Vendor management

In 2008, at the request of a group of companies that had participated in one of our End User Services forums, we began an investigation into two topics they considered most pressing: vendor management and customer experience.

Let’s look at vendor management.

Our vendor management search has involved detailed interviews with 20 companies who have (or had) outsourced support operations. We found that:

  • The trend to outsource End User Services is set to continue, at least amongst our clients
  • But clients with unrealistic expectations have been disappointed by the attitude of their vendors – they have not lived up to their promises to drive operations forward to better performance
  • Our benchmarking studies show no cost advantage amongst those whose service is outsourced
  • Although readily accessible and well documented, best practice in vendor management is not deeply embedded in client organisations. Generally, companies have learnt to manage vendors through their own practical experience.

Companies are extending their outsourcing in End User Services

Vendor management - companies extending outsourcing in End User Services

Our research has shown that those who have the most successful relationships display some common approaches to the vendors:

  • To get a sensible, balanced contract, it is essential to run a good outsourcing process. This is more complex than some imagine, requiring proper programme management
  • Of the many specific practices we identified in contract negotiation, we found that finalising the contract requires an explicit and open trade-off between a number of factors, the most dominant of which is cost
  • In running an outsourced operation, clients must adopt a “tough love” attitude towards their vendors – they must scrutinise vendors closely whilst building strong, wide and trusting relationships at all levels within the vendor
  • h2index has documented the crucial 30 best practices that outsourcing clients must adopt to build successful relationships with their vendors.

Comparison of best practices deployed in operating outsourced contract

vendor management - best practices in operating outsourced contract

How we can help

On this topic, we are continually deepening our knowledge as we work with our global clients. We can conduct reviews of vendor management practices and we can help clients resolve specific challenges that arise in their relationships with vendors.