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 a large number of 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, even if the service, price, or features aren’t exactly what the company is looking for.
Benefits of vendor management
Left unmanaged, vendor partnerships can quickly fall behind. However, by establishing a point-person who is focused on managing that vendor relationship a strong dynamic partnership can be formed, and this is one of the main goals and benefits of vendor management.
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 allows 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 in addition to soft skills. IT vendor managers need to be able to understand the intricacies of each technology, process, software or tool that is being outsourced to a third party. However, it’s also a role that requires strong soft skills in order to communicate with vendors and to maintain that relationship.
The responsibilities of an IT vendor manager include anything involved in the process of 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.
According to Job Hero, the most important skills and qualifications for an IT vendor manager include:
- Sales skills to hire vendors and monitor industry trends.
- Interpersonal skills to successfully interact with vendors and the main point of contact for that account.
- Critical thinking skills to determine the best prices, features and products to meet business needs.
- Communication skills to effectively write reports, perform vendor research and to share findings from sales data with other key stakeholders.
- Negotiation skills to renew contracts and to make changes to existing vendor contracts.
- Multi-tasking skills to juggle several vendors and varying product services.
Vendor management office
Companies that work with a wide array of vendors might go as far as to create an IT vendor management office (VMO), which is a department that specifically oversees vendor relationships. This department helps guide the organization through RFP creation to final implementation of the service, and helps IT leaders stay on top of the relationship with regular performance evaluations.
Vendor management tools and software
Vendor management tools and software are available to help organizations manage a large number of vendor relationships. 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, here are some of the most popular and well-known vendor management software tools:
- LogicGate Third-Party Risk
- SAP Fieldglass
- Zoho Creator
IT vendor management salary
The average salary for an IT vendor manager is $125,714 per year, according to data collected by PayScale. Reported salaries range from $51,000 to $146,000 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:
- Compliance Education Institute: Vendor Management Certification (CRVPM)
- Supplier Relationship Management (SRM) Certification Program
- International Association for Contract & Commercial Management (IACCM) Supplier Relationship Management (SRM) certification
- Certified Third Party Risk Professional (CTPRP)
- Certified Third Party Risk Assessor (CTPRA)
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
- PM College Vendor Relationship Management course
- International Associate of Information Technology Asset Managers (IAITAM) Vendor Management Advanced Study course
- The Training Associates (TTA) Vendor Management training
- International Computer Negotiations (ICN) IT contracting boot camp
- International Computer Negfotations (ICN) Cloud contracting course