What is vendor management?
Vendor management helps organizations take third-party vendor relationships from a passive business transaction to a proactive collaborative partnership. While working with IT vendors can help ease the burden on IT, it also raises concerns, especially around data, risk, and security. A sound IT vendor management strategy can help organizations determine which vendor best fits the company’s needs while keeping in mind relevant features, price, availability, risk and security, and compliance regulations.
As most organizations rely on multiple third-party vendors, complexities compound and juggling many vendor relationships can quickly overwhelm an already-busy IT department. Plus, to ensure the best service, businesses should avoid falling into a trap where they stick with current vendors out of ease and convenience, especially if the service, price, or features aren’t exactly what the company is looking for.
Instead, establishing a dedicated vendor management practice can help keep your organization and your vendors on task after the initial contract is signed, and help establish processes for continually evaluating vendor performance to ensure the relationship remains beneficial. Building strong relationships with vendors creates loyalty and reliability in the supply chain, and can help companies ensure they are delivering the best products and services possible.
Benefits of vendor management
Left unmanaged, vendor partnerships can quickly fall behind. But by establishing a point-person who is focused on managing that vendor relationship, a strong dynamic partnership can be formed. Building that relationship and foundation is one of the main goals and benefits of vendor management. Establishing and maintaining vendor management best practices can help save the company money, time, and resources.
Other benefits of an effective vendor management process include the following:
- Creating more choices for your organization and finding better choices to create a vendor strategy that best suits the company’s budget and needs.
- Choosing between multiple vendors can create bidding wars, giving your company better rates and prices.
- Building stronger relationships with vendors will improve collaboration and communication when implementing technology or outsourcing resources.
- Vendor management can better support IT governance, helping organizations keep a close eye on compliance and risk management.
- With a strong vendor relationship, businesses can quickly identify any vendor issues before they become a bigger problem.
- Vendor management enables your organization to remain proactive instead of reactive by staying on top of vendor performance and efficiency.
Vendor management skills and responsibilities
Successful IT vendor management requires a solid base of technical knowledge. IT vendor managers must understand the intricacies of each technology, process, software, or tool outsourced to a third party. But it’s also a role that requires strong soft skills to communicate with vendors and to maintain those relationships.
The role of vendor management will vary by organization, depending on what products and services it creates. But for every company, vendor management requires researching, communicating with, and deciding on a specific vendor to meet organizational needs. You may have to renegotiate contracts, find the best deals, deliver comparisons between products to executive leadership, manage long-term relationships with vendor contacts, and keep an eye on how relationships evolve.
While the role of vendor management might fall under the realm of IT managers or IT operations managers, companies that work with a wide array of vendors often take the extra step to create an IT vendor management office (VMO) to oversee all vendor relationships. This department helps guide the organization through RFP creation to final implementation and helps IT leaders stay on top of vendor relationships with regular performance evaluations.
Some companies might not need an entire department for vendor management, but still want a dedicated internal role for vendor management. By hiring one or two people solely focused on managing vendor relationships, companies can ensure they’re getting the best deals, working with the right vendors, and staying on top of the latest technology. It also prevents vendor management from falling to the wayside, allowing contracts to expire or relationships to fizzle out.
Vendor management software
Vendor management tools and software are available to help organizations manage many vendor relationships at once. These tools can help IT leaders and vendor managers keep notes on different products, costs, services, and contract details.
IT vendor management tools and software can be useful for something as simple as keeping track of vendor contact information, phone numbers, and email addresses. Other tools may go as far as to deliver detailed reports on the cost-benefit analysis of certain contracts. They’re also useful for the research phase, as many also offer reviews and ratings on vendors or even offer lists of preferred vendors.
According to Capterra, the most popular and well-known vendor management software tools include:
- A1 Tracker
- C1Risk
- Contractor Compliance
- Digital Purchase Order
- Gatekeeper
- OurRecords
- PayEm
- Precoro
- Promena e-Sourcing
- ProcurementExpress.com
- Proqura
- SimpleVMS
- Tandem Software
- Tikkit
- Torii
Vendor management job description
Vendor management jobs include roles such as IT vendor manager, recruiting vendor manager, IT project manager, IT technical project manager, and vendor business relationship owner, among others. Vendor management is also a skillset often required for roles such as IT manager and IT operations manager.
While the job description for vendor management roles will vary depending on the role and company, there are some general expectations you can prepare for. Vendor management jobs typically require the following:
- Researching vendors and managing vendor relationships
- Negotiation and communication skills
- Ability to work with external partners and suppliers
- Understanding of how to align service delivery needs with business goals
- A willingness to work against KPIs
- Ability to change or develop new processes for managing vendors
- Executing contracts and navigating contract renewals
- Maintaining compliance on terms and conditions
Vendor management salary
The average salary for an IT vendor manager is $130,183 per year, according to data collected by PayScale. Reported salaries range from $51,000 to $147,000 per year, with an average yearly bonus of $15,484.
Vendor management certifications
There are certifications you can earn to validate your knowledge with vendor management, including certifications specifically focused on risk assessment, contract management, and relationship management.
Available certifications include:
- Certified Third Party Risk Assessor (CTPRA)
- Certified Third Party Risk Professional (CTPRP)
- Compliance Education Institute: Vendor Management Certification (CRVPM)
- International Association for Contract & Commercial Management (IACCM) Supplier Relationship Management (SRM) certification
- Supplier Relationship Management (SRM) Certification Program
Vendor management education and training
There is a wide range of courses available, both online and in person, that you can take to develop or brush up on IT vendor management skills, including:
- Global Knowledge Vendor Management Training course
- International Associate of Information Technology Asset Managers (IAITAM) Vendor Management Advanced Study course
- International Computer Negotiations (ICN) Cloud contracting course
- International Computer Negotiations (ICN) IT contracting boot camp
- PM College Vendor Relationship Management course
- The Training Associates (TTA) Vendor Management training
