Is Your Vendor Management Process Keeping Up With Changing Business Models?

CEO of olive technologyI write about leadership and B2B technology.

Effective vendor management enables organizations to control costs, drive service excellence, reduce risk and maximize value from vendors across contracts. Adoption of SaaS cloud applications has empowered strategic IT leaders to consistently evaluate technologies that fit their business.

Those who haven’t consistently evaluated their toolset in the current era will be left behind. Most IT leaders I’ve talked to have no hesitation in telling me that, frankly, they don’t review their tech stack often enough. Mostly because risk reviews are rarely mission-critical, companies often take a “wait until something goes wrong” approach. In an era when everything was hosted on-premises and investing in software changes was a huge undertaking, a “wait and see” makes more sense. Today, it’s like not going to the dentist until your tooth falls out.

The subscription model focuses on continuous innovation by the provider. As such, IT leaders are responsible for keeping their tech stacks in line with their innovations.

Ability to change vendors more easily (Note: more Easy, not easy), combined with a host of excellent best-in-breed point solutions, creates a perfect storm for the growing number of companies leveraging technology.

Just as vendors themselves need to stay ahead of the curve in order to remain relevant, buyers who wait two to three years to review their own tech stacks will inevitably outperform their competitors in terms of innovation. It should be recognized that it will fall behind the

Over the past decade, the economic impact of innovation has skyrocketed, doubling every 18 months, and about 90% of all big data collected in the last six years. These staggering statistics highlight just how important it is for companies to focus on innovation. With today’s startups becoming less expensive to build, building custom systems in-house that require costly internal maintenance is becoming increasingly advantageous over building to third parties to maintain and innovate. is on the rise. Google’s parent company Alphabet’s spending habits help support this. Because even the company’s army of engineers has spent about $27 billion on acquisitions.

It can be difficult to know which vendors are actually creating value, may have additional impact, and which are fully replaceable or even cut. However, you should avoid procrastinating on this task. It can slow things down and possibly kill your business. There are a few simple steps to ensure thorough due diligence while maintaining speed.

First, you need to identify your business goals and figure out which vendors are helping you towards one of those goals. If not, it’s time to assess its effectiveness. The easiest way to find this out is to survey your internal users and vendors. These surveys are preferably stored in a central tool so that the values ​​can be easily adjusted as needed. Once you’ve removed some fat, you’ll probably notice two things.

1. Some existing vendors have overlapping values. Often the larger platforms we use have additional features that we didn’t realize we were paying for even for point solutions.

2. There are specific business goals and use cases that are not currently offered or solved with spreadsheets or manual processes.

The first point is where you can drive some degree of integration. However, it is very likely that you will lose some core, unique functionality for a particular division, so be careful. It is very important to perform a thorough requirements gathering before reducing or replacing a vendor. The second point is the opportunity for new innovation. If you think spreadsheets are the solution, there is often, but not always, an opportunity for growth.

Companies know that they have to keep innovating all the time, and that third-party vendors are a much faster and more cost-effective way to bring this innovation to market, yet as in 1999, many of CIOs and technology leaders are still buying and updating technology? Are old habits lingering, or are they just having a hard time evaluating technology decisions?

To start down this path, you must first change your mindset.

1. You need to get into the habit of consistently being at the top of your tech stack. Treat it like a department. Do you review your marketing results every few years, does he review his performance with the VP of Product just once in three years?You don’t. Software has such a huge impact on businesses today, so why should we treat it differently?

2. Once you understand the concept of a monthly ROI review with your vendor, put it into action. Find a place to store your business needs and identify which vendors solve which needs, just like you do with business KPIs and departments. If multiple vendors are solving the same problem, survey an internal user and he will find the vendor with the highest ROI and isolate the others.

3. Look for technology gaps in the proposed process against your current KPIs. What are the key goals you want to achieve that currently have little or no technology involved in their execution? For example, perhaps your financial forecasts are still on spreadsheets. This is an opportunity for innovation. It’s time to quickly scan the market and find solutions.

Of course, this is easier said than done, but so is staying in shape. Get into the habit of regularly checking the health of your tech stack to stay ahead.

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