Vendor Management Office or VMO is a framework for managing and governing your outsourcing vendors that ensures your desired business outcomes are achieved through your outsourcing efforts. However certain factors when not taken care of can hinder your efforts in setting up an agile and flexible vendor governance framework. Let's look at the most prominent ones:
SLA Maze - Often SLAs are too many, generic, and are not properly spelt out that makes it difficult for both client and the vendor to understand and execute them.
Communication Barrier - Most of the times we only see top-down communication that involves senior management and executives. Bottom-up communication that generally involves technical team responsible for execution and delivery is either missing or given a secondary treatment. Thus organizations fail to have a two sided view of their contracts.
What about Qualitative Outcomes? - KRAs/ KPIs (Key Result Areas/ Key Performance Indicators) are employed to assess vendor performance, these metrics measure and track quantitative outcomes of the outsourcing contract but leave the qualitative facet of the contract that are important to your organization. Qualitative outcomes such as customer/ employee satisfaction, stakeholder expectation, client-vendor expectation mismatch, long term relationship with the vendor are indispensable for the maximum contract value realization.
Endless Meetings - Does carrying on innumerable, lengthy meetings yield the expected results? Not always. Most often the result of these meetings is ever piling cumbersome status reports that further complicate the overall project and load the project personnel.
Lack of a single consistent tool for measuring the Vendor performance - Manual or partially automated processes do not fully monitor the vendor performance and lack an ongoing vendor review. They demand considerable time of project personnel in feeding data and extracting and interpreting results.
Proof of Concept - More often than not clients seek value, but fail to ask for a proof firsthand, a demo of the system/ infrastructure/ application at the client premises with the help of client "people and data" is not always run by the vendor beforehand.
Vendor Selection and Negotiation - Negotiate with the top two. After evaluating multiple vendors, carry out contract negotiations with the final two, and not just the final one. This increases competition and chances of getting a vendor with the top choice.
Keeping Compliance out of Contract - Client often overlook whether the offered product by his vendor is compliant to all legislations and regulations. Once the product is implemented at the client end, any compliance risk and cost of non compliance may have to be borne by the client and can affect the product performance.
Infrequent Vendor Evaluations - Most organizations carry out vendor evaluations at randomly defined periods. The period may be monthly, quarterly, annually or at the start, somewhere middle, and the end of contract. More frequent evaluations may result in weekly or monthly evaluations. Lack of well thought out ongoing evaluations leads to overlooking performance inefficiencies and required improvement areas.
Don't buy Solution, buy Features - A solution is a broad-based term. Often 70% of the solution is generalized and 50% is customized to the client needs. However this may lead to a client paying for the features which are not of use to him.
The days of using spreadsheets, notepads, and white boards to schedule your staff are over!