The evolving role of the CIO in vendor management

The role of the CIO is changing as technology becomes increasingly critical for business growth. While the focus used to be on managing technology, it has now shifted toward managing relationships with vendors. As a result, IT sourcing, procurement, and vendor management leaders have become more critical, as they are responsible for connecting the internal capabilities of organizations with the external digital business ecosystem.

Prioritizing vendor relationships for effective vendor management

To manage relationships with vendors, CIOs, and IT teams need to prioritize their vendor relationships based on importance or find another way to maintain close vendor relationships. The Pareto principle is one way to prioritize vendor relationships. It involves focusing on the top 80 percent of organizational spending with around 20 percent of vendors.

Managing tail spending for high-growth companies

However, high-growth companies may need help managing their tail spend, which represents a high cost despite comprising a relatively small portion of the total cost. To address this, companies can review suppliers for complete visibility and use spend management tools to reveal hidden tail spend. They can then search for underutilized tools, streamline, or spot duplicates to reduce the number of products within their stack.

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Supplier consolidation and third-party specialists for efficient vendor management

Supplier consolidation and reduction make it easier for processes to be aligned and streamlined across all aspects of the business, from supply chain to finance. Companies can also work with third-party specialists to manage the day-to-day oversight of transactional activity and collection of operational data related to vendor management, freeing up internal resources to focus on developing more prosperous relationships and strategic value.

Managing IT spending for maximum ROI

Recent research from Gartner expects IT spending to rise to $195 billion in 2023, with IT services and enterprise software representing the most prominent growth categories. As a result, companies must manage these expenditures effectively to maximize their return on investment.

Using Vendr to manage supplier relationships

Vendr's Contracts feature provides a valuable tool for centralizing spend visibility. Integrating Contracts with your company's finance system makes it easier to compare contracted spending with actuals, streamline the software stack, and make informed, data-driven decisions that can positively impact the bottom line.

To begin using Contracts, Vendr customers can speak with their Customer Success Manager (CSM) to learn how to add non-Vendr or non-SaaS contracts. Alternatively, they can refer to Vendr's help documentation for more information.

For those who have yet to become a Vendr customer, the company offers a free stack analysis to help unlock the full potential of software spend and take control of renewals.

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In conclusion, as the role of the CIO evolves, managing relationships with vendors will become increasingly critical for organizations. By prioritizing vendor relationships, reviewing suppliers, using spend management tools, and working with third-party specialists, companies can reduce their tail spending, streamline processes, and develop more prosperous relationships with vendors. In addition, tools like Vendr's Explore feature can help businesses manage their vendor relationships more efficiently and make informed decisions about their software purchases.

This article was originally published in May 2019.

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