Vendor Manager role is evolving based on maturity of organization, complexity of thier IT service and solutions requirements and number of vendors  servicing their needs. Some of key roles and responsibilities for Vendor Manager are:

• Managing vendor relationships
• Perform vendor stratification - classification and consolidation
• Renegotiating existing contracts
  • Fine tune pricing models
  • Perform cost and performance benchmarking

• Execute vendor selection process - hiring of new vendors
• Establish new service delivery approaches 
  • Formalizing and documenting the process (VMO Setup and Sustain)
  • SLA and Metrics
  • Strengthen governance and engagement management processes
    

Outsourcing relationships are like marriage; it takes a lot of effort from both parties to make them work and last long-term. Some reasons for the derailment of an offshore relationship are as follows:

Mismatched Expectations

Clients expect to save money starting on day one, when they retain an offshore company. Offshore suppliers are eager to please their newly retained client and promise everything that is asked for. Both end up incurring start-up costs such as documentation, travel, hardware, software, requirements gathering, etc. etc. which were more than likely not understood and therefore not planned for.

Missing Documentation

Most companies lack thorough documentation of in-house processes. In such cases, the client expects the offshore vendors to create new documentation. The offshore vendor (who hadn’t planned on this activity) attempts to create the documentation but cannot find historical data or adequate time with subject matter experts to get everything documented.

Communication Gaps

Although offshore vendors in India have an English speaking staff, cultural nuances create language barriers between the client and the offshore vendors. Something as simple as “can we get this done today” may result in a “yes” from a person in India however the client may find out later that the request wasn’t fulfilled because the yes meant it would be done but the urgency of the timing may not be understood.

Oversight and Management

It is important to be in constant touch with your offshore provider. Talking to them via phone everyday is extremely important. Frequent travel to oversee the operations and to meet your offshore team face to face is also extremely critical to ensuring that you receive quality, productivity, and efficiency from your offshore supplier. Don’t just rely on phone and chat to conduct business with your offshore provider, be sure to set up a travel schedule frequent and also provides adequate time for some thorough discussions with your offshore team.

Performance Measurement

Contractual agreements should include metrics and measurement criteria to measure the performance of your offshore team. Metrics should be detailed to the nth level so that there is no confusion of what is being measured and where the vendor may be not making the grade.

To summarize, offshore relationships can be made to work. Our expertise is in establishing and implementing successful offshore relationships. Contact us today to learn more about our services.

Gartner, Inc. identified its top 10 technologies and trends for 2010 during their Gartner Expo held in October 2009. Not surprisingly Cloud Computing and Social Networking made their Top 10 list:

• Cloud computing
• Advanced analytics
• Client computing
• Green IT
• Reshaping the datacenter
• Social networking
• Security – activity monitoring
• Flash memory
• Virtualization for availability
• Mobile applications

So what is Cloud Computing and why is it being identified as a technology to watch for in 2010?
 
Cloud Computing means delivering technology solutions over the Internet leveraging hardware and software that are provided by the datacenters. The services in cloud computing then are referred to as Saas or Software as a service. The hardware and software will be the cloud. Companies like Google and Microsoft will provide users with software that resides on their servers. You won't need to buy or install software on your computer. If you've used Google docs or Google Documents; you would know how it works. Other examples are gmail and office mail.

Now I'm talking about Cloud Computing specifically because Cloud Computing will impact how outsourcing will evolve in 2010 and beyond. Outsourcing vendors will still be in demand to provide outsourcing services but perhaps they'll evolve into a paid subscription model rather than a development model. More about Cloud Computing and its impact on the outsourcing market in an upcoming blog....

2010 is right around the corner and executives are busy making plans for 2010 and worrying about how they will meet their reduced budgets while keeping their customers happy. Companies will continue to evaluate outsourcing options and the following three trends will be most visible:

Focus on Low cost and High Value

Every company in the US continues to face pressure to remain competitive and viable. Most IT budgets have been slashed down to the bare minimum. But the work still needs to be done. How else will the work be done unless companies find lower cost labor and service providers who can provide everything? So suppliers who offer lower cost solutions but with increased value in terms of lower risk or "more for less" will be the ones who really see their business grow.

More focus on Strategic Vendors

Most companies are probably looking at their vendor lists and thinking “how did we do business with 600 vendors?” Streamlining operations includes streamlined procurement processes and vendor lists. So 2010 will see companies moving to fewer Strategic Vendors who can outsource to their downstream vendors. (This is what General Motors did back in 2006 and saved millions.)

Movement towards Outsourced Procurement

As one of my earlier posts indicated, outsourced procurement is a trend whose time has come. By outsourcing procurement services, businesses will gain big returns from cost savings; buyers with better domain expertise; and improved processes.

2010 will hopefully bring a turnaround in the world economy. But even as the economy improves, companies will no longer repeat their mistake of remaining complacent. Better processes, lower costs, and better skilled employees; these will be the reason companies will choose one outsourcing provider over another

Not surprisingly, one of the key findings from” 2009 The Black Book of Outsourcing - State of the Outsourcing Industry Report” is that:

“Indian outsourcers have regained strong buyer confidence by demonstrating tangible transparency, accountability and ethical management practices to eighty-one percent of US companies buying services offshore.”
 
As companies continue to face the tightening of the belt, I believe that Procurement Outsourcing will gain a lot of visibility in 2010. Procurement Outsourcing can bring a lot of value to companies who are seeking to outsource non-core activities to focus on core strengths.
 
When properly done, Procurement Outsourcing can result in savings that are perhaps even greater than outsourcing business and technology functions.  The savings would come from operational efficiency because a procurement outsourcing company will provide skilled buyers who have domain knowledge, technical solutions that demonstrate accurate spend, better visibility to contractual terms and rates, and also provide more competitive rates because of their ability to leverage larger buying power from multiple suppliers.

Procurement Outsourcing’s time has come; I’ll keep an eye on its evolution in 2010 and report back with interesting case studies in this area.

We all know about PMO's or Project Management Offices. They were the trend and continue to be implemented across IT organizations as more and more companies focus on process and project management practices. But a new trend whose time has come is that of establishing a Vendor Management Office or VMO.

As companies continue to benefit from outsourcing and offshoring, creating a Vendor Management  Office makes a lot of sense. By creating a Vendor Management Office, companies can:

• Keep track of key vendors/suppliers and their rates
• Identify sub-contractors who the tier-one vendors are sourcing work from
• Ensure that rates are consistently applied across multiple vendors providing similar capabilities
• Reduce risk through dependency on one vendor by ensuring multiple vendors are capable of providing similar services
• Manage performance scorecards to weed out poor performing vendors
• Create an on-boarding process to evaluate new vendors

Interestingly few if any companies who are currently outsourcing their technology services have a Vendor Management Office (VMO) set-up. I believe that as companies evolve their vendor management practices and implement multi-vendor enviroments, Vendor Management Offices will become as common as Project Management Offices.