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How to Succeed with Sourcing and Vendor Management

14.07.2009
For Oracle, SAP, Microsoft, and other IT vendors, the only thing worse than knowing there is a meeting of global IT sourcing and vendor management executives is being a fly on the wall at a meeting of IT sourcing and vendor management executives. At a recent meeting of Forrester's Sourcing and Vendor Management Leadership Board, the words "cost" and "cutting" were rarely separated during any discussion among the executives in the room - and their specific quotes regarding some vendors would make my father blush.

Thanks, you say. More gloom and doom. Likely, youre a vendor with little pipeline or internal IT tasked with doing more with less. Well, there is some good news in the IT world - and in particular in the IT sourcing and vendor management space. While there is argument over if the economy is better or worse than six months ago, there is no doubt that sourcing and vendor management groups are a key enabler for their organizations to improve their sourcing strategy during this downturn and to benefit from the eventual economic recovery. One executive said of the evolution of focus during boom times to current status: "revenue hides a lot of problems."

Last November, Forrester's CEO George Colony hosted a dinner of global sourcing and vendor management executives and captured the salient points of that discussion in a . Highlights of the discussion focused on cost cutting: cutting maintenance contracts on non- mission critical software, cutting weak, superfluous vendors, and stopping upgrades.

So what has improved? While the meeting in November skimmed the surface on "what to do" as the economy collapsed, our meeting in May focused on the details of the how, why, and when of these efforts. This recession is forcing both clients and vendors to refocus and has enabled sourcing and vendor management groups to do needed work that will position their organizations to capitalize on the upturn.

Instead of blind cost cutting, calmer minds within organizations are taking a long, hard look at improving third party IT sourcing strategy, investing in tools, improving templates and processes, and segmenting vendor relationship, all while delivering cost savings sorely needed by their organizations. A final soft benefit, albeit difficult to quantify, is the focus on establishing stronger relationships with vendors so when the recovery takes place, organizations will be prepared to capitalize based on the work the executives have done - which is also good news for the vendor, as it can be part of this recovery. Organizations will remember those who assisted and reward them with new business.