Alsbridge Report Reveals Methodology that is helping CIOs Create Successful VMOs

Although organizations have been establishing Vendor Management Offices (VMOs) to facilitate their ITO arrangements for many years, Alsbridge has found that few succeed in effectively running their outsourcing activities as a business.

“You would expect that because ITO has become more commonplace, VMOs would have become standardized,” says Ben Trowbridge, CEO, Alsbridge, Inc. “Unfortunately that is not the case. If a VMO even exists at all, it often looks very different from one organization to the next.”

According to the report from Alsbridge, 40 - 70 percent of the original business case for outsourcing can be lost because the client organization is unable to establish a governance structure for managing the vendor relationship.

“The problem is that no industry standard reference models are available to help address the unique challenges associated with managing these complex relationships,” said Trowbridge. “So, for organizations that are taking their first steps into the realm of outsourcing, establishing an efficient and effective vendor governance structure can be a complicated and frustrating undertaking.”

Setting up a Successful Vendor Governance Framework

When blueprinting a VMO, it is important to recognize the several stakeholder groups within the organization that have a significant role in governing the vendor relationship at various points in the sourcing life cycle.

The VMO processes used to sustain viable relationships and high-performance service delivery between these stakeholders are organized into the following framework component areas:
•    Relationship Management
•    Performance Management
•    Financial Management
•    Contract Management
•    IT Service Management

Each of the components contains elements that are strategic, tactical, and operational in nature. In addition, the activities associated with each component will also vary depending on the vendor and where the deal is within the outsourcing life cycle. The full report addresses each of the five components in detail. Download the full report here.

About Alsbridge Inc.

Alsbridge provides world class sourcing advisory and benchmarking services for IT, finance and sourcing executives. With over 150 consultants located globally, we’ve helped hundreds of companies reduce costs and get more value from their vendors. Our experienced consultants leverage proprietary tools and information databases to identify and engage the optimal vendors for your situation, negotiate best practice terms at fair market prices, and improve the way you work with your vendors. Alsbridge clients utilize the most cost effective and value added sources globally for IT infrastructure services, hardware and maintenance, network services, software and maintenance, application support and development, business processes and cloud services. Our commitment to delivering value to our clients has made Alsbridge a distinguished member of the 2010 Inc. 500 fastest growing privately held companies in America.