The adoption and usage of these third-party vendors (SaaS) for central and/or critical business functions is growing fast and it is not going away; in fact, it is here to stay. In today’s business environment, a solid percentage of complex business functions are delivered through the use of third-party vendor applications. With each new app, vendor, and tool set comes more risk, so additional touch points are brought to the proverbial table effectively making a complex situation, even more complex.136207264

For compliance purposes, businesses need to demonstrate the policies protecting access to these vital apps. However, users frustrated with managing multiple password policies may inadvertently defeat the security measures and put business data at risk. Strong authentication and app management solutions help, but deploying these systems can be a major undertaking, which effectively cancels out the cost and simplicity benefits of SaaS in the first place.

Routinely, we see critical information or assets being shared with cloud providers, consultants, business process outsourcers, third-party transactions, and a myriad of other business associates.

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Organizations are dependent on vendors yet spend little effort managing their performance, resulting in less than optimal results.

The use of some standard processes can ensure that vendors at least meet expectations.

The application of additional techniques can move vendors beyond good-enough performance to better or even first-rate.

Our Advice

Without effective management, vendor performance will remain at standard or deteriorate below standard service. Actively manage vendor performance to motivate them to provide exceptional service.

Treat the collection of IT vendors as a portfolio requiring regular performance review. Actively manage them all, but pay the most attention to underperformers and develop plans to bring them up to a higher level of service.

To become a favored client to the vendor, establish internal responsibility for ensuring you have shared targets, build a relationship with liaison staff and their managers, implement an effective performance tracking process, and resolve small issues early to correct potentially chronic problems.

Impact and Result

Vendor performance metrics provide the common understanding between the organization and the vendor delivering the products and/or services. Measure progress against metrics and set targets for higher performance, or address a vendor’s substandard performance before it becomes a larger problem.

The size of your organization relative to your vendor’s and the role of your assigned client-facing representative dictate how you manage the relationship. Cultivate vendor management relationships to leverage negotiations and nurture the client-facing worker who will go above and beyond for you.

Without sufficient motivation, vendors will generally only meet the agreed expectations. Leverage the drivers of vendor profitability, reputation, and partnership to motivate them to higher performance.

Manage vendor relationships as a portfolio to achieve a consolidated view of performance highlights and issues, higher customer satisfaction, lower costs, higher quality, and better vendor service.

Related Research

1. Effectively manage vendor relationships.

Motivate vendors and suppliers to provide maximum performance.

2. Measure the performance of your vendor portfolio.

Identify at-a-glance target areas for performance improvement.

3. Survey your vendors to assess the health of the vendor relationship from their perspective.

Learn what motivates your vendors to better performance and take action.

4. Document and track ongoing vendor management issues.

Hold vendors accountable for their performance issues and motivate them to better performance.

5. Identify the vendor management roles best suited for your organization.

Dedicate vendor management responsibility to ensure vendor performance isn’t left to chance.

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