A recent report from
Alsbridge, Inc. shows 40 – 70 percent of the original business case for outsourcing can be lost, not because the vendor is unable to deliver on their part of the relationship, but because the client organization is unable to effectively transition information technology, align outsourced processes and then establish a governance structure for managing the vendor relationship.
“Vendor management is the nerve center for optimizing the value exchange between you and your provider(s),” said
Ben Trowbridge, CEO of Alsbridge. “Once the contract has been negotiated and signed, the challenging work of making the deal operational takes center stage.”
According to the
report, Alsbridge believes governance is the key to successful sourcing and a well-executed vendor management office (VMO) is the key to good governance.
“Our experience demonstrates emphatically that a good VMO can tame the governance beast and transform your relationship into a thing of beauty,” Trowbridge said.
The report provides tips and best practices for setting up a successful VMO such as:
- Set up a governance structure that eliminates complexity and focuses on provider interactions that drive measures of progress through documentation of governance processes
- Establish a table of authorities, follow this with documentation of contractual processes, and work through the touch points with your provider by testing hand-offs with use cases to determine where they are broken and where the baton is being dropped
- Resolve issues by fixing the process, documentation and tools that define the interaction
- Align the compensation of the VMO leadership with specific contractual results and recognize/reward the softer side of relationship management
- Provide training in vendor management and assist those in the VMO to acquire and develop the competencies for effective governance
- Be patient - Providers will be suspicious of your intentions and feel they are giving up control when in fact they are improving the possibility of joint accountability for control and program success
Click
here to access the full report.
About Alsbridge Inc.Alsbridge provides world class sourcing advisory and benchmarking services for IT, finance and sourcing executives. With over 150 consultants located globally, we’ve helped hundreds of companies reduce costs and get more value from their vendors. Our experienced consultants leverage proprietary tools and information databases to identify and engage the optimal vendors for your situation, negotiate best practice terms at fair market prices, and improve the way you work with your vendors. Alsbridge clients utilize the most cost effective and value added sources globally for IT infrastructure services, hardware and maintenance, network services, software and maintenance, application support and development, business processes and cloud services. Our commitment to delivering value to our clients has made Alsbridge a distinguished member of the 2010 Inc. 500 fastest growing privately held companies in America.
