Got vendors? You need vendor management. As an IT manager, you spend a lot of your company’s money. You hire individual consultants and big-time corporate consultants. You sign Statements of Work or multi-year agreements with niche- and enterprise-software vendors. You pay big bucks for professional services provided and software and hardware maintenance contracts.
So how do you manage those precious, vital third-party service providers? More specifically, how do you make sure you’re getting what you think you’re paying for? Here are three golden rules of IT vendor management.
1. Do your due diligence before signing a contract.
Do not be fooled by a sweet deal that’s only good until the end of the quarter. If a vendor tells you that prices will go up if you don’t sign the contract by the end of the quarter, tell that vendor to go fly a kite. Smart IT managers perform due diligence on third parties that’s commensurate with the risk the third party brings to the company. Here are a few key questions to ask before you enter into a written agreement with any third party whose products or services are mission-critical to your company. (a) Does the vendor have experience in this area? (b) Can the vendor afford to take on our contract? Hint: If the vendor is waiting on your first contract payment to hire the programmers needed to do your project, you’re working with the wrong vendor. (c) Has the agreement between your company and the vendor been reviewed by your company’s senior managers and the departments that will be affected by bringing on this third party, like internal audit, legal, and operations?
2. Monitor the vendor’s performance.
Before you sign a contract to engage a vendor to provide services, ask yourself this question, punk: How will you know if the vendor is doing what you’re paying it to do? If there’s a project plan, is someone making sure deadlines are met? If the vendor’s work is ongoing, who is making sure that (a) invoices match actual work performed? and (b) is the vendor meeting its service level agreements as defined in the Contract or Statement of Work?
3. If the vendor craters, have a plan.
This third “golden rule” is to remind smart IT managers never, ever to assume that even the biggest and best vendors are infallible. As part of your due diligence process when you’re onboarding a new third party or engaging in a new project with an existing third-party relationship, make a D.R. plan. Require the third party to tell you how long it will take THEM to recover if they have a disaster. On your side, make a plan for what you’ll do if the vendor has a disaster that lasts longer than your business operation can tolerate.
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