There are several factors that feed into digital transformation from across the world of business, including vendor management. There are areas of growth, investment and strategy that all have a role to play in a company’s digital transformation process. The role they all play together feeds into the whole picture of a growth strategy. In this article, however, we will be looking at the role vendor management has to play in pushing digital transformation.
Let us start by defining what we mean by vendor management. Vendors are the businesses and organisations that work to provide services which are procured by another business. It can be a complicated system as a business of any size could potentially work with a number of vendors reaching into the dozens or hundreds. This range of services brings various complicated agreements involving rates of pay, delivery, planning etc. Vendor management is a function that brings this array of services, arrangements, contract agreements and so forth into one central management system, where services can be streamlined and optimised.
One outcome of digital transformation has been the move from traditional vendor relationships where a company may continue to purchase goods or hire people from the same company. It would involve long contracts and firm, long-lasting relationships. In recent times, however, we are seeing ever greater short-term contracts and more transient vendor/company associations.
The desired outcome of vendor management is to increase value through efficiency which can certainly be achieved in the new landscape of the gig economy. The breakup of the traditional formation of contracts has resulted in greater choice and flexibility for a company looking to procure services.
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What services might a company require for digital transformation?
A company looking to move towards digital requires specialist skills to fulfil what can be quite a momentous task. Companies wanting to stay ahead of the game will need to look at sourcing services in a way that meets project requirements as and when they come about. A company might require services such as:
- Software development
- Data analysis
- Agile PMO
- Omni-channel specialism
- Digital marketing
- UI-UX designer
Of course, vendor management in a company is about more than procuring talent but about fulfilling the different areas where a company requires goods and services. A good vendor management strategy involves the research and completion of procuring and acquiring services. It includes pricing, work quotas, quality control. After the service has been completed vendor management involves maintaining contracts and relationships, payments and evaluations.
For more information about this, please see our eBook: The Gig Economy in the Digital Era
What role does Agile play in improving vendor management?
Agile has expanded beyond its original scope of software development. We can now use it to enhance and optimise vendor management processes. Where once a business would need to either continue an agreement until the contract’s end or change an agreement entirely, businesses can now localise and fulfil gaps in vending and procurement processes because of Agile. There are many potential situations where a project might need to change in direction, involving a reshuffle of staff and other services. Traditional project management might involve a complete halt of the process but Agile allows for small changes within a project without the explicit requirement of a complete stop.
In particular, this is where talent sourcing comes into play. Agile approaches to vendor management mean that specific talent can be procured for more specific reasons at times when that talent is needed, rather than a complete staff overhaul from beginning to end.
How do these roles drive digital transformation?
These services can work concurrently to produce a digital transformation strategy that works for each department and conforms to a coherent company-wide schedule. The emphasis should no longer be on traditional PMO but on PMO that embraces Agile process management within an experimental yet cooperative approach. What does this mean? In the past, PMO has focused on what is instantly deliverable, rather than outcomes with a focus on longevity and continuity. Spotify is one of the most famous examples of the successful implementation of Agile methodology. They completely redesigned their business model around Agile’s potential for collaborative methods and specifies the most efficient way of continuing to work.
This shift in focus to what provides value also means that both what companies look for and vendors offer has changed; now the focus is on long-term value over price. There is no ‘one size fits all’ digital transformation, each company making this change have different needs. Business models, vendor management, customer relationships and other departments are looking at how digital technology can streamline processes and therefore improve business.
To cope with the greater demand that the wider field of talent puts on the procurement department, vendor management offices should create and enforce guidelines. These guidelines and directives will mean that everyone in the organisation is on the same page and will reduce the potential for people in other different departments to unwittingly disrupt another’s work. For instance, these guidelines can stop an employee in one department from purchasing the same product as another department, or using a vendor that another employee has already secured a good deal with. With Agile, employees amongst departments can be consistent and therefore can continue with greater cost-effectiveness.
Good vendor management policy benefits everyone
One of the principle focuses in good vendor management should be on consistency. Consistency across all departments ensures focus on procuring the right talent for the right job, at the right time. An effective vendor management process will always ensure that necessary talent is researched, sought and hired on an expert basis. Digital transformation means a focus on long-term sustainability of hired talent over short-term cost savings and also allows for more focused, expert hires. Talent platforms such as Outvise are emerging to provide high-quality, effective and efficient methods that fulfil a companies complex hiring needs, in the vastly changing landscape of recruitment.
Pau Cerdà is co-founder of Outvise. Pau has founded several digital startups and consulting companies. He advised some major telecom and media groups. Former Oliver Wyman. Telecom Engineer + MBA (ESADE)