As the pace of emerging technologies accelerates, an increasing number of vendors will play a critical role in your organization’s success. But if a chain is only as strong as its weakest link, how can you ensure all vendors – and especially new autonomous technology vendors – are delivering value without adding unnecessary risks? Our comprehensive blueprint provides you with the tools to level up your VMI and help the organization realize strategic value from its vendors.
The potential offered by the rapid technological evolution we call Exponential IT is enormous, but keeping up with the pace of this new paradigm requires an equally adaptable and agile VMI. Every organization will see an increase in the number of new technology vendors they work with so scalable efficiency can keep you from being left behind. Take back the power in vendor negotiations, enable departments to manage their own vendors in line with IT governance, and future-proof your vendor management.
1. Evolving your VMI is not a matter of "if," but "when"
In this age of next-generation technologies, every organization will be forced to evolve their VMI sooner rather than later. Prioritize vendor management now to realize optimal results, or you’ll always be on the back foot with new and existing vendors.
2. Don’t waste resources on the wrong vendors
According to data gathered in our 2024 IT Staff and Spend Benchmarking, up to 62% of your IT spend may be going to vendors. Invest in the vendors that will drive your technology strategy forward, not hold it back. Use autonomous technologies to help mature your VMI, focusing on high-value vendor partnerships that further your organization’s strategic objectives in this world of exponential technologies.
3. Vendor management still needs people
Autonomous technologies can be leveraged to evolve your VMI, but complete technology autonomy of vendor management is unlikely. Optimization and automation can streamline the process, but the value of person-to-person relationships can’t be replaced. Build strong, reciprocal relationships with strategic and valuable vendors to get the most from your vendors.
Use our research to build a roadmap to maturing the people, processes, and technology within your VMI
Our three-phased framework helps IT leaders at every step of the journey to maturing their VMI, so vendor contracts are value-driven, informed by the direction of the organization, and agile enough to keep up with emerging technologies. Our step-by-step guidance, templates, and tools will help you to:
- Define adaptable governance mechanisms that can inform insightful and autonomous decision-making while outsourcing capabilities.
- Identify and build the solutions and skills the VMI needs to integrate or develop to support the changing technology landscape.
- Assess and manage vendor relationships and performance while spending more time optimizing vendor-collaborative relationships.
- Continuously review and refine how the VMI has advanced the organization’s objectives, allowing you to determine new opportunities for innovation.
Establish a Vendor Management Roadmap to Succeed With Autonomous Technologies
Mature your IT vendor management initiative (VMI) to optimize the selection and use of next-generation technologies.
Your Exponential IT Journey
To keep pace with the exponential technology curve, adopt an Exponential IT mindset and practices. Assess your organization’s readiness and embark on a transformation journey. This blueprint will help you build your roadmap to get there.
To access all Exponential IT research, visit the Exponential IT Research Center.
1. Adopt an Exponential IT Mindset
Info-Tech resources: Exponential IT Research Center, Research Center Overview, and Keynote
2. Explore the Art of the Possible
Info-Tech resources: Exponential IT research blueprints for nine IT domains
3. Gauge Your Organizational Readiness
Info-Tech resource: Exponential IT Readiness Diagnostic
4. Build an Exponential IT Roadmap
Info-Tech resource: Develop an Exponential IT Roadmap blueprint
5. Embark on Your Exponential IT Journey
Info-Tech resources: Ongoing and tactical domain-level research and insights
Analyst perspective
It’s time to lean into our vendor relationships in a new way.
When new technologies come to the forefront, we often become so excited by the platform features that we forget about the people and process impact – specifically, those of the vendor management team that is tasked with assessing, negotiating, onboarding, and managing the vendor attached to those technologies. As we move into this new era driven by technologies, the vendor management initiative (VMI) will have to be a well-defined and strategically focused framework that we can lean into.
The impact vendor management (VM) will have on our ability to adopt and leverage emerging technologies cannot be forgotten. In fact, VM likely needs to be matured before these new technologies really take organizations by storm. Opportunities to improve immediately are readily available. Examples include defining when a vendor can be a partner, identifying what solutions or new functions are emerging, and upskilling internal VM resources to be less operational and more strategic. (The tech can take care of the operational side.)
Readying the vendor management team to plan, build, run, and review in the autonomous era does not have to be something you plan in five years; it can and should be happening now before it is too late.
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Brittany Lutes
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EXECUTIVE BRIEF
Executive summary
Your Challenge
As organizations continue to adopt an increasing number of emerging technologies, they must:
- Evolve how technology solution vendors and service providers are acquired and managed.
- Mature the VMI to produce strategies and standards that can be adopted across the organization.
- Adapt existing manual vendor performance and relationship processes to be autonomous.
- Implement a risk-reward framework that could put vendors in greater control of financial outcomes for all parties involved.
Common Obstacles
Adopting the right vendor management framework to mature the VMI is hindered by:
- VM software only just starting to emerge and leverage the potential of AI.
- Historically transactional relationships between vendors and organizations.
- The emergence of greater unknown risks every day.
- Leveraging traditional IT DevOps skills when VenOps skills are now needed.
- Ever-evolving regulations around the use of AI, both directly and indirectly by vendors.
Info-Tech’s Approach
Evolve and elevate your service strategy to focus on customer value delivery. This blueprint will help you:
- Plan: Get organized.
- Build: Configure tools and templates.
- Run: Implement and operate.
- Review: Align and improve (ongoing).
This ensures the organization can appropriately rely on their vendor partners for a number of advantages.
Info-Tech Insight
VMIs that can mature themselves will be positioned to better select, onboard, and manage the vendors providing next-generation technologies.
Your challenge
The accelerated pace of tech change is creating vendor-specific challenges for organizations, including:
- Acquiring and managing technology solution vendors differently – especially if the organization is bringing on more third-party solutions or services.
- Identifying and agreeing to enterprise-wide standards and strategies around vendor management.
- Managing more third-party vendors for an increased number of outcomes.
- Leveraging new technologies that can autonomize vendor performance and relationship management processes.
- Implementing new requirements around how and what vendors need to deliver to be eligible for financial reimbursement (e.g. risk vs. reward models).
Sixty-one percent of technology managers plan to hire more contract professionals in the first half of 2024 (Robert Half, 2024).
62% of IT total spend is on vendors (software, hardware, and contract services) (Info-Tech IT Staff & Spend Benchmarking, 2024).
39% of organizations actively pursue innovation opportunities with their vendors (Deloitte, 2020).
Common obstacles
However, successful adoption of exponential technologies is hindered by:
- Vendor management software only just starting to emerge and leverage the potential of generative AI and other forms of technology.
- The organization acquiring new technology vendors at expedited rates.
- Historically transactional relationships between vendors and organizations.
- The emergence of greater unknown third-party risks every day.
- Increasing dependence on skilled contractors.
- Minimal training for strategic and VenOps skills.
- Ever-evolving regulations around the use of AI, both directly and indirectly by vendors.
- Reliance on subjective and outdated methods to evaluate vendors.
Solutions that support the ability to manage vendor performances and relationships will be necessary in the era of autonomization.
VM technology and skills are not where the organization needs them to be
94% of sourcing technology is not considered intuitive (Globality, 2023).
Only 1 in 3 procurement leaders believe their team has the skills required to “create value from company spend” (Globality, 2023).
Info-Tech’s approach
Follow the four phases of the vendor management process:
The Info-Tech difference:
- Define where the organization is going and how the use and management of vendors will support that future state.
- Identify initiatives across the vendor management process that will drive an autonomous VMI.
- Establish a roadmap to implement the right initiatives at the right times.
Organizations are leveraging more applications and therefore more vendors than ever before
The number of applications within an organization continues to grow exponentially:
Whether it’s technology solutions or the resources required to deliver on an outcome, every single organization is seeing an increase in the number of third parties that they plan to work with (MuleSoft, 2023).
Yet, the VMI could drive organizational value through the adoption of emerging tech and maturation of vendor management practices
94% of organizations were leveraging their service providers to deploy AI/ML Technologies. (Source: Deloitte, 2022)
- Specifically, when it comes to AI and machine learning (ML) technologies, very little (6%) is being developed in-house (Deloitte, 2022).
- Rather, many organizations are choosing instead to leverage the capabilities of third-party technology vendors.
- How those vendors and their AI/ML functionalities are selected and then managed will fall specifically on the VMI.
- Given that only 5% of organizations are seeing 40% or more in savings through automation currently, there is plenty of opportunity to further enhance how these technologies, and the vendors that are providing them, are managed (Deloitte, 2023).
- Rather than let vendors dictate when and how they think their technologies should be used, it’s time for the VMI to set standards for the organization when it comes to emerging and changing technology vendors.
Info-Tech Insight
Organizations need to be ready now more than ever to leverage their vendors in new ways to drive favorable organizational performances and increased value realization.
Info-Tech’s methodology for establishing a vendor management roadmap to succeed with autonomous technologies
Phase 1: Define the Guiding Star |
Phase 2: Explore Exponential IT Initiatives for the VMI |
Phase 3: Build the Roadmap for an Exponential IT VMI |
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Core Activities |
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Phase Outcomes |
Establish the organization’s direction and how autonomous VM technologies and processes will further enable its success. | Explore a variety of possible initiatives the organization could adopt aligned to each of the four core VM processes. | Establish an Exponential IT roadmap that will support the implementation and adoption of critical IT activities within the VMI. |
Insight summary
Don’t waste resources on commodity vendors – or worse, the wrong vendors
Leverage autonomous technologies to mature the VMI and successfully adopt value-added exponential technologies organization-wide.
It’s not about if – it’s about when
Every organization will be forced to mature their VMI sooner than later – technology’s impact on the pace of change will force every organization to either get on board or move over for another organization that is willing to make the change.
Pay only for the risks that lead to rewards
If vendor management is prioritized in the Exponential IT journey, the VMI’s roadmap will soon include initiatives such as creating risk and reward contracts, where vendors only get paid for taking risks that lead to organizational benefits.
Outsource entire capabilities
Successfully outsourcing entire IT capabilities will require cross-organization initiatives that actively include enterprise legal and financial resources.
VenOps is the new DevOps
As organizations engage in less in-house development, they will soon need to switch from focusing on DevOps to VenOps.
Relationships are here to stay
Achieving complete technology autonomy is less likely for the VMI than for other areas of IT given the relational nature of vendor management.
Blueprint deliverables
Each step of this blueprint is accompanied by supporting tools and deliverables to help you accomplish your goals.
Key deliverable:
Executive Communication Presentation
Use this presentation to share not just what Exponential IT is but how adopting critical VMI initiatives will successfully drive the organization into the autonomous era.
VMI Exponential IT Workbook
Use this tool to identify the future state of the VMI and prioritize its core initiatives.
Blueprint benefits
IT Benefits
- Select advanced technology solutions and services faster and more easily.
- Spend less time managing low-value vendor relationships.
- Establish partnerships with the right IT vendors that will further organizational objectives.
- Understand and consider the implementation of next-generation vendor management technologies.
Business Benefits
- Obtain greater rewards without taking the greater risk associated with the emergence of new technologies.
- Scale the VMI to provide consistency and standardization across the organization on vendor management practices.
- Empower leaders throughout the organization to understand and manage technology vendors.
- Reduce resources required to assess vendors and their adherence to contracts.
Measure the value of this blueprint
Maturing the VMI will ultimately result in the following value outcomes:
- Focus on Value
- Adaptability
- Effective Partnerships
- IT-Enterprise Integration
- Better Decision-Making
Specifically, after 12 months your organization’s VMI should experience:
- An increase in the number of vendors it considers a partner.
- Less time spent selecting and managing commodity vendors.
- Increased accuracy around assessing and classifying vendors.
- Stronger relationships with strategic vendors.
- Faster selection of vendors or cancelation of vendor contracts based on vendors’ ability to deliver against agreed-upon organizational outcomes.
- Enhanced skill sets among those who manage vendors.
Executive brief case study
INDUSTRY: Healthcare
SOURCE: "Expion Health Revamps Its RFP Process,” CIO, 2024
Evolving the RFP process
Like many organizations, Expion was using Excel capabilities to their limit to conduct intricate analyses for their RFP responses. To determine rates for potential customers, Expion needed to generate detailed insights into a covered population’s current medical needs and medication uses as well as predict its future needs.
In summer of 2023, Expion launched ExpionIQ Advisor, which leverages several statistical analyses in addition to AI models. This allowed the organization to automate RFPs with opportunities to further expand into other predictive analytics. While there are still manual review options and controls in place, the use of this solution has mitigated how much time Expion spends responding to RFPs.
Results
Expion has not just drastically decreased the number of cumbersome Excel documents it uses to assess data; it also saw a decrease in manual errors and reduced the time it took to do RFP calculations from six to eight days to mere hours. More importantly, ExpionIQ Advisor is now a product their clients are seeking.
- Expansion into new markets $300K sales projected
- Operational cost savings 1.5 FTEs
Info-Tech offers various levels of support to best suit your needs
DIY Toolkit |
Guided Implementation |
Workshop |
Executive & Technical Counseling |
Consulting |
“Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.” | “Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.” | “We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.” | “Our team and processes are maturing; however, to expediate the journey we'll need a seasoned practitioner to coach and validate approaches, deliverables, and opportunities.” | “Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.” |
Diagnostics and consistent frameworks are used throughout all five options. |
Guided Implementation
A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.
A typical GI is 4 to 8 calls over the course of 2 to 6 months.
What does a typical GI on this topic look like?
Phase 1 |
Phase 2 |
Phase 3 |
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Call #1: Understand the VMI’s objectives and its role in driving Exponential IT.
Call #2: Assess the organizational context and the VMI plan. |
Call #3: Align the VMI to the autonomous milestone of Exponential IT.
Call #4: Create success measures. |
Call #5: Review and select VMI Initiatives. | Call #6: Create initiative profiles.
Call #7: Build the roadmap. |