Whatever the cause, large vendor portfolios prevent organizations from innovating. But innovation is a necessary factor in digital transformation. To reach a point that frees staff to innovate requires a new approach to procurement.
Many public sector organizations have attempted to optimize their vendor contracts in an effort to streamline procurement. In so doing, they may have accumulated piecemeal and reactive contracts and agreements. Without a strategic approach, resources are being wasted on contract negotiation, software and technology implementation, and contract and software licensing management.
Strategic contract management is much more than simply whittling down the amount of vendors you work with. In fact, it likely involves more than a single vendor. Rather, it’s all about establishing strong, strategic partnerships that help your overall business goals:
Contrary to popular belief, working with fewer vendors doesn’t negatively affect an organization’s ability to negotiate Service-Level Agreements (SLAs) or pricing. Quite the opposite: It puts you in the driver’s seat to take full advantage of scale or volume pricing and discounts. You may even benefit from preferential pricing.
Let’s explore four additional benefits of vendor consolidation:
Coordinating procurement across multiple vendors and their varying fulfillment operations takes a lot of time and bogs down workers. It can also make it difficult to track your purchases and IT lifecycle.
Working with fewer vendors, however, helps optimize your entire IT supply chain — from procurement and delivery to deployment, asset management and services. You’ll have a quicker, easier view into purchases and related trends. And, your shipping, delivery and deployment will be streamlined.
As an added bonus, having fewer vendors simplifies your ability to automate the procurement process, which can free your SPCM professionals to focus more on innovation and improving efficiencies.
Internal IT support for contract management costs less when working with fewer vendors. You’ll save time obtaining quotes, selecting vendors, negotiating licensing agreements and handling renewals. As a result, you’ll be able to reduce headcount because managing fewer vendors is more straightforward and less cumbersome. You’ll also be able to take advantage of pre-negotiated pricing.
One federal government agency found this to be true when it chose to take a hard look at its procurement process. The agency came face to face with a snowballing-out-of-control vendor portfolio and asset management strategy. Partnering with Insight not only helped the agency consolidate its many vendors into a single contract, but also eliminated its need to deal with third-party provider management.
Subsequently, the agency reduced its costs significantly, finding savings in automated purchasing, license renewals and software lifecycle asset management.
Accurate IT governance is paramount in the public sector. Without it, you’re left in the dark when it comes to proper alignment of IT resources with the mission of the organization.
Consolidating the number of vendors you work with makes it easier to monitor the performance of each individual supplier. In this way, you can ensure they’re living up to their end of the contract. A smaller vendor portfolio also provides you with greater visibility into your contracts, software licensing agreements and SLAs.
As a result, you’ll be in a better position to ensure IT compliance and keep security risks to a minimum.
Having fewer vendors optimizes the inner workings of your IT department, simplifying the team’s ability to deploy, refresh and support employees. Workers gain a better understanding of the IT options available to them and are able to more efficiently order and track the IT products they need.
This leads not only to consistent employee experiences, but also to improved productivity. Happy employees have a far greater likelihood than unhappy employees of staying at a company long term. According to a Gallup poll, “highly engaged business units achieve 24% less turnover” in high-turnover organizations and 59% less in low-turnover organizations.
Working with fewer vendors facilitates that positive outcome.
Now that you know the benefits of vendor consolidation, where do you begin? Partnering with a Super Solution Integrator (SSI) can be extremely advantageous and a good place to start a consolidation initiative.
An SSI typically has expertise and capabilities across the entire IT ecosystem. Consequently, an SSI can help you architect, manage and execute your IT initiatives end to end — and do so in a strategic way. That’s the key to empowering your SPCM professionals to successfully optimize costs and innovate.