The web of interrelated vendor relationships weaves new strands all the time. When existing vendor management capabilities are not up to the task of controlling the complexity, business value drops. In an article for CIO Insight, Dave England discusses the discipline of vendor management and governance (VMG) as a means to maintain transparency and high business value.
The Vending Machine
The good news is that if you are scratching your head at the term of VMG, you are not alone, in that England says most businesses have only started establishing a VMG function in the past year. As a result, maturity levels are currently low. To grow VMG, standardization must exist within it to get external and internal stakeholders on the same page about it:
Achieving true standardization, meanwhile, requires addressing the “devil in the details” challenge of ensuring alignment between multiple providers. Consider ITIL standards: while they prescribe what is to be done in terms of incident and change management, they don’t specify how those functions are executed. As a result, different service providers can introduce nuanced variations in their interpretation of ITIL standards. This can compromise the quality of the operational data that the governance model relies on. A mature VMG function recognizes the need for standardization at a granular level, and ensures that all providers adhere to a uniform interpretation of ITIL.
To decide where a business can start, the CIO can conduct a self-assessment of vendor management maturity. Categories of maturity could include the following: contract, financial, performance, relationship, and risk management. Wherever the biggest gaps occur in scoring from the self-assessment is where the business can start improvement efforts.
For a meatier explanation, you can view the original article here: http://www.cioinsight.com/it-management/expert-voices/a-cios-guide-to-improving-vendor-management.html