Why a dedicated VMO team should run the resource tracking – By Nikhil Pundlik

Our recent study has told us that in many enterprises across the globe, the CIO has assumed the sole responsibility for managing IT vendors. As a CIO , does not generally have the time to deal with day-to-day vendor management activities, the reality is that work gets delegated to individual departments, technology platform owners and project managers – who in turn co-ordinate with the administration and the legal staff along with the procurement team to initiate and then complete the sourcing contracts.

What this has resulted into is a lack of central database for sourcing / procurement needs.  A lot of the Project Managers & Tower / Technology platform owners tend to treat sourcing as they would “buy toilet paper from a super market”. Sourcing should be a centralized strategic approach – but individuals running it at different levels takes away a lot of control – not only over just prices and contracts ( thereby increasing maverick spend) but also over governance & overall relationship.

In my experience, I have seen how a dedicated VMO team can mitigate all these risks and reap benefits – not only for the clients, but also for the vendors. A VMO team can run a lot of vendor management operations for the Client – but one important function that needs to be run solely by the VMO team is Resource Tracking.

When VMO starts owning the resource tracking process – that means that the project managers, individual departments and technology platform owners are going through the VMO team to place their resource requests. The most important benefits of this are

• There is now a centralized repository for all contracts & resource requests issued
• The Legal & the Admin team can maintain templates – which the VMO can then use to standardize the process even further
• Reports can be sent out to the respective Project Managers, when their resources on-board are nearing their contract end dates – so the project managers can in-turn churn out extension requests. This not only gives the projects managers visibility, but also gives the Vendors sufficient lead times – reducing the time-to-fill cycles.
• Reports can be sent out the Admin team – when a resource is going to onboard so that all the admin activities (like providing a machine to the user, allocating a seat, creating his windows logon / email ids, providing access rights, issuing RFIDs etc )  being well in advance – such that the resource gets productive from day one.
• There have been instances when a resource gets onboarded without valid paperwork signed. Sometimes , this gets delayed so much that the resource eventually offboard and all is forgotten – until the billing /audit arrives when the project managers are unable to find valid singed SOWs to justify the billing / spending. With a  dedicated VMO team in place, they run a check on all resources once a week – and publish reports to various stake holders – making them aware of any such abnormalities so they can initiate the process of getting the paperwork signed off in time.
• A centralized database means we have a list of vendors and resource names – along with their skill sets. This can reduce maverick spends by strategically partnering with a preferred vendor  to get the best rates – once they know  that there is enough demand for “economies of scale” and we know that we don’t need to look for niche vendors if a preferred vendor has most skills to match.
• Any information required for the top-level management – like number of resources engaged, splits by vendor / onsite and offshore – and any such splices and dices of data are readily available at a press of a button.
• Once all the contracts start going through he VMO , the VMO can then route the contracts based on the contract value – For example, all contracts upwards of $100,000 would be routed to the CIO for signature , and all between $50,000 & $100,000  would be routed to the Senior Directors / VPs and so on and so forth.
• A Centralized database means a centralized rate card. The project managers can then query this single database to find out different vendors that provide the requested skill set, and can choose among the best rates.
• It also helps in determining what resource requests have been places which had been budgeted for in the Annual Operating Plan – and which resource requests have been ad-hoc. That gives a good measure for the signing authorities to accept or reject such ad-hoc resource requests – based on the urgency and the contract value.

There are much more benefits of having a VMO team run the resource tracking process – some tangible, some intangible.

I would really like to know your thoughts on the same. Please contact me at – nikhil.p@spluspl.com

By Nikhil Pundlik

(A Sourcing Guru since Mar 2008)

Vendor Management Office – By Nikhil Pundlik

Need for Vendor Management Program

As more and more of our IT applications development / infrastructure is outsourced to various vendors, We need to realize the importance of a formal vendor management program. A tool which can help us to measure the performance and efficiency of various vendors is absolutely necessary if we desire to manage out outsourcing relationships successfully. Setting up a Strategic Vendor Management program helps us to clearly define and understand the relationships we have with our vendors so that we know how to measure, and in turn, optimize various specifics of the engagements. The foundation of any new vendor management processes always starts with defining metrics (measuring points/areas) and then accumulating various vendor data to set up those measures and metrics.

A Legacy Vendor management system.

Instead of a web-based vendor management system, many organizations use non-web based manual VMO systems. However as the number of relationships and vendors increase, handling data gets very tough as information regarding vendors was gets very fragmented.  It resides in file cabinets, Excel spreadsheets, Word documents, Access databases, etc.  There is no consistency in the way the information is stored and it becomes a challenge to extract information about vendors when required. The process of managing a vendor relationship is not clear as role and responsibilities are not understood and the information required of vendors to effectively manage the relationship is not known.

What are the advantages/benefits in moving to the web-based app?

The web-based application completely redefines the way we view vendor management.  With the system, we are able to combine all vendors, contracts, software, and services into one database and build logical relationships between them.  Since vendor management is a distributed function in most organizations, it was critical that the system should be understood and used by individuals throughout various business lines.  The web-based application’s ease of use simplifies the process of tracking vendor information and managing on-going vendor activities such as contract expirations, watch lists, and vendor reviews.

Does the web-based Vendor Management application help with presenting information to the auditors/regulators?

In most cases, Regulators place a very high level of importance on an organization’s ability to display that vendors are being managed effectively.  The web-based application is the tracking system for all vendor information.  With the system, we can easily communicate to auditors and regulators the risk of each vendor and the due diligence activities performed.  The reports we generate using the system allows the organizations to quickly respond to audits and examinations and provide comprehensive and current information in a usable format.

Who can use the application and how often?

The application can be used by a number of employees depending on the rights of usage given to each employee.  It is originally employed as an organizational priority with senior level management support.  The system provides the organization with a holistic view of the documentation and activities surrounding vendors, contracts, software, and services.  Vendor management is an on-going process that requires a methodical and diligent approach.  The organization can use the system as frequently as on a daily basis or depending on how the data is gathered from different vendors  to manage and maintain a successful vendor management relationships.

By Nikhil Pundlik

(Sourcing Guru since Mar 2008)