Does My Business Need A VMO? -


Does My Business Need A VMO?

By Joseph B. Kappernick

Recently, a number of companies have endured high-profile outsourcing failures in service delivery, project execution, and realization of the expected value. These incidents have opened eyes to how business in moving into a decentralization of technology purchasing, and increased complexity in vendor pricing and licensing. Vendor management has gained prominence in the recognition that vendors need to be managed through the whole processes, not just at the end.

The VMO manages and facilitates contracts across three crucial departments on a regular basis. Each of them has different sets of skills, methods, and processes. The job is only made more complicated by the fact that the VMO has to work multiple departments and supplier relationships both in the operational and strategic levels. Whether you choose to have a very structured approach to your staffing of this positing or more laid back is of very little difference.

Helping IT sourcing be more effective is an imperative for businesses today. For this to be achived stronger realtionships with vendors have to be established. A VMO can accomplish getting better rate negotiations and demand consolidation through stronger vendor relationships.

There are not hard set rules for a VMO, but an effective VMO is able to abide by 8 guiding principals:

1. Manage VMO as a business with in a business

2. Leverage consolidated purchasing power

3. Continuously manage contractual relationships with suppliers

4. Treat suppliers as an extension of internal resources

5. Use the minimum numbers of suppliers possible

6. Select the highest valued supplier; not the lowest purchasing price

7. Negotiate win/win deals with all suppliers that balance risk, speed, and performance

8. Actively monitor, manage, and improve supplier performance

Improving the time cycle of purchases and reducing costs are a VMO's top priority. Can your businesses benefit from this?Lastly, it transforms IT sourcing from a reactive function into an advisory function that facilitates the attainment of business and IT goals through strong supplier relationship management.

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