Capture and Market the ROI of Your VMO
- All IT organizations are dependent on their vendors for technology products, services, and solutions to support critical business functions.
- Measuring the impact of and establishing goals for the vendor management office (VMO) to maximize its effectiveness requires an objective and quantitative approach whenever possible.
- Sharing the VMO’s impact internally is a balancing act between demonstrating value and self-promotion.
Our Advice
Critical Insight
- The return on investment (ROI) calculation for your VMO must be customized. The ROI components selected must match your VMO ROI maturity, resources, and roadmap. There is no one-size-fits-all approach to calculating VMO ROI.
- ROI contributions come from many areas and sources. To maximize the VMO’s ROI, look outside the traditional framework of savings and cost avoidance to vendor-facing interactions and the impact the VMO has on internal departments.
Impact and Result
- Quantifying the contributions of the VMO takes the guess work out of whether the VMO is performing adequately.
- Taking a comprehensive approach to measuring the value created by the VMO and the ROI associated with it will help the organization appreciate the importance of the VMO.
- Establishing goals for the VMO with the help of the executives and key stakeholders ensures that the VMO is supporting the needs of the entire organization.
Capture and Market the ROI of Your VMO Research & Tools
Start here – read the Executive Brief
Read our concise Executive Brief to find out why you should calculate and market internally your VMO’s ROI, review Info-Tech’s methodology, and understand the ways we can support you in completing this project.Besides the small introduction, subscribers and consulting clients within this management domain have access to:
- Capture and Market the ROI of the VMO – Phases 1-4
1. Get organized
Begin the process by identifying your VMO’s ROI maturity level and which calculation components are most appropriate for your situation.
- Capture and Market the ROI of the VMO – Phase 1: Get Organized
- VMO ROI Maturity Assessment Tool
- VMO ROI Calculator and Tracker
- VMO ROI Data Source Inventory and Evaluation Tool
- VMO ROI Summary Template
2. Establish baseline
Set measurement baselines and goals for the next measurement cycle.
- Capture and Market the ROI of the VMO – Phase 2: Establish Baseline
- VMO ROI Baseline and Goals Tool
3. Measure and monitor results
Measure the VMO's ROI and value created by the VMO’s efforts and the overall internal satisfaction with the VMO.
- Capture and Market the ROI of the VMO – Phase 3: Measure and Monitor Results
- RFP Cost Estimator
- Improvements in Working Capital Estimator
- Risk Estimator
- General Process Cost Estimator and Delta Estimator
- VMO Internal Client Satisfaction Survey
- Vendor Security Questionnaire
- Value Creation Worksheet
- Deal Summary Report Template
4. Report results
Report the results to key stakeholders and executives in a way that demonstrates the value added by the VMO to the entire organization.
- Capture and Market the ROI of the VMO – Phase 4: Report Results
- Internal Business Review Agenda Template
- IT Spend Analytics
- VMO ROI Reporting Worksheet
- VMO ROI Stakeholder Report Template
Workshop: Capture and Market the ROI of Your VMO
Workshops offer an easy way to accelerate your project. If you are unable to do the project yourself, and a Guided Implementation isn't enough, we offer low-cost delivery of our project workshops. We take you through every phase of your project and ensure that you have a roadmap in place to complete your project successfully.
1 Get Organized
The Purpose
Determine how you will measure the VMO’s ROI.
Key Benefits Achieved
Focus your measurement on the appropriate activities.
Activities
1.1 Determine your VMO’s maturity level and identify applicable ROI measurement categories.
1.2 Review and select the appropriate ROI formula components for each applicable measurement category.
1.3 Compile a list of potential data sources, evaluate the viability of each data source selected, and assign data collection and analysis responsibilities.
1.4 Communicate progress and proposed ROI formula components to executives and key stakeholders for feedback and/or approval/alignment.
Outputs
VMO ROI maturity level and first step of customizing the ROI formula components.
Second and final step of customizing the ROI formula components…what will actually be measured.
Viable data sources and assignments for team members.
A progress report for key stakeholders and executives.
2 Establish Baseline
The Purpose
Set baselines to measure created value against.
Key Benefits Achieved
ROI contributions cannot be objectively measured without baselines.
Activities
2.1 Gather baseline data.
2.2 Calculate/set baselines.
2.3 Set SMART goals.
2.4 Communicate progress and proposed ROI formula components to executives and key stakeholders for feedback and/or approval/alignment.
Outputs
Data to use for calculating baselines.
Baselines for measuring ROI contributions.
Value creation goals for the next measurement cycle.
An updated progress report for key stakeholders and executives.
3 Measure and Monitor Results
The Purpose
Calculate the VMO’s ROI.
Key Benefits Achieved
An understanding of whether the VMO is paying for itself.
Activities
3.1 Assemble the data and calculate the VMO’s ROI.
3.2 Organize the data for the reporting step.
Outputs
The VMO’s ROI expressed in terms of how many times it pays for itself (e.g. 1X, 3X, 5X).
Determine which supporting data will be reported.
4 Report Results
The Purpose
Report results to stakeholders.
Key Benefits Achieved
Stakeholders understand the value of the VMO.
Activities
4.1 Create a reporting template.
4.2 Determine reporting frequency.
4.3 Decide how the reports will be distributed or presented.
4.4 Send out a draft report and update based on feedback.
Outputs
A template for reporting ROI and supporting data.
A decision about quarterly or annual reports.
A decision regarding email, video, and in-person presentation of the ROI reports.
Final ROI reports.