6 IT Vendor Management Best Practices

Technology moves faster than ever these days, and all sectors of a company can struggle to keep up. But the IT department, in particular, has a lot on its plate. From deploying updates and managing security functions to resetting passwords and troubleshooting glitches, their job is never ending. So, who is overseeing IT vendor management?

Whether it’s someone’s side job or you have a role dedicated just to that, it’s a vital aspect of any business dealing with IT goods and services. To simplify things, we’ve compiled a list of IT vendor best practices for any business.
 
UNDERSTANDING IT VENDOR MANAGEMENT BEST PRACTICES
The vendors you work with are critical to your business operations. Unreliable vendors can cause issues that ripple down to your customers and hurt the bottom line. Managing your vendors can have several goals, but ideally, you achieve a balance between them that works best for your company. Cost reduction, transaction simplification, easy invoicing, scalability, and increased dependability are all metrics by which you might judge a vendor relationship. Your priority will depend on your needs as a business, but what if you didn’t have to sacrifice one for another?

1: STRATEGIC VENDOR SELECTION 
Choosing your vendors wisely is the first step toward better IT vendor management. But how do you evaluate vendors to find the best match? Several standards are important to choosing the best fit. By reducing vendor turnover, you can minimize downtime and provide uninterrupted service to your customers.

Choosing the right vendor can bring your company into alignment with your business goals, increasing growth opportunities and improving the bottom line. Here are some key metrics on which to evaluate potential vendor relationships:

Reliability 
Greater reliability will reduce the company's worry, stress, and general hair-pulling. If your vendors take too long to reply to your questions, don’t handle invoices on time, or are slow to deliver your orders, this downtime can severely impact how you serve your own customers.

Technical Capabilities
Part of IT vendor management best practices is making sure your vendors adequately meet your needs. One vendor that can do several tasks is better than hiring five vendors for related services. With fewer points of contact, things are less likely to get lost in translation, and service follow-ups are simpler.

Customer Service 
If your vendor white-labels your products and directly interacts with your clients, their customer service quality directly impacts your business’ reputation. But even if they only operate behind the scenes, their customer service affects every aspect of your working relationship.

Scope of Service 
The best IT vendor management includes finding vendors that can perform the services you need professionally and on time. If a potential IT vendor can only perform a limited service and you’ll need several other vendors to fill the gaps, consider a vendor with a more inclusive service package.

Scalability 
Can the vendor scale its services as your company grows? If you’re going to outgrow a vendor in a year or two, it may be best to find one that can scale its offerings as your needs grow.

2: Monitor Vendor Performance 
IT vendor management best practices include tracking and understanding your vendor's performance on several key metrics. Conduct regular reviews to compare your vendor's service delivery to industry standards or the parameters of your contract. KPIs to measure include:

• Service Availability
• Response and Resolution Times 
• Service Quality 
• Customer Satisfaction and Net Promoter Score (NPS)
• Compliance and Security
• Cost Effectiveness 
• Innovation and Improvement

Conduct regular reviews and develop feedback loops to monitor IT vendor performance. This will help you spot issues and correct course before they spiral out of control. TSP uses custom and cloud-based ticketing systems that enable real-time tracking and management.

3: Build a Solid Relationship and Use Clear Communication
Building stronger relationships with your IT vendors means streamlined communication and a faster resolution for problems that may arise. Have clear guidelines for designating assigned points of contact and follow-up policies to ensure nothing falls through the cracks. A good vendor relationship and simplified contracts mean faster service delivery and less miscommunication. Have a framework for managing expectations around response times to make sure issues are addressed promptly.

4: Create a Contract Exit Strategy
If things aren’t going well between you and your vendor, you need a way to leave the contract and find another vendor who better fits your needs. Don’t overlook this integral part of IT vendor management. It really comes down to smartly negotiating your contracts by setting reasonable KPIs. All your contracts should include benchmarks for the vendor to meet and the option to renegotiate after a set period, such as 90 or 180 days.

By tying the contract to vendor performance, you give yourself the option to leave the business relationship if the vendor fails to perform to your expectations. Not having such clauses could lead to legal issues such as contract disputes and penalties for breach of contract. That’s why it’s important to create a consistent policy to add specific stipulations to all vendor contracts during initial negotiations.

Having consistent contract exit policies can help you reduce IT vendor costs while also boosting satisfaction for your end-users. If a vendor knows you’ll hold them to performance benchmarks, they’re more likely to prioritize your satisfaction. But even if they don’t, you can quickly end the relationship and find a different vendor without a long fight to leave the partnership.

5: Improve Technological Integration 
When you’re growing, you want solutions that can scale with your business without downtime, glitches, or poor service. Make your IT vendor management simpler with TSP’s cloud solutions and diverse offering of specialized skills. We offer a platform that fits your current needs and also expands as your business grows. We provide a tech foundation that integrates and grows with your business, making sure you can keep offering the best service to your customers.

Here are some metrics to look at for how smoothly the tech integration processes of a new vendor may go:

• Integration Success Rate: measures the percentage of successful integrations compared to total attempts.
• Time to Integrate: tracks the average duration required to complete system integrations.
• User Adoption Rate: shows how quickly and extensively staff adopt the new systems.
• Scalability Metrics: assess the ability of integrated systems to scale up as the business grows.
• Cost Efficiency: determines the cost savings achieved after integration.
• Vendor Responsiveness: gauges how quickly the vendor responds to integration-related issues.

Unless a vendor scores well across all of these metrics, it’s not worth entrusting your business success to them!

6: Implement a Comprehensive Vendor Management Policy
IT vendor management doesn’t have to be complicated or expensive. By creating a clear, concise, and consistent framework for vendor management, you can make better, faster decisions regarding your vendors. With consistent benchmarks, payment policies, and communications guidelines across the board, you eliminate doubts about which vendors provide the most value.

Keep your documentation consistent and accessible all in one place. Conduct regular check-ins and assessments with vendors to make sure everyone is on the same page. Assign one person or team to oversee vendor relationships and handle benchmarks, reviews, and contract renegotiations. By proactively managing and making the most of your IT vendor relationships, you can save money and increase your efficiency, thus providing better service to your customers and aligning yourself for business growth.

HOW TO IMPLEMENT IT VENDOR MANAGEMENT BEST PRACTICES
Developing IT vendor management best practices is about more than improving operational efficiency — it’s about gaining an advantage in a highly competitive market. Focusing on critical aspects like integration, scalability, and cost efficiency ensures that your vendor relationships stay smooth and cost-effective while remaining adaptable to changing demands.

When your business adopts a holistic view of its IT vendor management strategies, it can better align technology investments with overall business objectives. This can lead to better outcomes and a stronger position in its market. TSP's expertise in these areas offers organizations a reliable pathway to improving their IT vendor management. We help them gain a more organized IT environment to achieve better growth and success. Ready to get started? Contact us today!