IT Vendor Management Best Practices

by Richard Pollina | Aug 23, 2022 | Vendor Management, Accounts Payable

IT vendors are an essential part of IT operations and the lifeblood of your business. If you want to make sure they’re performing at their best, it’s important to have a well-defined vendor management process in place. When companies set out on this journey, they often don’t know where to start.

To help with that process, we’ve come up with 10 best practices for managing IT vendors. Here’s what we recommend:

1. Consider System Maintenance Needs

If your organization is like most, you have many different IT vendors. They might be software providers, service providers, or hardware manufacturers. You probably have many of them because each vendor has a different product offering and, ideally, offers one that best suits your needs. While this is great for improving efficiency and streamlining operations, it can also create headaches when managing these relationships.

You can improve the efficiency of your systems by maintaining them regularly. That’s why it’s important to consider system maintenance needs when evaluating IT vendors. The best and most cost-effective way to ensure that all of your systems are up-to-date is by ensuring that you have an ongoing relationship with each vendor. Don’t just look at their initial product offering as if it was something static.

Another important consideration is whether this vendor will provide ongoing support. If they don’t, you’ll have to find another company that does, which can be expensive and time-consuming. It’s also worth noting that some vendors may not provide much help when making changes or upgrades to their product offerings over time. This means that if something goes wrong with one of your systems, you’ll need outside assistance from an expert who knows how to fix things.

2. Prepare a Service Integration Plan

A Service Integration Plan is a document that describes how your IT vendors will work together to deliver services and products. It also identifies issues you need to be aware of as you transition from one vendor to another and provides a roadmap for how you want them to proceed.

Identifying who should be involved in developing your Service Integration Plan is important because the wrong person can lead you astray with their assumptions or lack of knowledge about IT infrastructure issues. A good starting point is with those with technical expertise (e.g., architects or project managers), as they are most likely to understand the impact changes will have on your overall environment and processes. From there, it’s helpful if they can communicate well as part of an integrated team—a skill that may not come naturally if they’ve been used primarily as individual contributors before this point!

The first step in creating a successful plan is determining what needs improvement so that everyone knows where improvements need to be made (e.g., new features). This can take some time, depending on how long ago these deficiencies were identified. If possible, consider bringing someone onto the team who has experience doing this type of work beforehand so they can help guide others.

3. Use a Centralized Repository to Store Contract Documents

It’s important to store all your contracts in one place. Not only does this make it easy to find the documents, but it also makes them easier to share with other team members.

To be effective, the centralized repository should:

• be secure
• make it easy for users to update documents
• provide a search function that works through all stored items (contracts, SLAs, etc.) and their associated metadata
• support sharing via email or URL link
• allow users to view and print copies of files without leaving the repository platform

By storing your contracts in one place, you’ll get a better grasp of the details of each vendor relationship and how it fits into the overall IT landscape. This is important when considering any changes that could affect your organization’s IT infrastructure.

A centralized repository will also help you avoid duplicate copies of contracts. A separate copy of every new contract, SLA, or customer agreement is created as part of the negotiating process. This can lead to confusion and frustration if a vendor needs a specific contract at any given time.

4. Track Important Vendors in a Company Directory

To manage your IT vendors effectively, you need a good directory of companies. Your directory should include contact information for each vendor and the roles that represent them within your organization. It’s important to keep this information updated.

Once you have your vendor directory in place, use it to keep track of all important vendors. Make sure your team knows who they should contact with questions or if there are problems. This will help them respond quickly when there’s an issue.

In addition to contact information, you may want to include:

• A list of key vendor contacts
• The roles they play within your organization
• How to reach them in case of emergencies

5. Use Templates and Checklists to Standardize Processes

Use templates and checklists to standardize processes.

• Templates are a great way to ensure that the right things are being done, but they can also help ensure that your vendors do the right things. For example, if there’s a template for handling user requests for new access privileges, you can use it as a checklist of sorts to ensure all necessary information is being gathered before allowing access. This will help identify problems early on rather than after they’ve been inadvertently introduced into your system.
• A similar technique applies when evaluating vendors based on their ability to follow processes. If one vendor seems better at following established procedures than another (and both have similar levels of expertise), then chances are good that this particular vendor will perform well in other areas.

If you don’t have the time or resources to create your own templates and checklists, many online resources provide them for free (or very affordable).

6. Document Communication Between Vendors and Clients

Documenting communication between vendors and clients is an important part of vendor management. It can help you establish a central repository for information about your vendors, track their work progress and ensure any issues are resolved.

Here are some best practices for documenting communication:

• Use a centralized repository for all documentation. Keep this repository in a single location so it’s easy to find and update when necessary.
• Keep documentation consistent by having a standardized format that everyone follows when creating new documents or updating existing ones, including:
• The title page with contact details of all parties involved, including names and email addresses
• A description of what the document covers
• An overview of how the eventual outcome will look like (e.g., “We want to buy X amount of products from Vendor Y at this price”)

Use a standardized process for updating documentation. This will help ensure that all team members are on board with any changes to the status quo, and it also ensures that there’s an easy way to roll back these changes if they’re not working out.

Make sure you have a process in place for updating documentation that’s easy to follow and understand. For example, if one vendor goes over budget by $10,000 on their project with you, then this would need to be reflected in your documentation so that everyone knows what happened.

7. Conduct Ongoing Performance Reviews With Vendors

You should conduct a vendor performance review every six months. These reviews allow you to evaluate the quality, cost, reliability, and timeliness of service provided by your vendors. To conduct these reviews effectively:

• Use a structured review form that is specific to each vendor in your IT ecosystem. This will help you compare vendor performance more easily and accurately across different categories of service.
• Use a rating scale to evaluate different aspects of each vendor’s services (e.g., quality of service received). Consider how well they adhere to contractual agreements, such as SLAs. Whether they respond quickly when notified about problems. How long do they take on average to fix issues or deliver new functionality requested by your company? Whether they provide regular updates on project progress.

If a vendor’s performance is falling short, do your best to rectify the situation. If they’re meeting or exceeding expectations, give them an incentive to continue doing so (e.g., by offering a bonus at the end of each year).

In addition to assessing vendor performance, your organization should also consider the cost of service provided. If a vendor’s cost-per-transaction has increased over time, you may need to renegotiate contract terms. Or if they’re providing a higher level of service than what was originally agreed upon (e.g., delivering more features or functionality), you should be willing to pay more.

8. Create a Consistency Scorecard

Consistency plays a large role in the success of your vendor management program. It’s important for you and your team to be on the same page when it comes to defining what consistency looks like, how to measure it, and how best to implement it.

To start, define what you mean by consistency by creating a Consistency Scorecard that outlines who is responsible for each area of the program, how often they will check in on performance (daily or weekly), what criteria they’ll be using, who they need approval from before moving forward with any changes…and so on.

Next up: Measure your vendors’ performance against this scorecard by conducting audits every two weeks or so (depending on how frequently contracts change). If there are issues that need addressing immediately as part of an audit process, communicate them as quickly as possible before moving on to other items on the agenda so that nothing slips through the cracks.

Next, create a process for flagging and dealing with exceptions. Because this can be such a tedious task, it’s recommended you set up an exception reporting system where vendors who find inconsistencies in their contract terms are required to document them on a daily basis—or at least as soon as possible after identifying them.

9. Welcome Feedback From Employees About Outsourced Services

You should welcome feedback from employees who use the services, as well as those who don’ andr category can be especially important, as you may have employees who aren’t using certain services because they aren’t aware of those offerings or how much time is spent on them.

When soliciting feedback, try to make it clear that you’re looking for both positive and negative comments. It’s important to know what people think about all aspects of your vendor management program so that you can improve it over time.

Ensure that all feedback is taken seriously and that employees know it will be used to make changes. When you evaluate IT vendor management best practices, keep in mind that employees should be able to submit their feedback anonymously. This helps prevent concerns about retaliation and fosters a more honest feedback environment.

It may also be worth considering a feedback loop for employees who are using the service. This could help bring to light issues that the vendor or IT department might not have previously identified, and it allows them to easily provide suggestions on how they would like things improved.

10. Track Vendor Performance in the Onboarding Process, Too!

There are several ways you can track vendor performance. You can start by tracking the performance of the first phase of your relationship with the vendor, “onboarding.” After that, you can use your data to improve future vendor selection and management practices.

For example, if you have an established scorecard system for tracking general business metrics like customer satisfaction and net promoter score (NPS), it’s easy to add a new item on whether vendors are meeting or exceeding their commitments during onboarding. This will help ensure that you work with high-performing vendors who deliver on their promises.

Another option is to develop a specific set of criteria for what constitutes good vendor performance during onboarding (e.g., % adherence rate) and then track those metrics over time so they become part of your organization’s standard operating procedure going forward..

Conclusion

Remember, vendor management is a process. By following these best practices and taking the time to implement them, your company can make sure that it’s not just getting great service from its IT vendors but also being proactive about monitoring their performance. This will help protect your business against sudden disruptions or other problems that might arise.

A Complete Guide to Vendor Management

by Richard Pollina | Aug 16, 2022 | Accounts Payable, Vendor Management

If you’ve been in business for any period of time, you know that finding and managing vendors is an integral part of running your company. It can also be a headache if you don’t have systems in place to ensure that your vendors are properly vetted. Luckily, there are plenty of ways to make the process easier on yourself and your team by setting up some policies and procedures for vetting new vendors. In this article, we’ll show you exactly how to set up a vendor management system that will help you keep track of your suppliers and ensure they’re producing high-quality products.

What is vendor management?

Vendor management is a process of identifying, selecting, and managing vendors. It’s one of the most important aspects of supply chain management because it ensures that you aren’t wasting money or time on bad investments—and that your company is getting the best possible value for its business.

Vendor management is also a way to manage your supply chain in general. You want to make sure that all parts of your supply chain are working together smoothly and efficiently (and you don’t want any weak links in your chain).

As such, vendor management is especially important for companies that use vendors. If you’re using multiple vendors (which can be done with a single company), it’s critical to understand how each vendor is doing and whether they are providing value to your business.

Vendor risk management

Vendor risk management is the process of identifying and mitigating risks associated with vendors. This can include suppliers, contractors, partners, and direct vendors. Vendor risk management is an important part of any business, but too often, it gets overlooked or ignored because people don’t know what vendor risk is.

Vendor risk is the risk that a vendor will do something to cause your business harm. This can include failing to deliver products or services on time and within budget, providing inadequate quality, engaging in fraudulent activity (such as embezzlement), or breaching contracts. Considering how much money most companies spend on vendors each year, it’s easy to see why this is an important area of concern for business owners.

Vendor risk management helps you identify and mitigate risk associated with vendors by doing things like:

• Conducting a thorough due diligence process before starting a relationship with a new vendor or supplier
• Reviewing contracts regularly to be sure they are still relevant and up-to-date
• Having clear policies in place for dealing with issues such as payment terms, dispute resolution procedures (including arbitration), confidentiality agreements, etc.
• Conducting regular audits to ensure that you are following all applicable laws and regulations
• Ensuring that your vendor risk management program is well-documented with clear, step-by-step instructions on how it should be implemented
• Documenting key information about each vendor so you know where they’re located, what their products/services are like, etc., in case something goes wrong.

Vendor management policies

Vendor management policies are a set of rules that define the relationship between the company and its vendors. They ensure that the company obtains the best value for money, quality of goods and services, and greater overall efficiency when making purchasing decisions.

The document should provide guidelines on dealing with different types of vendors regarding service levels, adherence to contract terms and conditions, payment schedules, and discounts. The policy should also cover vendor selection criteria such as past performance or whether they have been awarded any quality-related awards by industry bodies (such as ISO accreditation).

The policies are usually created by the company’s procurement department and then reviewed by both Finance and Legal departments to ensure no conflict with existing contracts or legislation. Once approved, they should be distributed to all relevant staff within the organization to understand how it impacts their work practices.

Vendor management plan

A good vendor management plan is one of the most important things to have when managing vendors. It helps you keep track of vendors, saving you time and money by ensuring that each vendor is evaluated before they are hired.

To create a good vendor management plan, first decide what type of vendor your company needs: internal or external, short term or long term, etc. Then create a list of tasks that need to be completed in order to find the right vendor(s) for your company. For example, if an internal employee has no prior experience with this type of task, then he/she should be assigned responsibility for finding someone else who has experience with it (such as contacting his/her previous employer).

Having a good vendor management plan will help keep your business running smoothly and efficiently.

Vendor agreement

A vendor agreement is a legal document that defines the relationship between a buyer and a seller. In this way, it’s similar to other contracts like property contracts or employment agreements but has some unique elements that set it apart from these. For example, in some cases, the person signing on behalf of their company may not have the authority to do so; therefore, it’s important for you to understand how this impacts your ability to enforce its terms against them.

A vendor agreement can include anything from who will be responsible for what tasks (such as building maintenance) to how much money each party will receive in payment or who gets ownership rights once all services have been rendered. It’s important for both sides to understand these agreements before signing them so that there are fewer surprises down the line.

Vendor agreements may also contain clauses about what happens in the event of a dispute or disagreement between parties. For example, if one side decides not to pay for services rendered due to a lack of quality workmanship, there’s probably a clause that states how payment will be handled. In other cases, an arbitration clause may require both parties to find a third-party mediator before going into court over any issues they have with each other – this can prevent costly litigation.

Vendor contract negotiation

The hardest part of negotiating a vendor contract is the initial stages. You want everything you can get, but at the same time, you don’t want to come across as greedy or unreasonable. It’s important to negotiate in good faith and hammer out a deal that works for both parties—no one wants to sign a contract if it’s going to be an uphill battle from the get-go!

Once you’ve secured a good service price and agreed on terms and conditions with your new vendor partner, ensure they’re spelled out clearly in writing. This will help ensure there are no misunderstandings later on when things start getting real serious between y’all (I mean…in business terminology).

The last thing you need to do when negotiating a vendor contract is to make sure that everything has been spelled out. This includes things like the scope of work, payment terms and conditions, dates for delivery or completion, how changes will be managed, and any potential penalties due to delays. The best way to ensure all these clauses are included in your agreement with a new supplier before signing it off as “negotiated” is by getting them drafted up beforehand.

The vendor pre-qualification process

The vendor pre-qualification process is the first step in selecting a company to provide goods or services to your organization. It should be performed prior to selecting any vendor and is an important form of due diligence that can help avoid dealing with incompetent or unethical providers who can cause problems for your business. The following steps should be taken during the vendor pre-qualification process:

• Review information about vendors from past contracts, including:
• Their performance record (quality and timeliness)
• Their ability to execute projects as scheduled
• Conduct interviews with key personnel at each potential contractor’s facility(ies), including the project manager (if applicable) and the quality control manager/supervisor(s).
• Ask them about the company’s history and how long it has been in business.
• Have them describe their business philosophy and past performance on similar projects (if applicable).
• Determine if there are any outstanding legal issues with other clients or suppliers that may negatively affect your company’s relationship with them in the future.

Vetting a potential new vendor

There are several ways to vet potential vendors. Here are some things to look for:

• Check their background. If you’re working with an agency or freelancer, ask for references and check them. Make sure the vendor has a decent track record and some successes under his belt (or hers).
• Get references from previous clients. And make sure you call those clients—don’t just take their word for it! The more satisfied customers you can speak with, the better off you’ll be in terms of knowing what kind of service to expect from your new vendors.
• Check certifications and insurance. The best way to ensure quality work is by ensuring that the worker has been properly certified or trained in the field they’re attempting to enter. This will also help protect both parties involved in any transaction because workers/contractors must meet certain requirements before being allowed access inside another company’s systems (including employees). Insurance is another important factor when considering whether or not one should hire someone new. If something goes wrong during their employment period, both parties would be protected against liability issues (this means less stress than ever before!).
• Go through the credit history. Don’t forget about the credit history of anyone who works for your company. This will help ensure they are financially stable both now and in the future. It’s also a good idea to check their financial stability before hiring them because if something goes wrong during the employment period and they claim bankruptcy, you may need to pay out of pocket for any damages incurred.

Due diligence in vendor evaluation

Due diligence is a process that allows you to acquire information about prospective vendors and their capabilities to make an informed decision regarding the selection of service providers. Due diligence also helps ensure that your organization can work with a particular vendor after it has been chosen, leading to higher customer satisfaction and retention.

Due diligence begins before the vendor evaluation process starts; this helps ensure that all parties involved have access to all relevant information before deciding which vendors should be selected for further testing (or not).

The purpose of due diligence is to provide a solid foundation for vendor selection. It is also an alternative method of evaluating vendors instead of a traditional request for proposal (RFP) process.

There are three steps in due diligence:

• The first step is to determine what information needs to be gathered and assessed. In this stage, you’ll want to identify the different types of information that will help you evaluate vendors thoroughly; this includes financial records for companies, customer references for products or services provided by them, etc. Once you have all of these things figured out, it’s time to create a list.
• The second step is to gather information about each potential vendor. This can be done by conducting interviews with key stakeholders and having them provide all pertinent details on their company’s history, goals, strengths, weaknesses, etc. Once you’ve gathered all of this data, it’s time to review it carefully. Reviewing the information will help point out any red flags that might indicate a potential problem later on.
• The third step is to determine which vendor best fits your needs. You should consider if there are any hidden costs that could make one company more expensive than another, or if there will be any communication issues when working with them. It’s also important to evaluate whether a potential vendor has all of the necessary certifications and licenses required by law.

Vetting vendors

Vetting vendors is a process of determining if a vendor is a good fit for your company. It’s important to vet vendors because it helps you avoid bad vendors that may not be able to deliver on their promises, or worse yet, could cause harm to both your brand and your customers.

The vetting process will typically include questions about the vendor’s background, previous work history, current staffing levels and turnover rate (which can indicate how well the company treats its employees), professional certifications or licenses held by key staff members, and any other information that might lead you down an investigative rabbit hole.

Conclusion

The vendor management process of a company can be quite complex. It involves multiple stakeholders such as IT teams, procurement departments, and marketing executives. Also, vendors play an important role in this process as they offer their services to businesses at reasonable rates. Therefore, it’s essential for every business owner to understand how this process works so that they can effectively manage it without incurring any losses or facing any security breaches.