How to use a vendor management office effectively

Measure the impact of supplier relations staff

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Over the past few years, many companies have taken the first steps in setting up an IT Vendor Management Office (VMO), but many are still very much in the early stages of refining what exactly the role of the VMO is within the organisation. And the definition of a VMO can vary widely across companies - ranging from a broad marketing term used to describe the process or a specific term used to refer to a dedicated group of staff who oversee and manage suppliers.

The scope of the dedicated team's responsibilities also varies. In organisations where sourcing and purchasing teams are not actively involved throughout the life cycle or where there is a low level of process maturity, the VMO can take on a more holistic role. The VMO's responsibilities can span from RFP creation, vendor evaluation, negotiation, contract management, vendor relationship, to ongoing performance management.

When this is the case, Forrester's research has found that the VMO does not necessarily own the pre-contract steps but is a driving force behind promoting best practices, providing contract and negotiation templates, facilitating communication, and helping define the vendor key performance metrics. This is becoming particularly prevalent as companies realise it's nearly impossible to govern vendors effectively if they haven't included the appropriate terms and requirements into the selection and contracting - pushing VMOs to participate actively in these steps early on.

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