In the fast-paced digital business world, third-party vendors have a more profound impact on your organization than ever before. This can be positive or negative, depending on how you evaluate and monitor your partners. With the prevalence of Software as a Service (SaaS), outsourced payroll, and infrastructure being provided by outside companies, it is important to protect yourself, your data, and your enterprise through the vendor lifecycle management process. This means appraising your vendors early, often, and in ways that are designed to mitigate third-party data breaches. There are dozens of components a vendor lifecycle management process can include, but we’ll try to cover the key areas for success.
Keep your organization and its data safe by educating yourself and your team about the following.
What Does the Vendor Lifecycle Management Process Consist Of?
There will be different points of emphasis for any given vendor and their relationship with your company, but the goal is always to create clear terms for policy and contingency. To start with, any contracted vendor should be willing to comply with the following points:
Qualification: This is the portion of choosing vendors where you create a shortlist of suppliers based on their qualifications and offers. It is important to assess whether they meet your list of specifications and vice-versa. A quality relationship that will maintain compliance depends on mutual understanding.
Evaluation: Once you have narrowed down your potential selections via qualification, it is time to make comparisons between the contenders. While this may sound similar to qualification, there should be much more scrutiny taking your pool of vendors from a few down to one. This is where your organization-specific demands come into play, especially as they relate to your data-protection and specific software policies.
Selection: Following the qualification and evaluation process, you will have to choose a vendor. Given the regularity with which these decisions are made in our digital world, the actual selection itself is not momentous. Instead, the selection process should act as your next trigger to release data and/or incorporate the vendor into your network access and device chain.
On-Boarding: Supplier onboarding is the next step once you’ve formed a partnership or signed a contract. This usually consists of getting your organizations aligned with what problems and solutions you’ll be working on, how the work will be done, and how to audit it.
Depending on the type of vendor, this can come in the form of return on investment (ROI), internal key performance indicators (KPIs), or a project completion date. Regardless of vendor and project, the most important organizational element is keeping your security protocols in line with one another.
Performance Management: Now that you are in a working contract with a vendor, you must hold them to the stipulations created in the first four processes. This is not a measure of control, but a measure of communication and collaboration.
Very few business relationships are perfect, but they can be made easier with clear messaging early in the process. This can help steer policy towards success, or in the event of a non-compliant vendor, provide clear documentation about what was going wrong and who is accountable for it.
In short, define performance management earlier rather than later. It will save you time and hassle.
Risk Management: This stage is what to which most of your policies will ultimately re-route. While the products and performance that a vendor provides are paramount to your success, risk management is the key to preventing ultimate failure. It is easier to recover from mediocre results than from disaster.
With that in mind, there should be risk mitigation clauses in your contract, as well as contract management throughout to ensure that your vendors are fulfilling the agreement. Due diligence should also be conducted before, during, and after a relationship. It may sound strange to investigate a company after you have stopped working, but you will often find evidence of deficient service after a contract has ended. If this is the case, you must work to rectify situations that may have compromised your own work.
Ultimately, if you are stringent about every step of your vendor lifecycle management, the risk assessment should be easier. That said, it is something you have to be proactive about throughout a client relationship.
Development: The development stage of a vendor lifecycle is the most rewarding part of a successful business process. While a good goal is to be protected and productive within the terms of engagement, the best vendors exceed the KPI goals set. In this, they develop new value and allow your business relationship to evolve.
That is a best-case scenario. Sometimes development can come in the form of making a shaky start better. Ultimately, you should expect growth from your vendors in the same way you expect it from your business. This means your standards and methods of communication play a key role in development.
Relationship Management: Wrapping up the vendor lifecycle process is managing the relationship in its totality. Someone in your organization has to be accountable for assessing whether the contract and overall dynamic are successful, and what direction you should go with your vendors.
Ideally, this person or people will be active within the contract, ensuring they have an accurate picture of both the good and/or bad components. Additionally, they need to have a working relationship with management on both teams, not just yours. The risk of having a bad vendor relationship is exponentially worse if a manager is unable to identify a deficiency.
We highly recommend having an internal two-party audit system to enhance relationship management and ensure consistent reporting.
The life cycle of managing a vendor may seem daunting with all the different moving parts, but refining your process will make it easier. Expecting perfection is unrealistic, but learning from each vendor and contract will allow you to be better with each new relationship.
If you would like to speak with one of our experts about our managed IT services or the best way to manage an existing or upcoming contract, please reach out. We’d love to help make vendor management a cornerstone of your organization.