The Outsourcing Vendor Management Program Office
Art, science, and the power of perseverance – Never say never!
As companies’ outsourcing efforts evolve from contracts with single vendors to complex multisourcing initiatives that encompass multiple providers across multiple geographies, effective vendor management becomes more and more important to a company’s ability to realize the desired value from outsourcing. How are today’s companies approaching vendor management? What leading vendor management practices have they adopted, and how do executives view the effectiveness of their companies’ vendor management efforts?
This publication reports the results of a survey on vendor management practices that polled 27 business and information technology (IT) executives at global enterprises that had outsourced IT and/or telecommunications services. Among the findings:
- Sixty-seven percent of respondents reported that they had established dedicated vendor management program offices (VMPOs), suggesting a growing awareness of the importance of actively managing service provider relationships.
- Many companies are showing an increased interest in adopting a broad approach to vendor management, as evidenced by the fact that most respondents have adopted practices that incorporate, in some fashion, Deloitte’s approach to 10 leading-practice VM functions.
- Despite adopting dedicated VMPOs that focus on broad vendor management functions, only 57 percent of the respondents rated their VMPOs as very effective to effective — a significantly lower percentage than our experience working with clients would suggest.
The survey results, as well as our interactions with clients across industries, indicate that companies still continue to struggle with operating effective VMPOs — even though they understand the need for VMPOs and invest in them. Our report aims to shed further light on a critical underlying cause of underperformance and offers practical, executable remedies that can make outsourcing more productive and successful for the enterprises that outsource, the providers that service them, and the executives involved.