White Paper: Best Practice Vendor Management

If you are concerned that you are not getting the most out of your telecoms vendor, it is best to take action. The traditional structure for engaging a telecoms contractor is low on contact, high on frustration and tends to produce much more conflict than innovation. It is a relationship that can seem geared towards wastefulness.

Vendor management offers a new approach to managing this relationship without increasing pressure on in-house resource. A vendor manager will build a long-term strategic partnership with your vendor, reducing conflict, monitoring value and leveraging the contractor’s insight into tech innovation to increase efficiency and benefits. 

Telecoms vendor management helps companies with a specific problem: weak relationships with telecommunications vendors. Often there is a lot of excitement and discussion as a contract is agreed, perhaps for millions of pounds, only to be followed by a slow drop-off in communication. Agreed benefits are diluted, the finer details of the contract are overlooked and the relationship with the vendor becomes more distant.

Unless you are in regular contact with a telecoms vendor, it is impossible to get maximum benefit out of your budget for services such as voice and mobile, or WAN/LAN. This is where telecoms vendor management steps in: to keep up the pace of communication, helping you to get the best value.

Telecoms vendor management is not about distrusting your contractor or thinking they are trying to give you a rough deal. It is simply a management practice based in the belief that continued input into your telecoms partnership will guarantee the best service.

A useful comparison is hiring a builder for a project. You choose a contractor carefully, check credentials and discuss the project in detail. Most people would not then just hand over the cheque and leave them to it. Instead of this risky strategy, a prudent person would prefer to monitor progress to ensure the build was according to plan and within budget.

Unfortunately, in practice many organisations do the equivalent of giving the builder a large cheque and walking away. They sign an agreement with a telecoms vendor, and then only contact them if major problems arise. There is very little pressure on the vendor to ensure they deliver maximum value. In practice, they only work hard for the customers who actively manage contracts.

It is certainly best practice to prepare a compelling business case for telecoms procurement before entering an agreement, then negotiating to ensure benefits are written into the contract. Yet, unless contracts are managed to ensure benefits are realised, it is all just words on paper. It takes active management to bring the agreement to life.

Holding contractors to their commitments is a key objective in vendor management. In many cases, a pro-active approach actually secures benefits over and above what is written into the contract. Without additional help, companies often find spending in various categories is higher than stated in the contract due to project work or change in business demand. Vendor management helps to ensure that expenditure is always reasonable, proportionate and smartly invested.

Even where organisations recognise the benefits of strengthening their relationship with telecoms vendors, business pressures often mean there is no time to do so. This is why most of the time companies only contact vendors when there is a problem. All too often the operational staff reporting a problem lack in-depth knowledge of the contract, leading to frustration and inefficiency. For example, employees often request quotes for an increase in services, not knowing that preferential rates were written into the contract.

A vendor manager will build stronger relationships with your telecoms vendor by being in regular contact, making it easier to escalate and resolve issues when they occur. Whereas reactive management results in contact with telecoms vendors always focusing on problems, a pro-active approach identifies opportunities. Vendors often respond with strategic insights into the market and technical innovation, which in turn results in improved account management and efficiency. Businesses usually find the service pays for itself in efficiencies, as well as delivering operational advantages.

Once a telecoms contract is put in place, a vendor manager will focus on gathering knowledge and understanding. The goal is to be an expert on that agreement. Your vendor manager will review all the contracts for the relevant services and identify the key deliverables, paying close attention to current and future levels of spending and how those are allocated between different contract categories. Without this close scrutiny, it is hard to monitor contract delivery effectively.

Communication is essential to good vendor management. Your manager will ask you to explain to all staff that supplier vendor management is being used – and why. Spelling out how responsibility and accountability is divided between the vendor management service and your company is crucial. The vendor manager also want employees in your business to know that they are the first port of call if you experience issues with your vendors.

It might sound as if monitoring performance against a contract would be simple, but in reality, as business needs change, telecoms needs may become very complex. Many business cases using telecoms involve moving parts that change over time, making it harder to keep track of whether key SLAs are being met. Some telecoms companies exploit this complexity to dilute the original business case, whereas others might inadvertently deliver reduced value due to poor tracking.

A good vendor manager knows how much resource is required to monitor contract delivery effectively, even for large and complex projects with frequent revisions. The manager will make sure telecoms vendors do not resort to default billing, which generally gives poor value for money.

From the outset, it is a good idea to establish some parameters about levels of contact with your vendor. A typical governance structure might involve monthly operational meetings, quarterly service meetings, bi-annual executive meetings and occasional sessions on innovation and strategy. These meetings will not always require the presence of an external vendor manager, but your vendor manager will advise you on desirable outcomes and areas of discussion. It is important that meetings are attended by staff of an appropriate level, both from the business and the contractor.

Meetings with your telecoms supplier should be based around issues that are critical to your business, which is not always synonymous with where you spend the most money. It is easy to overlook niche areas where expenditure is low, but an outage would have a serious impact on your business.

It can be helpful to provide for a governance structure within the contract itself, especially around workshop provision. Workshops on technology, innovation and skills updates are crucial to maintaining proactivity within the partnership. If you are in a multi-supplier environment, these sessions can be used to bring together contractors to ensure they work together in delivering unified solutions. 

Fixing a governance structure into your contract will help you extract the most from your vendor, not just for the first few months, but throughout the relationship. There should be a continuous cycle of checking the goods and services available in the market against what you have procured to ensure you are receiving the best value. It is easy for market innovations or price drops to go unnoticed.

In many circumstances, consolidating suppliers is a reliable way of driving efficiency and leveraging your budget. There is often a way to work with a vendor to find alternative means of delivering the same or better outcomes, especially when introducing a new technology or process. Giving your vendor the opportunity to make the case for implementing a new system is almost always worthwhile, even if you do not ultimately choose to adopt the proposals.

It is impossible to think long-term if you don’t have a good handle on the here and now. A category-based management plan is an invaluable tool in securing best value. The plan should include baseline summaries of spend, showing exactly what the money will provide and who is responsible for delivery. Clear, user-friendly contracts will help, too. A vendor engagement plan which reflects the critical services and opportunities for improvement should also be developed.

To bring life to your vendor relationship, establish SMART objectives (specific, measurable, assignable, realistic and time-measured) for areas like commercial, operational or facilities benefits. Mutually-agreed objectives for improvements can be tracked by both the business and the contractor, helping to deliver on the business case for a project and realise the benefits. This kind of plan can play a powerful role in driving forward procurement practices in business.

An approach of building strategic partnerships, planning for active vendor engagement and continually evolving plans to ensure optimum performance usually delivers much better value than a traditional arms-length approach. What could it do for your business? 

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