Besides the small introduction, subscribers and consulting clients within this management domain have access to:
This phase helps the VMI stay focused and aligned by reviewing existing materials, updating the existing maturity assessment, and ensuring that the foundational elements of the VMI are up to date. The main outcomes from this phase are a current maturity assessment and updated or revised Plan documents.
This phase helps you configure, create, and understand the tools and templates used to elevate the VMI. The main outcomes from this phase are a clear understanding of the tools that identify which vendors are important to you, tools and concepts to help you take key vendor relationships to the next level, and tools to help you evaluate and improve the VMI and its personnel.
This phase helps you begin integrating the new tools and templates into the VMI’s operations. The main outcomes from this phase are guidance and the steps required to continue your VMI’s maturation and evolution.
This phase helps the VMI stay aligned with the overall organization, stay current, and improve its strategic value as it evolves. The main outcomes from this phase are ways to advance the VMI’s strategic impact.
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.
Review existing tools and templates and configure new tools and templates.
Updated Maturity Assessment and configured tools and templates.
1.1 Existing Plan document review and new maturity assessment.
1.2 Optional classification models.
1.3 Customer positioning model.
1.4 Two-way scorecards.
Updated Plan documents.
New maturity assessment.
Configured classification model.
Customer positioning for top five vendors.
Configured scorecard and feedback form.
Configure VMI Tools and Templates.
Configured Tools and Templates for the VMI.
2.1 Performance improvement plans (PIPs).
2.2 Relationship improvement plans (RIPs).
2.3 Vendor-at-a-Glance reports.
2.4 VMI Personnel Competency Evaluation Tool.
Configured Performance Improvement Plan.
Configured Relationship Assessment and Relationship Improvement Plan.
Configured 60-Second Report and completed Vendor Calendar for one vendor.
Configured VMI Personnel Competency Evaluation Tool.
Continue configuring VMI Tools and Templates and enhancing VM competencies.
Configured Tools and Templates for the VMI and market intelligence to gather.
3.1 Internal feedback tool.
3.2 VMI ROI calculation.
3.3 Vendor recognition program.
3.4 Assess the Relationship Landscape.
3.5 Gather market intelligence.
3.6 Improve professional skills.
Configured Internal Feedback Tool.
General framework for a vendor recognition program.
Completed Relationship Landscape Assessment (representative sample).
List of market intelligence to gather for top five vendors.
Improve the VMI’s brand awareness and impact on the organization; continue to maintain alignment with the overall organization.
Raising the organization’s awareness of the VMI, and ensuring the VMI Is becoming more strategic.
4.1 Expand professional knowledge.
4.2 Create brand awareness.
4.3 Investigate potential alliances.
4.4 Continue increasing the VMI’s strategic value.
4.5 Review and update (governances, policies and procedures, lessons learned, internal alignment, and leading practices).
Branding plan for the VMI.
Branding plan for individual VMI team members.
EXECUTIVE BRIEF
By the time you start using this blueprint, you should have established a solid foundation for your vendor management initiative (VMI) and implemented many or all of the principles outlined in Info-Tech’s blueprint Jump Start Your Vendor Management (the Jump Start blueprint). This blueprint (the Elevate blueprint) is meant to continue the evolutionary or maturation process of your VMI. Many of the items presented here will build on and refer to the elements from the Jump Start blueprint. The goal of the Elevate blueprint is to assist in the migration of your VMI from transactional to strategic. Why? Simply put, the more strategic the VMI, the more value it adds and the more impact it has on the organization as a whole. While the day-to-day, transactional aspect of running a VMI will never go away, getting stuck in transactional mode is a horrible place for the VMI and its team members:
To prevent these tragic things from happening, transform the VMI into a strategic contributor and partner internally. This Elevate blueprint provides a roadmap and guidance to get your journey started. Focus on expanding your understanding of customer/vendor dynamics, improving the skills, competencies, and knowledge of the VMI’s team members, contributing value beyond the savings aspect, and building a solid brand internally and with your vendors. This requires a conscious effort and a proactive approach to vendor management…not to mention treating your internal “clients” with respect and providing great customer service. At the end of the day, ask yourself one question: If your internal clients had to pay for your services, would they? If you can answer yes, you are well on your way to being strategic. If not, you still have some work to do. Long live the strategic VMI! |
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Phil Bode |
Your Challenge |
Common Obstacles |
Info-Tech’s Approach |
Each year, IT organizations “outsource” tasks, activities, functions, and other items. During 2021:
This leads to more spend, less control, and more risk for IT organizations. Managing this becomes a higher priority for IT, but many IT organizations are ill-equipped to do this proactively. |
As new contracts are negotiated and existing contracts are renegotiated or renewed, there is a perception that the contracts will yield certain results, output, performance, solutions, or outcomes. The hope is that these will provide a measurable expected value to IT and the organization. Often, much of the expected value is never realized. Many organizations don’t have a VMI to help:
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Vendor Management is a proactive, cross-functional lifecycle. It can be broken down into four phases:
The Info-Tech process addresses all four phases and provides a step-by-step approach to configure and operate your VMI. The content in this blueprint helps you and the VMI evolve to add value and impact to the organization that was started with the Info-Tech blueprint Jump Start Your VMI. |
The VMI must continue to mature and evolve, or it will languish, atrophy, and possibly be disbanded.
Spend on managed service providers and as-a-service providers continues to increase. In addition, IT services vendors continue to be active in the mergers and acquisitions arena. This increases the need for a VMI to help with the changing IT vendor landscape.
38% 2021 |
16% 2021 |
47% 2021 |
Spend on As-a-Service Providers |
Spend on Managed Services Providers |
IT Services Merger & Acquisition Growth (Transactions) |
When organizations execute, renew, or renegotiate a contract, there is an “expected value” associated with that contract. Without a robust VMI, most of the expected value will never be realized. With a robust VMI, the realized value significantly exceeds the expected value during the contract term.
A sound, cyclical approach to vendor management will help ensure your VMI meets your needs and stays in alignment with your organization as they both change (i.e. mature and evolve).
Phase 1 - Plan |
Phase 2 - Build |
Phase 3 - Run |
Phase 4 – Review |
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Phase Steps |
1.1 Review and Update Existing Plan Materials |
2.1 Vendor Classification Models 2.2 Customer Positioning Model 2.3 Two-Way Scorecards 2.4 Performance Improvement Plan (PIP) 2.5 Relationship Improvement Plan (RIP) 2.6 Vendor-at-a-Glance Reports 2.7 VMI Personnel Competency Evaluation Tool 2.8 Internal Feedback Tool 2.9 VMI ROI Calculation 2.10 Vendor Recognition Program |
3.1 Classify Vendors & Identify Customer Position 3.2 Assess the Relationship Landscape 3.3 Leverage Two-Way Scorecards 3.4 Implement PIPs and RIPs 3.5 Gather Market Intelligence 3.6 Generate Vendor-at-a-Glance Reports 3.7 Evaluate VMI Personnel 3.8 Improve Professional Skills 3.9 Expand Professional Knowledge 3.10 Create Brand Awareness 3.11 Survey Internal Clients 3.12 Calculate VMI ROI 3.13 Implement Vendor Recognition Program |
4.1 Investigate Potential Alliances 4.2 Continue Increasing the VMI’s Strategic Value 4.3 Review and Update |
Phase Outcomes |
This phase helps the VMI stay focused and aligned by reviewing existing materials, updating the existing maturity assessment, and ensuring that the foundational elements of the VMI are up-to-date. |
This phase helps you configure, create, and understand the tools and templates used to elevate the VMI. |
This phase helps you begin integrating the new tools and templates into the VMI’s operations. |
This phase helps the VMI stay aligned with the overall organization, stay current, and improve its strategic value as it evolves. |
Insight 1 |
An organization’s vendor management initiative must continue to evolve and mature to reach its full strategic value. In the early stages, the vendor management initiative may be seen as transactional, focusing on the day-to-day functions associated with vendor management. The real value of a VMI comes from becoming strategic partner to other functional groups (departments) within your organization. |
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Insight 2 |
Developing vendor management personnel is critical to the vendor management initiative’s evolution and maturation. For the VMI to mature, its personnel must mature as well. Their professional skills, competencies, and knowledge must increase over time. Failure to accentuate personal growth within the team limits what the team can achieve and how the team is perceived. |
Insight 3 |
Vendor management is not about imposing your will on vendors; it is about understanding the multifaceted dynamics between your organization and your vendors and charting the appropriate path forward. Resource allocation and relationship expectations flow from these dynamics. Each critical vendor requires an individual plan to build the best possible relationship and to leverage that relationship. What works with one vendor may not work or even be possible with another vendor – even if both vendors are critical to your success. |
The four phases of maturing and evolving your vendor management initiative are supported with configurable tools, templates, and checklists to help you stay aligned internally and achieve your goals.
VMI Tools and Templates
Continue building your foundation for your VMI and configure tools and templates to help you manage your vendor relationships.
Info-Tech’s
A suite of tools and templates to help you upgrade and evolve your vendor management initiative.
IT Benefits |
Business Benefits |
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DIY Toolkit |
Guided Implementation |
Workshop |
Consulting |
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“Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.” | “Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.” | “We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.” | “Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.” |
Phase 1 | Phases 2 and 3 | Phase 4 | |
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Call #1: Review status of existing plan materials. Call #2: Conduct a new maturity assessment. |
Call #3: Review optional classification models. Call #4: Determine customer positioning for top vendors. Call #5: Configure vendor Scorecards and vendor feedback forms. Call #6: Discuss PIPs, RIPs, and vendor-at-a-glance reports. |
Call #7: VMI personnel competency evaluation tool. Call #8: Create internal feedback tool and discuss ROI. Call #9: Identify vendor recognition program attributes and assess the relationship landscape. Call #10: Gather market intelligence and create brand awareness. |
Call #11: Identify potential vendor alliances, review the components of a strategic VMI, and discuss the continuous improvement loop. |
A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.
A typical GI is between 6 to 12 calls over the course of 3 to 6 months.
Contact your account representative for more information.
workshops@infotech.com 1-888-670-8889
Day 1 |
Day 2 |
Day 3 |
Day 4 |
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Plan/Build Run |
Build/Run |
Build/Run |
Run/Review |
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Activities |
1.1 Existing Plan document review and new maturity assessment. 1.2 Optional classification models. 1.3 Customer positioning model. 1.4 Two-way scorecards. |
2.1 Performance improvement plans (PIPs). 2.2 Relationship improvement plans (RIPs). 2.3 Vendor-at-a-glance reports. 2.4 VMI personnel competency evaluation tool. |
3.1 Internal feedback tool. 3.2 VMI ROI calculation. 3.3 Vendor recognition program. 3.4 Assess the relationship landscape. 3.5 Gather market intelligence. 3.6 Improve professional skills. |
4.1 Expand professional knowledge. 4.2 Create brand awareness. 4.3 Investigate potential alliances. 4.4 Continue increasing the VMI’s strategic value. 4.5 Review and update (governances, policies and procedures, lessons learned, internal alignment, and leading practices). |
Deliverables |
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Phase 1 | Phase 2 | Phase 3 | Phase 4 |
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1.1 Review and update existing Plan materials | 2.1 Vendor classification models 2.2 Customer positioning model 2.3 Two-way scorecards 2.4 Performance improvement plan (PIP) 2.5 Relationship improvement plan (RIP) 2.6 Vendor-at-a-glance reports 2.7 VMI personnel competency evaluation tool 2.8 Internal feedback tool 2.9 VMI ROI calculation 2.10 Vendor recognition program | 3.1 Classify vendors and identify customer position 3.2 Assess the relationship landscape 3.3 Leverage two-way scorecards 3.4 Implement PIPs and RIPs 3.5 Gather market intelligence 3.6 Generate vendor-at-a-glance reports 3.7 Evaluate VMI personnel 3.8 Improve professional skills 3.9 Expand professional knowledge 3.10 Create brand awareness 3.11 Survey internal clients 3.12 Calculate VMI ROI 3.13 Implement vendor recognition program | 4.1 Investigate potential alliances 4.2 Continue increasing the VMI’s strategic value 4.3 Review and update |
This phase will walk you through the following activities:
This phase helps the VMI stay focused and aligned by reviewing existing materials, updating the existing maturity assessment, and ensuring that the foundational elements of the VMI are up-to-date. The main outcomes from this phase are a current maturity assessment and updated or revised Plan documents.
This phase involves the following participants:
Phase 1 – Plan revisits the foundational elements from the Info-Tech blueprint Jump Start Your Vendor Management Initiative. As the VMI continues to operate and mature, looking backward periodically provides a new perspective and helps the VMI move forward:
Keep an eye on the past as you begin looking toward the future.
At this point, the basic framework for your VMI should be in place. However, now is a good time to correct any oversights in your foundational elements. Have you:
If any of these elements is missing, revisit the Info-Tech blueprint Jump Start Your Vendor Management Initiative to complete these components. If they exist, review them and make any required modifications.
Download the Info-Tech blueprint Jump Start Your Vendor Management Initiative
1 – 6 Hours
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Download the Info-Tech blueprint Jump Start Your Vendor Management Initiative
Download the Jump - Phase 1 Tools and Templates Compendium
Phase 1 | Phase 2 | Phase 3 | Phase 4 |
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1.1 Review and update existing Plan materials | 2.1 Vendor classification models 2.2 Customer positioning model 2.3 Two-way scorecards 2.4 Performance improvement plan (PIP) 2.5 Relationship improvement plan (RIP) 2.6 Vendor-at-a-glance reports 2.7 VMI personnel competency evaluation tool 2.8 Internal feedback tool 2.9 VMI ROI calculation 2.10 Vendor recognition program | 3.1 Classify vendors and identify customer position 3.2 Assess the relationship landscape 3.3 Leverage two-way scorecards 3.4 Implement PIPs and RIPs 3.5 Gather market intelligence 3.6 Generate vendor-at-a-glance reports 3.7 Evaluate VMI personnel 3.8 Improve professional skills 3.9 Expand professional knowledge 3.10 Create brand awareness 3.11 Survey internal clients 3.12 Calculate VMI ROI 3.13 Implement vendor recognition program | 4.1 Investigate potential alliances 4.2 Continue increasing the VMI’s strategic value 4.3 Review and update |
This phase will walk you through the following activities:
This phase helps you configure, create, and understand the tools and templates used to elevate the VMI. The main outcomes from this phase are a clear understanding of the tools that identify which vendors are important to you, tools and concepts to help you take key vendor relationships to the next level, and tools to help you evaluate and improve the VMI and its personnel.
This phase involves the following participants:
Phase 2 – Build is similar to its counterpart in the Info-Tech blueprint Jump Start Your Vendor Management Initiative; this phase focuses on tools, templates, and concepts that help the VMI increase its strategic value and impact. The items referenced in this phase will require your customization or configuration to integrate them within your organization and culture for maximum effect.
One goal of this phase is to provide new ways of looking at things and alternate approaches. (For example, two methods of classifying your vendors are presented for your consideration.) You don’t live in a one-size-fits-all world, and options allow you (or force you) to evaluate what’s possible rather than running with the herd. As you review this phase, keep in mind that some of the concepts presented may not be applicable in your environment…or it may be that they just aren’t applicable right now. Timing, evolution, and maturity will always be factors in how the VMI operates.
Another goal of this phase is to get you thinking about the value the VMI brings to the organization, and just as important, how to capture and report it. Money alone may be at the forefront of most people’s minds when return on investment is brought up, but there are many ways to measure a VMI’s value and impact. This Phase will help you in your pursuit.
Lastly, a VMI must focus on its internal clients, and that starts with the VMI’s personnel. The VMI is a reflection of its team members – what they do, say, and know will determine how the VMI is perceived…and used.
The classification model in the Info-Tech blueprint Jump Start Your Vendor Management Initiative is simple and easy to use. It provides satisfactory results for the first one or two years of the VMI’s life. After that, a more sophisticated model should be used, one with more parameters or flexibility to accommodate the VMI’s new maturity.
Two models are presented on the following pages. The first is a variation of the COST model used in the Jump Start Your Vendor Management Initiative blueprint. The second is the MVP model, which segments vendors into three categories instead of four and eliminates the 50/50 allocation constraint inherent in a 2x2 model.
If you used the COST classification model in the Jump Start Your Vendor Management Initiative blueprint, you are familiar with its framework: vendors are plotted into a 2x2 matrix based on their spend and switching costs and their value to your operation. The simple variation of this model uses three variables to assess the vendor’s value to your operation and two variables to determine the vendor’s spend and switching cost implications. The COST classification model presented here sticks to the same basic tenets but adds to the number of variables used to plot a vendor’s position within the matrix. Six variables are used to define a vendor’s value and three variables are used to set the spend and switching cost. This provides greater latitude in identifying what makes a vendor important to you. |
Another option for classifying vendors is the MVP classification model. In this model, vendors fall into one of three categories: minor, valued, or principal. Similar to the COST vendor classification model, the MVP classification model requires a user to evaluate statements or questions to assess a vendor’s importance to the organization. In the MVP approach, each question/statement is weighted, and the potential responses to each question/statement are assigned points (100, 33, or 10) based on their impact. Multiplying the weight (expressed as a percentage) for each question/statement by the response points for each question/statement yields a line-item score. The total number of points obtained by a vendor determines its classification category. A vendor receiving a score of 75 or greater would be a principal vendor (similar to a strategic vendor under the COST model); 55 to 74 points would be a valued vendor (similar to operational or tactical vendor); less than 55 points would be a minor vendor (similar to a commodity vendor). |
By now, you may be asking yourself, “Which model should I use? What is the advantage of the MVP model?” Great questions! Both models work well, but the COST model has a limitation inherent in any basic 2x2 model. Since two axes are used in a 2x2 approach, the effective weighting for each axis is 50%. As a result, the weights assigned to an individual element are reduced by 50%. A simple but extreme example will help clarify this issue (hopefully).
Suppose you wanted to use an element such as How integrated with our business processes are the vendor's products/services? and weighted it 100%. Under the 2x2 matrix approach, this element only moves the X-axis score; it has no impact on the Y-axis score. The vendor in this hypothetical could max out the X-axis under the COST model, but additional elements would be needed for the vendor to rise from the tactical quadrant to the strategic quadrant. In the MVP model, if the vendor maxed out the score on that one element (at 100%), the vendor would be at the top of the pyramid and would be a principal vendor.
One model is not necessarily better than the other. Both provide an objective way for you to determine the importance of your vendors. However, if you are using elements that don’t fit neatly into the two axes of the COST model, consider using the MVP model. Play with each and see which one works best in your environment, knowing you can always switch at a later point.
15 – 45 Minutes
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Download the Info-Tech Elevate - COST Model Vendor Classification Tool
15 – 45 Minutes
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Download the Info-Tech Elevate – MVP Model Vendor Classification Tool
Now that you have configured your choice of vendor classification model (or decided to stick with your original model), it’s time to think about the other side of the coin: How do your vendors view your organization. Why is this important? Because the VMI will have only limited success if you are trying to impose your will on your vendors without regard for how they view the relationship from their perspective. For example, if the vendor is one of your strategic (COST Model) or principal (MVP Model) vendors, but you don’t spend much money with them, you are difficult to work with, and there is no opportunity for future growth, you may have a difficult time getting the vendor to show up for BAMs (business alignment meetings), caring about scorecards, or caring about the relationship period. Our experience at Info-Tech interacting with our members through vendor management workshops, guided implementations, and advisory calls has led us to a significant conclusion on this topic: Most customers tend to overvalue their importance to their vendors. To open your eyes about how your vendors actually view your account, use Info-Tech’s OPEN Model Customer Positioning Tool. (It is based on the supplier preferencing model pioneered by Steele & Court in 1996 in which the standard 2x2 matrix tool for procurement [and eventually vendor management] was repurposed to provide insights from the vendor’s perspective.) For our purposes, think of the OPEN model for customer positioning as a mirror’s reflection of the COST model for vendor classification. The OPEN model provides a more objective way to determine your importance to your vendors. Ultimately, your relationship with each vendor will be plotted into the 2x2 grid, and it will indicate whether your account is viewed as an opportunity, preferred, exploitable, or negligible. |
As with the vendor classification models discussed in Step 2.1, the two-way scorecards presented here are an extension of the scorecard and feedback material from the Jump Start Your Vendor Management Initiative blueprint. The vendor scorecard in this blueprint provides additional flexibility and sophistication for your scorecarding approach by allowing the individual variables (or evidence indicators) within each measurement category to be evaluated and weighted. (The prior version only allowed the evaluation and weighting at the category level.) On the vendor feedback side, the next evolution is to formalize the feedback and document it in its own scorecard format rather than continuing to list questions in the BAM agenda. The vendor feedback template included with this blueprint provides a sample approach to quantifying the vendor’s feedback and tracking the information. The fundamentals of scorecarding remain the same:
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15 – 60 Minutes
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Download the Info-Tech Elevate – Tools and Templates Compendium
15 – 60 Minutes
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Download the Info-Tech Elevate – Tools and Templates Compendium
It is not uncommon to see performance dips from even the best vendors. However, when poor performance becomes a trend, the vendor manager can work with the vendor to create and implement a performance improvement plan (PIP).
Performance issues can come from a variety of sources:
PIPs should focus on at least a few key areas:
PIPs are most effective when the vendor is an operational, strategic, or tactical vendor (COST model) or a principal or valued vendor (MVP model) and when you are an opportunity or preferred customer (OPEN model).
15 – 30 Minutes
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Download the Info-Tech Elevate – Tools and Templates Compendium
Relationships are often taken for granted, and many faulty assumptions are made by both parties in the relationship: good relationships will stay good, bad relationships will stay bad, and relationships don’t require any work. In the vendor management space, these assumptions can derail the entire VMI and diminish the value added to your organization by vendors.
To complicate matters, relationships are multi-faceted. They can occur:
Improving or maintaining a relationship will not happen by accident. There must be a concerted effort to achieve the desired results (or get as close as possible). A relationship improvement plan can be used to improve or maintain a relationship with the vendor and the individuals who make up the vendor’s organization.
Improving relationships (or even maintaining them) requires a plan. The first step is to understand the current situation: Is the relationship good, bad, or somewhere in between? While the analysis will be somewhat subjective, it can be made more objective than merely thinking about relationships emotionally or intuitively. Relationships can be assessed based on the presence and quality of certain traits, factors, and elements. For example, you may think communication is important in a relationship. However, that is too abstract and subjective; to be more objective, you would need to identify the indicators or qualities of good communication. For a vendor relationship, they might include (but wouldn’t necessarily be limited to):
Evaluating these statements on a predefined and consistent scale establishes the baseline necessary to conduct a gap analysis. The second half of the equation is the future state. Using the same criteria, what would or should the communication component look like a year from now? After that is determined, a plan can be created to improve the deficient areas and maintain the acceptable areas.
Although this example focused on one category, the same methodology can be used for additional categories. It all starts with the simple question that requires a complex answer, “What traits are important to you and are indicators of a good relationship?”
15 – 60 Minutes
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Download the Info-Tech Elevate – Relationship Assessment and Improvement Plan tool
Executives and stakeholders (“E&S”) discuss vendors during internal meetings and often meet directly with vendors as well. Having a solid working knowledge of all the critical vendors used by an organization is nearly impossible for E&S. Without situational awareness, though, E&S can appear uninformed, can be at the mercy of others with better information, and can be led astray by misinformation. To prevent these and other issues from derailing the E&S, two essential vendor-at-a-glance reports can be used.
The first report is the 60-Second Report. As the name implies, the report can be reviewed and digested in roughly a minute. The report provides a lot of information on one page in a combination of graphics, icons, charts, and words.
The second report is a vendor calendar. Although it is a simple document, the Vendor Calendar is a powerful communication tool to keep E&S informed of upcoming events with a vendor. The purpose is not to replace the automated calendaring systems (e.g. Outlook), but to supplement them.
Combined, the 60-Second Report and the Vendor Calendar provide E&S with an overview of the information required for any high-level meeting with a vendor or to discuss a vendor.
30 – 90 Minutes
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Download the Info-Tech Elevate – Tools and Templates Compendium
15 – 30 Minutes
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Download the Info-Tech Elevate – Tools and Templates Compendium
By now, you have built and begun managing the VMI’s 3-year roadmap and 90-day plans to help you navigate the VMI’s day-to-day operational path. To complement these plans, it is time to build a roadmap for the VMI’s personnel as well. It doesn’t matter whether VMI is just you, you and some part-time personnel, a robust and fully staffed vendor management office, or some other point on the vendor management spectrum. The VMI is a reflection of its personnel, and they must improve their skills, competencies, and knowledge (“S/C/K”) over time for the VMI to reach its potential. As the adage says, “What got you here won’t get you there.” To get there requires a plan that starts with creating an inventory of the VMI’s team members’ S/C/K. Initially, focus on two items:
Conducting an assessment of and developing an improvement plan for each team member will be addressed later in this blueprint. (See steps 3.7 – Evaluate VMI Personnel, 3.8 – Improve Professional Skills, and 3.9 - Expand Professional Knowledge.) |
15 – 60 Minutes
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An assessment and inventory of competencies, skills, knowledge, and other intellectual assets by VMI team member |
Materials | Participants |
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Download the Info-Tech Elevate – Tools and Templates Compendium.
*Adapted from “Best Practices for Every Step of Survey Creation” from surveymonkey.com and “The 9 Most Important Survey Design Tips & Best Practices” by Swetha Amaresan. |
As part of the vendor management lifecycle, the VMI conducts an annual review to assesses compliance with policies and procedures, to incorporate changes in leading practices, to ensure that lessons learned are captured and leveraged, to validate that internal alignment is maintained, and to update governances as needed. As the VMI matures, the annual review process should incorporate feedback from those the VMI serves and those directly impacted by the VMI’s efforts. Your internal clients and others will be able to provide insights on what the VMI does well, what needs improvement, what challenges arise when using the VMI’s services, and other issues. A few best practices for creating surveys are set out below:*
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4. Pay attention to your vocabulary and phrasing; use simple words. The goal is to communicate effectively and solicit feedback, and that all starts with the respondents being able to understand what you are asking or seeking. 5. Use response scales and keep the answer choices balanced. You want the respondents to find an answer that matches their feedback. For example, potential answers such as “strongly agree, agree, neutral, disagree, strongly disagree” are better than “strongly agree, agree, other.” 6. To improve your response rate, keep your survey short. Most people don’t like surveys, but they really hate long surveys. Make every question count, and keep the average response time to a maximum of a couple of minutes. 7. Watch out for “absolutes;” they can hurt the quality of your responses. Avoid using language such as always, never, all, and every in your questions or statements. They tend to polarize the evaluation and make it feel like an all-or-nothing situation. 8. Ask one question at a time or request evaluation of one statement at a time. Combining two topics into the same question or statement (double-barreled questions or statements) makes it difficult for the respondent to determine how to answer if both parts require different answers, for example, “During your last interaction with the VMI, how would you rate our assistance and friendliness?” |
15 – 60 Minutes
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Download the Info-Tech Elevate –Tools and Templates Compendium
After the VMI has been operating for a year or two, questions may begin to surface about the value the VMI provides. “We’re making an investment in the VMI. What are we getting in return?” “Does the VMI provide us with any tangible benefits, or is it another mandatory area like Internal Audit?” To keep the naysayers at bay, start tracking the value the VMI adds to the organization or the return on investment (ROI) provided.
The easy thing to focus on is money: hard-dollar savings, soft-dollar savings, and cost avoidance. However, the VMI often plays a critical role in vendor-facing activities that lead to saving time, improving performance, and managing risk. All of these are quantifiable and trackable. In addition, internal customer satisfaction (step 2.8 and step 3.11) can provide examples of the VMI’s impact beyond the four pillars of money, time, performance, and risk.
VMI ROI is a multifaceted and complex topic that is beyond the scope of this blueprint. However, you can do a deep (or shallow) dive on this topic by downloading and reading Info-Tech’s blueprint Capture and Market the ROI of Your VMO to plot your path for tracking and reporting the VMI’s ROI or value.
Download the Info-Tech blueprint Capture and Market the ROI of Your VMO
2 – 4 Hours
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Download the Info-Tech blueprint Capture and Market the ROI of Your VMO
A vendor recognition program can provide many benefits to your organization. Obtaining those benefits requires a solid plan and the following foundational elements:
As with any project, there are advantages and disadvantages with implementing and operating a vendor recognition program.
Advantages:
Just as a coin has two sides, there are two sides to a vendor recognition program. Advantages must be weighed against disadvantages, or at the very least, you must be aware of the potential disadvantages.
Disadvantages:
There is no one-size-fits-all approach to creating a vendor recognition program. Your program should align with your goals. For example, do you want to drive performance and collaboration, or do you want to recognize vendors that exceed your expectations? While these are not mutually exclusive, the first step is to identify your goals. Next, focus on whether you want a formal or informal program. An informal program could consist of sending thank-you emails or notes to vendor personnel who go above and beyond; a formal program could consist of objective criteria announced and measured annually, with the winners receiving plaques, publicity, and/or recognition at a formal award ceremony with your executives. Once you have determined the type of program you want, you can begin building the framework.
Take a “crawl, walk, run” approach to designing, implementing, and running your vendor recognition program. Start small and build on your successes. If you try something and it doesn’t work the way you intended, regroup and try again.
The vendor recognition program may or may not end up residing in the VMI. Regardless, the VMI can be instrumental in creating the program and reinforcing it with the vendors. Even if the program is run and operated by the VMI, other departments will need to be involved. Seek input from the legal and marketing departments to build a durable program that works for your environment and maximizes its impact.
Lastly, don’t overlook the simple gestures…they go a long way to making people feel appreciated in today’s impersonal world. A simple (but specific) thank-you can have a lasting impact, and not everything needs to be about the vendor’s organization. People make the organization “go,” not the other way around.
30 – 90 Minutes
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Phase 1 |
Phase 2 |
Phase 3 |
Phase 4 |
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1.1 Review and update existing Plan materials |
2.1 Vendor classification models 2.2 Customer positioning model 2.3 Two-way scorecards 2.4 Performance improvement plan (PIP) 2.5 Relationship improvement plan (RIP) 2.6 Vendor-at-a-glance reports 2.7 VMI personnel competency evaluation tool 2.8 Internal feedback tool 2.9 VMI ROI calculation 2.10 Vendor recognition program |
3.1 Classify vendors and identify customer position 3.2 Assess the relationship landscape 3.3 Leverage two-way scorecards 3.4 Implement PIPs and RIPs 3.5 Gather market intelligence 3.6 Generate vendor-at-a-glance reports 3.7 Evaluate VMI personnel 3.8 Improve professional skills 3.9 Expand professional knowledge 3.10 Create brand awareness 3.11 Survey internal clients 3.12 Calculate VMI ROI 3.13 Implement vendor recognition program |
4.1 Investigate potential alliances 4.2 Continue increasing the VMI’s strategic value 4.3 Review and update |
This phase will walk you through the following activities:
This phase helps you begin integrating the new tools and templates into the VMI’s operations. The main outcomes from this phase are guidance and the steps required to continue your VMI’s maturation and evolution.
This phase involves the following participants:
The review and assessment conducted in Phase 1 – Plan and the tools and templates created and configured during Phase 2 – Build are ready for use and incorporation into your operations. As you trek through Phase 3 – Run, a couple of familiar concepts will be reviewed (vendor classification and scorecarding), and additional details on previously introduced concepts will be provided (customer positioning, surveying internal clients); in addition, new ideas will be presented for your consideration:
The methodology used to classify your vendors in the blueprint Jump Start Your Vendor Management Initiative applies here as well, regardless of whether you use the COST model or the MVP model. Info-Tech recommends using an iterative approach initially to validate the results from the model you configured in step 2.1.
Remember to share the results with executives and stakeholders. Switching from one classification model to another may lead to concerns or questions. As always, obtain their buy-in on the final results.
If you use the MVP model, the same features will be applicable and the same processes will be followed after classifying your vendors, despite the change in nomenclature. (Strategic vendors are the equivalent of principal vendors; high operational and high tactical vendors are the equivalent of valued vendors; and all other vendors are the equivalent of minor vendors.)
After classifying your vendors, run your top 25 vendors through the OPEN Model Customer Positioning Tool. The information you need can come from multiple sources, including:
At first blush, the results can run the emotional and logical gamut: shocking, demeaning, degrading, comforting, insightful, accurate, off-kilter, or a combination of these and other reactions. To a certain extent, that is the point of the activity. As previously stated, customers often overestimate their importance to a vendor. To be helpful, your perspective must be as objective as possible rather than the subjective view painted by the account team and others within the vendor (e.g. “You’re my favorite client,” “We love working with you,” “You’re one of our key accounts,” or “You’re one of our best clients.”) The vendor often puts customers on a pedestal that is nothing more than sales puffery. How a vendor treats you is more important than them telling you how great you are. Use the OPEN model results and the material on the following pages to develop a game plan as you move forward with your vendor-facing VMI activities. The outcomes of the OPEN model will impact your business alignment meetings, scorecards, relationships, expectations, and many other facets of the VMI. |
The OPEN Model Customer Positioning Tool can be adapted for use at the account manager level to determine how important your account is to the account manager.
Opportunity
Low value and high attractiveness
Characteristics and potential actions by the vendor
Customer strategies
Preferred
High value and high attractiveness
Characteristics and potential actions by the vendor
Customer strategies
Exploitable
High value and low attractiveness
Characteristics and potential actions by the vendor
Customer strategies
Negligible
Low value and low attractiveness
Characteristics and potential actions by the vendor
Customer strategies
In summary, vendor actions are understandable and predictable. Learning about how they think and act is invaluable. As some food for thought, consider this snippet from an article aimed at vendors:
“The [customer positioning] grid or matrix is, in itself, a valuable snapshot of the portfolio of customers. However, it is what we do with this information that governs how effective the tool is. It can be used in many ways:
After classifying your vendors (COST or MVP model) and identifying your positioning for the top vendors via the OPEN Model Customer Positioning Tool, the next step is to assess the relationship landscape. For key vendors (strategic, high operational, and high tactical under the COST model and principal and valued under the MVP model), look closer at the relationships that currently exist:
This information will provide a more holistic view of the dynamics at work (or just beneath the surface) beyond the contract and operational relationships. It will also help you understand any relationship leverage that may be in play…now or in the future…from each party’s perspective.
10 - 30 Minutes per vendor
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As you roll out your new, enhanced scorecards, the same principles apply. Only a couple of modifications need to be made to your processes.
For the vendor scorecards, the VMI will still be driving the process, and internal personnel will still be completing the scorecards. An email or short orientation meeting for those involved will ease the transition from the old format to the new format. Consider creating a FAQ (frequently asked questions) for the new template, format, and content; you’ll be able to leverage it via the email or meeting to answer questions such as: What changed? Why did it change? Why are we doing this? In addition, making a change to the format and content may generate a need for new or additional internal personnel to be part of the scorecarding process. A scorecarding kick-off meeting or orientation meeting will ensure that the new participants buy into the process and acclimate to the process quickly.
For the vendor feedback, the look and feel is completely new. The feedback questions that were part of the BAM agenda have been replaced by a more in-depth approach that mirrors the vendor scorecards. Consider conducting a kick-off meeting with each participating vendor to ensure they understand the importance of the feedback form and the process for completing it. Remember to update your process to remind the vendors to submit the feedback forms three to five business days prior to the BAM (and update your BAM agenda). You will want time to review the feedback and identify any questions or items that need to be clarified. Lastly, set aside some extra time to review the feedback form in the first BAM after you shift to the formal format.
Underperforming vendors are similar to underperforming employees. There can be many reasons for the lackluster performance, and broaching the subject of a PIP may put the vendor on the defensive. Consider working with the human resources department (or whatever it is called in your organization) to learn some of the subtle nuances and best practices from the employee PIP realm that can be used in the vendor PIP realm.
When developing the PIP, make sure you:
Not all performance issues require a PIP; some can be addressed one-on-one with the vendor’s account manager, project manager, or other personnel. The key is to identify meaningful problems and use a PIP to resolve them when other measures have failed or when more formality is required.
A PIP is a communication tool, not a punishment tool. When used properly, PIPs can improve relationships, help avoid lawsuits, and prevent performance issues from having a significant impact on your organization.
After assessing the relationship landscape in step 3.2 and configuring the Relationship Assessment and Improvement Plan Tool in step 2.5, the next step is to leverage that information: 1) establish a relationship baseline for each critical vendor; and 2) develop and implement a plan for each to maintain or improve those relationships.
The Relationship Assessment and Improvement Plan Tool provides insights into the actual status of your relationships. It allows you to quantify and qualify those relationships rather than relying on intuition or instinct. It also pinpoints areas that are strong and areas that need improvement. Identify your top seven relationship priorities and build your improvement/maintenance plan around those to start. (This number can be expanded if some of your priorities are low effort or if you have several people who can assist with the implementation of the plan.) Decide which relationship indicators need a formal plan, which ones require only an informal plan, and which ones involve a hybrid approach. Remember to factor in the maintenance aspect of the relationship – if something is going well, it can still be a top priority to ensure that the relationship component remains strong.
Similar to a PIP, your RIP can be very formal with action items and deadlines. Unlike a PIP, the RIP is typically not shared with the vendor. (It can be awkward to say, “Here are the things we’re going to do to improve our relationship, vendor.”)
The level of formality for your plan will vary. Customize your plan for each vendor. Relationships are not formulaic, although they can share traits. Keep in mind what works with one person or one vendor may not work for another. It’s okay to revisit the plan if it is not working and make adjustments.
What is market intelligence?
Market intelligence is a broad umbrella that covers a lot of topics, and the breadth and depth of those topics depend on whether you sit on the vendor or customer side of the equation. Even on the customer side, the scope and meaning of market intelligence are defined by the role served by those gathering market intelligence. As a result, the first step for the VMI is to set the boundaries and expectations for its role in the process. There can be some overlap between IT, procurement/sourcing, and the VMI, for example. Coordinating with other functional areas is a good idea to avoid stepping on each other’s toes or expending duplicate resources unnecessarily.
For purposes of this blueprint, market intelligence is defined as gathering, analyzing, interpreting, and synthesizing data and information about your critical vendors (high operational, high tactical, and strategic under the COST model or valued and principal under the MVP model), their competitors, and the industry. Market intelligence can be broken into two basic categories: individual vendors and the industry as a whole. For vendors, it generally encompasses data and information about products and services available, each vendor’s capabilities, reputation, costs, pricing, advantages, disadvantages, finances, location, risks, quality ratings, standard service level agreements (SLAs) and other metrics, supply chain risk, total cost of ownership, background information, and other points of interest. For the industry, it can include the market drivers, pressures, and competitive forces; each vendor’s position in the industry; whether the industry is growing, stable, or declining; whether the industry is competitive or led by one or two dominant players; and the potential for disruption, trends, volatility, and risk for the industry. This represents some of the components of market intelligence; it is not intended to be an exhaustive list.
Market intelligence is an essential component of a VMI as it matures and strives to be strategic and to provide significant value to the organization.
What are the benefits of gathering market intelligence?
Depending on the scope of your research, there are many potential uses, goals, and benefits that flow from gathering market intelligence:
What are some potential sources of information for market intelligence?
For general information, there are many places to obtain market intelligence. Here are some common resources:
Keep in mind the source of the information may be skewed in favor of the vendor. For example, vendor marketing materials may paint a rosier picture of the vendor than reality. Using multiple sources to validate the data and information is a leading practice (and common sense).
For specific information, many VMIs use a third-party service. Third-party services can dedicate more resources to research since that is their core function. However, the information obtained from any third party should be used as guidance and not as an absolute. No third-party service has access to every deal, and market conditions can change often and quickly.
Some additional thoughts on market intelligence
Much of the guidance provided on reports in the blueprint Jump Start Your Vendor Management Initiative holds true for the 60-Second Report and the Vendor Calendar.
These reports should be kept confidential. Consider using a “confidential” stamp, header, watermark, or other indicator to highlight that the materials are sensitive and should not be disclosed outside of your organization without approval.
Using the configured VMI personnel assessment tool (Elevate – Tools and Templates Compendium tab 2.7.1 or 2.7.2), evaluate each VMI employee’s skills, competencies, and knowledge (S/C/K) against the established minimum level required/desired field for each. Use this tool for full-time and part-time team members to obtain a complete inventory of the VMI’s S/C/K.
After completing the assessment, you will be able to identify areas where personnel exceed, meet, or fail to meet the minimum level required/desired using the included dashboards. This information can be used to create a development plan for areas of deficiency or areas where improvement is desired for career growth.
As an alternative, you can assess VMI personnel using their job descriptions. Tab 2.7.3 of the Tools and Templates Compendium is set up to perform this type of analysis and create a plan for improvement when needed. Unlike Tabs 2.7.1 and 2.7.2, however, the assessment does not provide a dashboard for all employee evaluations. Tab 2.7.3 is intended to focus on the different roles and responsibilities for each employee versus the VMI as a whole.
Lastly, you can use Tab 2.7.4 to evaluate potential VMI personnel during the interview process. Load the roles and responsibilities into the template, and evaluate all the candidates on the same criteria. A dashboard at the bottom of the template quantifies the number of instances each candidate exceeds, meets, and fails to meet the criteria. Used together, the evaluation matrix and dashboard will make it easier to identify each candidate’s strengths and weaknesses (and ultimately select the best new VMI team member).
To be an effective member of the VMI requires proficiency in many areas. Some basic skills like computer skills, writing, and time management are straightforward. Others are more nebulous. The focus of this step is on a few of the often-overlooked skills lurking in the shadows:
For the VMI to be viewed as a strategic and integral part of the organization, these skills (and others) are essential. Although this blueprint cannot cover all of them, some leading practices, tips, and techniques for each of the skills listed above will be shared over the next several pages. |
Communication is the foundational element for the other professional skills covered in this Step 3.8. By focusing on seven key areas, you can improve your relationships, influence, emotional intelligence quotient, diplomacy, and impact when interacting with others. The concepts for the seven focal points presented here are the proverbial tip of the iceberg. Continue learning about these areas, and recognize that mastering each will require time and practice.
2. Speaking
3. Body Language.
4. Personality.
5. Style.
6. Learning
7. Actions and inactions.
Diplomacy can be defined many ways, but this one seems to fit best for the purposes of vendor management: The ability to assert your ideas or opinions, knowing what to say and how to say it without damaging the relationship by causing offense.1 At work, diplomacy can be about getting internal or external parties to work together, influencing another party, and conveying a message tactfully. As a vendor manager, diplomacy is a necessary skill for working with your team, your organization, and vendors.
To be diplomatic, you must be in tune with others and understand many things about them such as their feelings, opinions, ideas, beliefs, values, positions, preferences, and styles. To achieve this, consider the following guidance:2
Whenever things get tense, take a deep breath, take a break, or stop the communication (based on the situation and what is appropriate). Being diplomatic can be taxing, and it is better to step back than to continue down a wrong path due to stress, emotion, being caught off guard, etc.
Relationship building and networking cannot be overvalued. VMI personnel interact with many areas and people throughout the organization, and good relationships are essential. Building and maintaining relationships requires hard work and focusing on the right items. Although there isn’t a scientific formula or a mathematical equation to follow, key elements are present in all durable relationships.
Focus on building relationships at all levels within your organization. People at every level may have data or information you need, and your relationship with them may be the deciding factor in whether you get the information or not. At other times, you will have data and information to give, and the relationship may determine how receptive others are to your message. Some relationship fundamentals are provided below and continue on the next page.1,2
Most people don’t get excited about meetings, but they are an important tool in the toolbox. Unfortunately, many meetings are unnecessary and unproductive. As a result, meeting invites often elicit an audible groan from invitees. Eliminating meetings completely is not a practical solution, which leaves one other option: improving them.
You may not be in charge of every meeting, but when you are, you can improve their productivity and effectiveness by making a few modifications to your approach. Listed below are ten ideas for getting the most out of your meetings:*
5. Use video when anyone is attending virtually. This helps prevent anonymity and increases engagement.
6. Start and end meetings on time. Running over impacts other meetings and commitments; it also makes you look ineffective and increases stress levels for attendees.
7. If longer meetings are necessary, build in a short break or time for people to stand up and stretch. Don’t say, “If you need a break or to stand up during the meeting, feel free.” Make it a planned activity.
8. Keep others engaged by facilitating and drawing specific people into the conversation; however, don’t ask people to contribute on topics that they know nothing about or ask generally if anyone has any comments.
9. Leverage technology to help with the meeting; have someone monitor the chat for questions and concerns. However, the chat should not be for side conversations, memes, and other distractions.
10. End the meeting with a short recap, and make sure everyone knows what was decided/accomplished, what next steps are, and which action items belong to which people.
Emotional intelligence (otherwise known as emotional intelligence quotient or EQ) is the ability to understand, use, and manage your own emotions in positive ways to relieve stress, communicate effectively, empathize with others, overcome challenges and defuse conflict.1 This is an important set of skills for working with vendors and internal personnel. Increasing your EQ will help you build better relationships and be seen as a valuable teammate…at all levels within your organization.
Improving this skill dovetails with other skills discussed in this step 3.8, such as communication and diplomacy. Being well versed in the concepts of EQ won’t be enough. To improve requires a willingness to be open – open to feedback from others and open to new ideas. It also requires practice and patience. Change won’t happen overnight, but with some hard work and perseverance, your EQ can improve.
There are many resources that can help you on your journey, and here are some tips to improve your EQ:2
Tips to improve your EQ (continued from previous page):
Things to avoid:1
Skills such as influence and persuasion are important (even necessary) for vendor managers. (Don’t confuse this with the dark arts version – manipulation.) A good working definition is provided by the Center for Creative Leadership: Influence is the ability to affect the behavior of others in a particular direction, leveraging key tactics that involve, connect, and inspire them.* Influence and persuasion are not about strongarming or blackmailing someone to get your way. Influence and persuasion are about presenting issues, facts, examples, and other items in a way that moves people to align with your position. Sometimes you will be attempting to change a person’s mind, and other times you will be moving them from a neutral stance to agreeing to support your position.
Building upon the basic communication skills discussed at the start of this step, there are some ways to improve your ability to influence and persuade others. Here are some suggestions to get you started:*
3. Build and maintain trust – trust has two main components: competency and character. In item 2 on the previous page, competency trust was discussed from the perspective of knowledge and expertise. For character trust, you need to be viewed as being above reproach. You are honest and ethical; you follow through and honor your commitments. Once both types of trust are in place, eyes and ears will be open and more receptive to your messages. Bottom line: You can’t influence or persuade people if they don’t trust you.
4. Grow and leverage networks – the workplace is a dynamic atmosphere, and it requires almost constant networking to ensure adequate contacts throughout the organization are maintained. Leveraging your network is an artform, and it must be used wisely. You don’t want to wear out your welcome by asking for assistance too often.
As you prepare your plan to influence or persuade someone, ask yourself the following questions:*
To function in their roles, VMI personnel must be well versed in the concepts and terminology associated with vendor management. To be strategic and to develop relationships with other departments, divisions, agencies, and functional groups, VMI personnel must also be familiar with the concepts and terminology for functions outside the VMI. Although a deep dive is beyond the scope of this blueprint, understanding basic concepts within each of the topics below is critical:
It isn’t necessary to be an expert in these subjects, but VMI personnel must be able to talk with their peers intelligently. For example, a vendor manager needs to have a general background in contract terms and conditions to be able to discuss issues with legal, finance, procurement, and project management groups. A well-rounded and well-versed VMI team member can rise to the level of trusted advisor and internal strategic partner rather than wallowing in the operational or transactional world.
Finance and accounting terms and concepts are commonplace in every organization. They are the main language of business – they are the way for-profit businesses keep score. Regardless of whether your organization is a for-profit, non-profit, governmental, or other entity, finance and accounting run through the veins of your organization as well. In addition to the customer side of the equation, there is the vendor side of the equation: Every vendor you deal with will be impacted financially by working with you.
Having a good grasp of finance and accounting terms and concepts will improve your ability to negotiate, talk to finance and accounting personnel (internal and external), conduct ongoing due diligence on your critical vendors, review contracts, and evaluate vendor options, to name just a few of the benefits.
The concepts listed on the following pages are some of the common terms applicable to finance and accounting. It is not intended to be an exhaustive list. Continue to learn about these concepts and identify others that allow you to grow professionally.
Finance and accounting terms and concepts
Finance and accounting terms and concepts (cont’d) |
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Whether your organization has a formal project management office (PMO) or not, project management practices are being used by those tasked with making sure software and software as a service implementations go smoothly, technology refreshes are rolled out without a hitch, and other major activities are successful. Listed below are some common competencies/skills used by project managers to make sure the job gets done right.
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The concepts listed below are common project management terms and concepts.1, 2 This list is not intended to be exhaustive. Look internally at your project management processes and operations to identify the concepts applicable in your environment and any that are missing from this list. | |
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Contracts and contract lifecycle management (CLM) are two separate but related topics. It is possible to have contracts without a formal CLM process, but you can’t have CLM without contracts. This portion of step 3.9 provides some general background on each topic and points you to blueprints that cover each subject in more detail.
IT contracts tend to be more complicated than other types of contracts due to intellectual property (IP) rights being associated with most IT contracts. As a result, it is necessary to have a basic understanding of IP and common IT contract provisions.
There are four main areas of IP: copyrights, patents, trademarks, and trade secrets. Each has its own nuances, and people who don’t work with IP often mistake one for another or use the terms interchangeably. They are not interchangeable, and each affords a different type of protection when available (e.g. something may not be capable of being patented, but it can be copyrighted).
For contract terms and conditions, vendor managers are best served by understanding both the business side and the legal side of the provisions. In addition, a good contract checklist will act as a memory jogger whether you are reviewing a contract or discussing one with legal or a vendor. For more information on contract provisions, checklists, and playbooks, download the Info-Tech blueprints identified to the left.
Download the Info-Tech blueprint Understand Common IT Contract Provisions to Negotiate More Effectively
Download the Info-Tech blueprint Improve Your Statements of Work to Hold Your Vendors Accountable
CLM is a process that helps you manage your agreements from cradle to grave. A robust CLM process eases the challenges of managing hundreds or even thousands of contracts that affect the day-to-day business and could expose your organization to various types of vendor-related risk.
Managing a few contracts through the contracting process is easy, but as the number of contracts grows, managing each step of the process for each contract becomes increasingly difficult and time consuming. That’s where CLM and CLM tools can help. Here is a high-level overview of the CLM process:
For more information on CLM, download the Info-Tech blueprint identified to the left.
Download the Info-Tech Blueprint Design and Build an Effective Contract Lifecycle Management Process
Almost every organization has a procurement or sourcing department. Procurement/sourcing is often the gatekeeper of the processes used to buy equipment and services, lease equipment, license software, and acquire other items. There are many different types of procurement/sourcing departments and several points of maturity within each type. As a result, the general terms listed on the next page may or may not be applicable within your organization. (Or your organization may not have a procurement/sourcing department at all!)
Identifying your organization’s procurement/sourcing structure is the best place to start. From there, you can determine which terms are applicable in your environment and dive deeper on the appropriate concepts as needed.
Procurement sourcing terms and concepts |
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Whether you consider conflict management a skill, knowledge, or something in between, there is no denying that vendor managers are often engaged to resolve conflicts and disputes. At times, the VMI will be a “disinterested third party,” sitting somewhere between the vendor and an internal department, line of business, agency, or other functional designation. The VMI also may be one of the parties involved in the dispute or conflict. As a result, a little knowledge and a push in the right direction will help you learn more about how to handle situations where two parties don’t agree.
To begin with, there are four levels of “formal” dispute resolution. You may be intimately aware of all of them or only have cursory knowledge of how they work and the purpose they serve:
Their use often can be controlled or limited either contractually or by your organization’s preferences. They may be exclusive or used in combination with one another (e.g. negotiation first, and if things aren’t resolved, arbitration). Look at your contracts and legal department for guidance. It’s important to understand when and how these tools are used and what is expected (if anything) from the VMI.
Another factor in the conflict management and informal dispute resolution process is the people component. Perhaps the most famous or well-known model on this topic is the Thomas-Kilmann conflict resolution model. It attempts to bring clarity to the five different personality types you may encounter when resolving differences. As the graphic indicates, it is not purely a black-and-white endeavor; it is comprised of various shades of grey. The framework presented by Mr. Thomas and Mr. Kilmann provides insights into how people behave and how to engage them based on personality characteristics and attributes. The model sorts people into one of five categories:
Although it is not an absolute science since people are unpredictable at times, the Thomas-Kilmann model provides great insights into human behavior and ways to work with the personality types listed. |
Although the topic is vastly greater than being presented here, the last consideration is a sound process to follow when the conflict or dispute will be handled informally (at least to start). The simple process presented below works with vendors, but it can be adapted to work with internal disputes as well. The following process assumes that the VMI is attempting to facilitate a dispute between an internal party and a vendor.
Step 1. Validate the person and the issue being brought to you; don’t discount the person, their belief, or their issue. Show genuine interest and concern.
Step 2. Gather and verify data; not all issues brought forward can be pursued or pursued as presented. For example, “The vendor is always late with its reports” may or may not be 100% accurate as presented.
Step 3. Convert data gathered into useful and relatable information. To continue the prior example, you may find that the vendor was late with the reports on specified dates, and this can be converted into “the vendor was late with its reports 50% of the time during the last three months.”
Step 4. Escalate findings internally to the appropriate stakeholders and executives as necessary so they are not blindsided if a vendor complains or goes around you and the process. In addition, they may want to get involved if it is a big issue, or they may tell you to get rid of it if it is a small issue.
Step 5. Engage the vendor once you have your facts and present the issues without judgment. Ask the vendor to do its own fact gathering.
Step 6. Schedule a meeting to review of the situation and hear the vendor’s version of the facts…they may align, or they may not.
Step 7. Resolve any differences between your facts/information and the vendor’s. There may be extenuating circumstances, oversights, different data, or other items that come to light.
Step 8. Attempt to resolve the problem and prevent further occurrences through root cause analysis and collaborative problem-solving techniques.
Develop your own process and make sure it stays neutral. The process should not put the vendor (or any party) on the defensive. The process is to help the parties reach resolution…not to assign blame.
Working with the account or sales team from your critical vendors can be challenging. A basic understanding of account team operations and customer/vendor dynamics will go a long way to improving your interactions (and even vendor performance) over time.
Sales basics
Improving sales and account team dynamics with your organization
Improving sales and account team dynamics with your organization (continued)
For more information on this topic, download the Info-Tech blueprint Evaluate Your Vendor Account Team to Optimize Vendor Relations.
Branding isn’t just for companies. It is for departments (or whatever you call them at your place of employment) and individuals working in those departments. With a little work and even less money, you can create a meaningful brand for the VMI. While you are at it, you may want to encourage the VMI’s team members to focus a little attention on their personal brands since the VMI and its personnel are intertwined. First, let's define “brand.”
Ask 50 people, “How do you define ‘brand’?” and you are likely to get 50 different answers. For the purposes of this blueprint, the following definition provides some guiderails by describing what a brand is and isn’t: “A brand is not a logo. A brand is not an identity. A brand is not a product. A brand is a person’s gut feeling about a product, service, or organization.”1 Let’s expand the definition of “a brand is…” to include departments and individuals since that’s the focus of this step, and it doesn’t violate the spirit of the original definition. A further expansion could include the goodwill associated with the product, service, organization, department, or individual.
Dedicating time and other resources to proactively creating and nurturing the VMI’s brand has many advantages:
As you embark on creating a brand for the VMI and raising awareness, here are a few considerations to keep in mind:
As previously mentioned, brands are for individuals as well. In fact, everybody has a brand associated with them…for better or worse...whether they have consciously created and molded it or not. Focusing on the individual brand at this point offers the VMI and its team members the opportunity to enhance the brand for both. After all, the VMI is a reflection of its personnel.
Here are some things VMI team members can do to enhance their brand:
30 – 90 Minutes
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Download the Info-Tech Elevate - Tools and Templates Compendium
As you deploy your surveys, timing must be considered. For annual surveys, avoid busy seasons such as mid to late December (especially if your organization’s fiscal year is a calendar year). Give people time to recover from any November holidays, and survey them before they become distracted by December holidays (if possible). You may want to push the annual survey until January or February when things have settled back into a normal routine. Your needs for timing and obtaining the results must be balanced against the time constraints and other issues facing the potential respondents.
For recency surveys, timing can work to your advantage or disadvantage. Send the survey almost immediately after providing assistance. If you wait more than a week or two, memories will begin to fade, and the results will trend toward the middle of the road.
Regardless of whether it is an annual survey or a recency survey, distributing the surveys to a big enough sample size will be tough. Combine that with low response rates and the results may be skewed. Take what you can get and look for trends over time. Some people may be tough critics; if possible, send the survey to the same people (and incorporate new ones) to see if the tough graders’ responses are remaining true over time. Another way to mitigate some of the tough critics is to review their answers to the open-ended questions. For example, a tough grader may respond with a “4 – helpful” when you were expecting a “5 – very helpful;” the narrative portion of the survey may be consistent with that answer, or it may provide what you were looking for: “The VMI was great to work with on this project.” When confined to a scale, some respondents won’t give the top value/assessment no matter what, but they will sing your praises in a question that requires a narrative response. Taken together, you may get a slightly different picture – one that often favors you.
After you have received a few responses to your surveys (recency and annual), review the results against your expectations and follow up with some of the respondents. Were the questions clear? Were the answer choices appropriate? Ultimately, you have to decide if the survey provided the meaningful feedback you were looking for. If not, revise the questions and answers choices as needed. (Keep in mind, you are not looking for “feelgood fluff.” You are looking for feedback that will reinforce what you are doing well and show areas for improvement.) Once you have the results, it’s time to share them with the executives and stakeholders. When creating a report, consider the following guidance:
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Calculating ROI begins with establishing baselines: what is the current situation? Once those are established, you can begin tracking the impact made by the VMI by looking at the differences between the baseline and the end result. For example, if the VMI is tracking money saved, it is critical to know the baseline amounts (e.g. the initial quote from the vendor, the budgeted amount). If time is being measured, it is important to understand how much time was previously spent on items (e.g. vendor meetings to address concerns, RFPs).
The blueprint Capture and Market the ROI of Your VMO will lead you through the process, but there are a couple of key things to remember: 1) some results will be quick and easy – the low-hanging fruit, things that have been ignored or not done well, eliminating waste, and streamlining inefficiencies; and 2) other things may take time to come to fruition. Be patient and make sure you work with finance or others to bring credibility to your calculations.
When reporting the ROI, remember to include the results of the survey from step 3.11. They are not always quantifiable, but they help executives and stakeholders see the complete picture, and the stories or examples make the ROI “personal” to the organization.
Reporting can be a challenge. VMIs often underestimate their value and don’t like self-promotion. While you don’t want to feel like you operate in justification mode, many eyes will be on the VMI. The ROI report helps validate and promote the VMI, and it helps build brand awareness for the VMI.
As indicated in step 2.10, take a “crawl, walk, run” approach to your vendor recognition program. Start off small and grow the program over time. Based on the scope of the program, decide how you’ll announce and promote it. Work with marketing, IT, and others to ensure a consistent message, to leverage technology (e.g. your website), and to maximize awareness.
For a formal program, you may want to hold a kickoff meeting to introduce the program internally and externally. The external kickoff can be handled in a variety of ways depending on available resources and the extent of the program. For example, a video can be produced and shared with eligible vendors, an email from the VMI or an executive can be used, or the program can be rolled out through BAMs if only BAM participants are eligible for the program. If you are taking an informal approach to the vendor recognition program, you may not need an external kickoff at all.
For a formal program, collect information periodically throughout the year rather than waiting until the end of the year; however, some data may not be available or relevant until the end of the measurement period. For subjective criteria, the issue of recency may be an issue, and memories will fade over time. (Be careful the subjective portion doesn’t turn into a popularity contest.)
If the vendor recognition program is not meeting your goals adequately, don’t be afraid to modify it or even scrap it. At some point, you may have to do a partial or total reboot of the program. Creating and maintaining a “lessons learned” document will make a reboot easier and better if it is necessary. Remember: While a vendor recognition program has many potential benefits, your main goals must be achieved or the program adds little or no value.
Phase 1 | Phase 2 | Phase 3 | Phase 4 |
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1.1 Review and update existing Plan materials | 2.1 Vendor classification models 2.2 Customer positioning model 2.3 Two-way scorecards 2.4 Performance improvement plan (PIP) 2.5 Relationship improvement plan (RIP) 2.6 Vendor-at-a-glance reports 2.7 VMI personnel competency evaluation tool 2.8 Internal feedback tool 2.9 VMI ROI calculation 2.10 Vendor recognition program | 3.1 Classify vendors and identify customer position 3.2 Assess the relationship landscape 3.3 Leverage two-way scorecards 3.4 Implement PIPs and RIPs 3.5 Gather market intelligence 3.6 Generate vendor-at-a-glance reports 3.7 Evaluate VMI personnel 3.8 Improve professional skills 3.9 Expand professional knowledge 3.10 Create brand awareness 3.11 Survey internal clients 3.12 Calculate VMI ROI 3.13 Implement vendor recognition program | 4.1 Investigate potential alliances 4.2 Continue increasing the VMI’s strategic value 4.3 Review and update |
This phase will walk you through the following activities:
This phase helps the VMI stay aligned with the overall organization, stay current, and improve its strategic value as it evolves. The main outcomes from this phase are ways to advance the VMI’s strategic impact.
This phase involves the following participants:
The emphasis of this final phase is on the VMI’s continued evolution.
Chances are you’ve seen a marketing or business alliance at work in your personal life. If you’ve visited a Target store or a Barnes and Noble store, you’ve more than likely walked past the Starbucks counter. The relationship is about more than the landlord-tenant agreement, and the same business concept can exist in non-retail settings. Although they may not be as common in the customer-IT vendor space, alliances can work here as well.
Definition
For vendor management purposes, an alliance is a symbiotic relationship between two parties where both benefit beyond the traditional transactional (i.e. buyer-seller) relationship.
Characteristics
Benefits
Risks
Keys to success
The purpose of this step is not to make you an expert on alliances or to encourage you to rush out of your office, cubicle, bedroom, or other workspace looking for opportunities. The purpose is to familiarize you with the concepts, to encourage you to keep your eyes open, and to think about relationships from different angles. How will you make the most of your vendors’ expertise, resources, market, and other things they bring to the table?
Although they are not synonymous concepts, increasing the VMI’s maturity and increasing the VMI’s strategic value can go hand in hand. Evolving the VMI to be strategic allows the organization to receive the greatest benefit for its investment. This isn’t to say that all work the VMI does will be strategic. It will always live in two places – the transactional world and the strategic world – even when it is fully mature and operating strategically. Just like any job, there are transactional tasks and activities that must be done, and some of them are foundational elements for being strategic (e.g. conducting research, preparing reports, and classifying vendors). The VMI must evolve and become strategic for many reasons: staying in the transactional world limits the VMI’s contributions, results, influence and impact; team members will have less job satisfaction and enjoyment and lower salaries; ultimately, the justification for the VMI could disappear.
To enhance the VMI’s (and, as applicable, its personnel’s) strategic value, continue:
Indicators of a transactional VMI: |
Indicators of a strategic VMI: |
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The vendor management lifecycle is continuous and more chaotic than linear, but the chaos mostly stays within the boundaries of the “plan, build, run, and review” framework outlined in this blueprint and the blueprint Jump Start Your Vendor Management Initiative. Two of the goals of managing the lifecycle are: 1) to adapt to a changing world; and 2) to improve the VMI and its impact over time. To do this, keep following the guidance in this phase, but don’t forget about the direction provided in phase 4 of the blueprint Jump Start Your Vendor Management Initiative:
Continue reviewing and updating the VMI’s risk footprint. Add risk categories and scope as needed (measurement, monitoring, and reporting). Review Info-Tech’s vendor management-based series of risk blueprints for further information (Identify and Manage Reputational Risk Impacts on Your Organization and others).
It is easy for business owners to lose sight of things. There is a saying among entrepreneurs about remembering to work on the business rather than working exclusively in the business. For many entrepreneurs, it is easy to get lost in the day-to-day grind and to forget to look at the bigger picture. A VMI is like a business in that regard – it is easy to focus on the transactional work and lose sight of maturing or evolving the VMI. Don’t let this happen!
Leverage the tools and templates from this blueprint and adapt them to your environment as needed. Unlike the blueprint Jump Start Your Vendor Management Initiative, some of the concepts presented here may take more time, resources, and evolution before you are ready to deploy them. Continue using the three-year roadmap and 90-day plans from the Jump Start Your Vendor Management Initiative blueprint, and add components from this blueprint when the time is right. The two blueprints are designed to work in concert as you move forward on your VMI journey.
Lastly, focus on getting a little better each day, week, month, or year: better processes, better policies and procedures, better relationships with vendors, better relationships with internal clients, better planning, better anticipation, better research, better skills, competencies, and knowledge for team members, better communication, better value, and better impact. A little “better” goes a long way, and over time it becomes a lot better.
Contact your account representative for more information.
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Jump Start Your Vendor Management Initiative
IT (and the organization as a whole) are more reliant on vendors than ever before, and vendor management has become increasingly necessary to manage the relationships and manage the risks. Implementing a vendor management initiative is no longer a luxury...it is a necessity.
Capture and Market the ROI of Your VMO
Calculating the impact or value of a vendor management office (VMO) can be difficult without the right framework and tools. Let Info-Tech’s tools and templates help you account for the contributions made by your VMO.
Evaluate Your Vendor Account Team to Optimize Vendor Relations
Understanding your vendor team’s background, experience, and strategic approach to your account is key to the management of the relationship, the success of the vendor agreement, and, depending on the vendor, the success of your business.
Identify and Manage Financial Risk Impacts on Your Organization
Vendors’ failure to perform, including security and compliance violations, can have significant financial consequences. Good vendor management practices help organizations understand the costs of those actions.
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