director Analyst. “When managed badly, large strategic vendors can become complacent, slow moving and intractable.”
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IT vendor management leaders can improve the way they manage these relationships by adopting a three-pronged approach focused on overall vendor analysis, vendor performance reviews and vendor action plans for continuous improvements.
Begin by building a holistic picture of the vendor and what it delivers to your organization This entails the identification, collection, aggregation and presentation of the vendor profile, performance and market data. There are many tools that achieve this, but focus on four key ones:
“At this information-gathering stage, it’s vital to ensure the data gathered is reliable,” says Spencer. “Then, when you’re confident with the data and reporting mechanisms, you’re ready to analyze and look for trends that support a discussion with a vendor.”
The second step is to create the governance framework for how the collected data is communicated with the vendor and across the organization’s key stakeholders. Ideally, this is a schedule of review meetings that are agreed upon at the point of procurement or during the onboarding process. Typically, the schedule will contain the following reviews:
Annual executive review to ensure alignment between the vendor and the client’s goals, as well as a time for senior executives on both sides to build trust and share ideas.
“Collecting sufficient information and designing processes to review it closely with the vendor have set the stage for extracting more value from the strategic relationship,” says Spencer. “But this will all be of limited value unless you can also ensure broad commitment from within your organization.”
To help build buy-in from stakeholders, build standard agendas that can be used for each review type consistently across all providers. Then pilot the process with one or two strategic vendors. Use these pilots to evaluate the best timing, deliverables and participants, which may vary between vendors and internal stakeholders.
When the process is refined, expand it across more strategic vendors. A slow expansion will demonstrate the value of the process and help you make time to communicate it to stakeholders, who should be drawn from business, IT and even the vendor side in some cases.
This article has been updated from the original, published on August 21, 2018, to reflect new events, conditions or research.
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Recommended resources for Gartner clients*:
Beyond Vendor Performance Management: Three Steps to Extract More Value From Your Most Strategic Vendor Relationships
*Note that some documents may not be available to all Gartner clients.