As enterprise organizations continue their charge to cut costs and achieve efficiencies, an oft-pursued strategy is to build relationships with outside vendors that can deliver results in key business areas. But, particularly in a recession, many organizations need a refresher in setting/establishing an IT vendor management strategy.
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In this month's CIO Briefing, find out how to establish an IT vendor management strategy that encompasses vendor management offices, IT outsourcing, vendor contract management and vendor maintenance clauses.
This guide is part of SearchCIO.com's CIO Briefings series, which is designed to give IT leaders strategic guidance and advice that addresses the management and decision-making aspects of timely topics. For a complete list of the topics covered to date, visit the CIO Briefings section.
How to oversee a vendor management program
Some days, in those rare, quiet moments, I think about simplifying my life. I am not talking about selling everything and moving into a tent in the woods. Instead, I think about what I can do to take some of the hectic out of my IT life and eke more meaningful time out of my day, amid all the conference calls, emails, project and process reviews, presentations, new technologies, problem-solving and more.
This past year, I have been actively consolidating my IT service provider relationships. I figured that doing so would allow me to shrink my time in vendor meetings, reduce the number of IT service provider invoices that have to be reviewed and paid, and simplify our problem-resolution process (the "one neck to choke" idea). But I also needed to ensure that my IT service provider consolidation did not increase the already high risks in my IT life. That meant I had to be careful not to increase costs, reduce service levels or miss out on opportunities. As a result, I have taken what I consider a measured, rational approach to IT vendor management and consolidation.
Learn more from our CIO columnist Niel Nickolaisen in "IT service provider consolidation tips: A CIO talks vendor management." Also:
- How to build an IT vendor management office or standards body
Vendor management offices and standards bodies can help large organizations save money on IT purchasing and better manage vendor relations, both critical during a recession.
IT outsourcing and vendor management
During the past year, 50% of 1,073 organizations worldwide saw a sharp uptick in outsourcing contract renegotiations, according to recent research from Gartner Inc. in Stamford, Conn. Many of those contracts were renegotiated in a bid to cut costs because of the recession.
"The recession causes bad behavior on both sides of the coin, the client and the supplier," said Allie Young, research vice president and distinguished analyst in Gartner's technology and service provider group.
This seemed like a good time to look for the warning signs of an outsourcing deal gone bad.
Learn more in "A dozen danger signs that your outsourcing contract is on the rocks." Also:
- What to watch for during negotiations with outsourcing vendors
What are the warning signs that contracts with outsourcing vendors are going bad? How can you mitigate the risks? Outsourcing experts offer advice.
- IT infrastructure outsourcing, multisourcing boosted by ITIL framework
IT infrastructure outsourcing and multisourcing benefit when enterprise and vendor have a strong IT Infrastructure Library framework. Learn how to align IT outsourcing and ITIL.
- CIO's guide to outsourcing application development and management
Application outsourcing will lead enterprise CIO agendas again next year, with IT application development and management services in high demand. Learn more in this guide.
Managing your IT vendor contract
The economic downturn is still providing strong incentive for CIOs to practice vendor contract management -- and there isn't a contract term or condition that isn't immune to some nitpicking: Does the cost-of-living or inflation-rate clause in that outsourcing contract still represent what I should be paying for labor? Does that currency conversion clause need adjusting?
Staffing augmentation labor rates continue to be targets of cost savings for CIOs -- as seen by such questions above.
"CIOs are saying, 'we've looked at our labor contracts, now let's have a closer look at what else we can do with our other vendor contracts or software maintenance contracts,' and are willing to look at it clause by clause, and term by term," said Christine Ferrusi Ross, an analyst at Cambridge, Mass.-based Forrester Research Inc.
Also under way are efforts to consolidate vendor contracts and software licenses across business units to get better pricing and eliminate contract redundancies. In other cases, enterprises are opting to eliminate aspects of their contracts completely.
Learn more in "Vendor contract management key to cutting costs through renegotiation." Also:
- Beware these risks of cloud computing, from no SLAs to vendor lock-in
In their rush to get services on the market, cloud computing providers are leaving quite a few gaps when it comes to contracts and accountability. Here's what to watch out for.
- Software vendor evaluation criteria: Sample scorecards for IT projects
Need a hand in evaluating prospective vendors or managing your current crop? Here's a sampling of software vendor scorecards and requirements to help you create your own.
Vendor maintenance contract management
As many CIOs continue to face budget pressures, some now are slashing a mainstay of the IT budget: vendor maintenance contracts for software and hardware systems.
Hard-pressed to find more places to cut, CIOs increasingly are inclined to take the risks of going off vendor maintenance, or of moving to a cheaper third-party provider, interviews suggest. This is true even for mission-critical systems, even though it means forfeiting their rights to upgrade.
The surprising punch line? For CIOs who do not plan to upgrade a system soon, or carry more licenses than they now need because of layoffs, the gamble might be just the right thing to do.
"Everybody is questioning every maintenance spend, and some of the contracts they're finding they can do without," said Duncan Jones, an analyst at Cambridge, Mass.-based Forrester Research Inc.
Learn more in "CIOs taking risk of cutting vendor maintenance contracts to save money." Also:
- How to cut application maintenance fees without undue risk or hardship
It's tough out there, and maintenance is expensive. These strategies will help you find ways to cut your application maintenance costs with upgrades and services in mind.
- Seven tips for cutting vendor maintenance on business applications
CIOs are cutting vendor maintenance contracts in the face of tight budgets. Locking down your apps before going off maintenance is key. Here are seven steps to take.