Vendor Management 3.0: Digitizing and Automating

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Ankur Bansal

Don't ignore data flowing through vendors management systems

In my last column I emphasized smart contracts as one of the ways to address issues in Vendor Management.

Vendor Management is becoming an area of increased importance as clients increasingly use vendor ecosystems (ranging from services, software, startups etc.). And yet, we see clients not paying enough attention to it.

Most clients who have outsourcing relationships with vendors are sitting on huge amounts of insights and data.

This data is simply under-utilized.

The vendor management model has, for decades, been all about cost savings and control. But as we enter the age of transformation, the real value lies in unlocking the data and insights between the two parties.

Vendor Management consists of several transactions across finance, performance, contract, compliance etc. As financial information is exchanged, it reveals significant insights on usage patterns of various IT elements, by the client. Similarly, performance data can reveal areas – at a granular level – that need improvement. With better tools, the data can be analyzed real time, and used to identify error patterns, usage patterns and trends. The result is prevention of outages and disruption, and better utilization of IT assets.

Having advised several companies in their vendor management journey, I, at times, have been mesmerized by the substantial amounts of rich data they are sitting on. It’s overwhelming, just how useful this information can be.

Instead of the traditional way of policing suppliers, Vendor Management Offices can create a forum for more meaningful dialogue with vendors with deeper insights into operational metrics that can allow clients to address issues.

In fact, I see the possibility of mining this information to be monetized and benefit the industry in general.

This requires Vendor management offices to be equipped with the right skills and technologies. The market has seen an influx of tools like Service Now, Sirion Labs and many more. Deploying these platforms is a step towards enabling a digitally enabled Vendor Management. This, in turn, can be further supported by the use of RPA and Cognitive technologies.

RPA can automate activities like invoice validation, performance validation, contract compliance, etc. These are labor intensive activities that often take multiple iterations and several days.

The opportunity and the future of Vendor Management can be described as below.


The future lies with the enterprises that gives way to a digitally enabled and data driven ecosystem of vendors. Enterprises will have to deal with constant changing sets of vendors in order to derive value. This is possible through information driven insights. Enterprises that do not adopt the new paradigm will struggle to manage vendors, as they will lack the skills to respond to the market dynamics of the ever changing vendor ecosystem.

Which side you want to be is completely your choice!