CIO: How to Manage Your IT Vendors?

Subscriptions, software, hardware, services, outsourced services… In an IT department, there is no shortage of suppliers, and IT expenses can sometimes account for a significant portion of the company’s budget. Effective vendor management and IT partner management are not only crucial for budget control; it is also closely linked to the performance of the CIO as a whole—whether we’re talking about its day-to-day operations or its development projects. So what are the best practices for optimizing the CIO’s supplier tracking? Here are 10 key points.

Managing IT vendors: a growing necessity

In IT departments, many factors contribute to the need for sound and efficient supplier management. These include

• On a very macro level, the transformation of business models induced by digital technology and the weight of innovation. This transformation amplifies the strategic and critical role of IS, and means that, to keep pace with these rapid changes, we need to challenge and even renew the suppliers we use, with equally accelerated decision-making cycles.
• D’un point de vue systémique, l’inflation du nombre de fournisseurs, accentué à la fois par :
  • the trend, observed in many organizations, to outsource all or part of the IS
  • the “webization” of applications or software packages, increasingly developed “as an as service”, cf. the multiplication of IaaS, PaaS, SaaS, BPaaS offers, etc.
  • the development of shadow IT, driven by business lines, which multiplies the number of operators
• La pression des DAF et contrôleurs de gestion pour contrôler et optimiser les postes de dépense, ainsi que l’entremise croissante des directions achats et directions juridiques :
  • a fortiori in an inflationary context that increases pressure on prices,
  • fueled by soaring cloud spending, with sometimes complex pricing structures
• Growing environmental concerns and the emergence of the concepts of Green IT and digital sobriety are prompting IT departments to take a fresh look at their suppliers, and possibly to source new partners.

All of these factors are prompting CIOs to pay closer attention to the management and oversight of their suppliers, whether in terms of sourcing, (re)negotiating rates, or ensuring the quality of the services provided.

Especially since IT procurement processes come at a cost—particularly in terms of human resources—which is often exacerbated by the complexity of the decision-making process. In his book*IT Vendor Relations in 40 Questions*, Philippe Rosé estimates that, on average, 20 people are involved in an IT purchase (14 in SMEs, 27 in large companies), divided equally between the CIO and business units—not to mention the teams on the supplier side.

At every stage (selection, relationship management, and completion of services), tracking IT department suppliers is therefore essential, and it is important to do everything possible to optimize this process.

10 Tips for Optimizing IT Department Steering for Suppliers

1/ Standardize your organization’s IT supplier base in a single repository.

Building up a catalog of resources – service providers, software, hardware, subscriptions, etc. – is never superfluous. – is never superfluous. This exercise has the advantage of centralizing all the IT suppliers and partners likely to be used in a given organization. This is all the more useful when shadow IT is commonplace, with the result that the supplier base is multiplied and fragmented. In such cases, the resource catalog is a way of regaining control of all suppliers and building up a 360° vision, and avoiding redundant or non-compliant solutions in terms of risk management, for example.

To do this, one can, for example, refer to the Cigref classification system, which provides a standardized framework. This approach, in addition to being useful on a day-to-day basis for the CIO and its users, will be viewed favorably by the finance and procurement departments, as it also provides greater visibility and thus better control over expenses, for example by facilitating the consolidation and comparison of costs.

2/ Listen carefully to source new suppliers on a regular basis.

Because technology evolves rapidly and new needs and expectations emerge, it is standard practice to regularly review and update the list of suppliers that the IT department can rely on. Identifying and evaluating new skills and solutions is therefore part of the CIO’s role in effectively managing the organization’s suppliers. To do this, it is helpful to:

• Engage regularly with business units to fully understand their strategic objectives and requirements (and, if necessary, refine them, as the CIO holds the relevant expertise); involve them in defining selection criteria and even in the selection process itself (such as an RFP – Request for Proposal)
• Take note of recommendations and feedback from peers (CIO clubs are generally very useful in this regard)
• Open up the CIO’s supplier base to new types of startup-style collaborations (with which we can, for example, set up proof-of-concept projects and be willing to relax the usual contractual framework and requirements to facilitate the onboarding of these new partners)
• Integrate internal policies (purchasing, risk management, etc.) and regulations in force. This can lead, for example, to the referencing or labeling of “Green” suppliers, etc.

3/ Measuring IT purchasing performance.

Cigref has drawn up a number of best practices and indicators that can be used to assess the quality of the IT purchasing process from 4 different angles:

1/ Economic performance :	– Savings achieved, reduction in Opex – Quality of the price obtained (initial and future supplies) – Implementation of vendor management (management of the supplier relationship beyond the price and the contract)
2/ Quality of procedures :	– Purchasing strategy deployed via framework agreements – Coverage rate of framework contracts in terms of scope managed – Quality of and compliance with purchasing processes and contract compliance – Assistance with expression of need – Compliance of contract with expressed need – Compliance with contract award deadlines – Quality of exchanges within the buyer-prescriber team – Benchmarks
3/ Relations with SMEs and innovation	– Volume of purchases from SMEs – Share of contracts awarded to SMEs – Dependency risk management (technical or financial)
4/ CSR policy	– Tracking of environmental KPIs included in the calls for proposals – Social criteria – Recycling of materials – Use of companies in the sheltered sector

* Source: IT department steering and Digital transformation – CIO dashboard (Christophe Legrenzi and Philippe Rosé)

4/ Centralize and share all supplier information useful to the team.

Successful vendor management must be dynamic and collaborative. Nothing is more frustrating than wasting time searching for a key contact or verifying a contract detail, especially when you can’t be sure the information you have is up to date. Once the vendor repository is established, it’s important to ensure it’s shared and easily accessible. Every stakeholder—whether an IT Manager, an employee, or even a business unit representative—must have quick and easy access to this shared database: contact information for sales or support representatives, reference documents such as contracts, SLA – Service Level Agreement, and commitments, as well as Vendor reviews with assessments of costs, lead times, the quality of the relationship, any alerts regarding failures, etc.

5/ Automate tracking of key contracts and deadlines

In a supplier relationship—especially within a CIO department—the legal framework matters. There are many key dates to keep track of, and the larger the number of suppliers, the more essential it is to rely on automated alerts and notifications to avoid the risk of missing a critical deadline: Contract renewal or termination, administrative documents to be requested periodically, and volume-based discounts due on specific dates.

This management of deadlines is also a way of anticipating – if need be – the search for new suppliers well in advance, as we know that the task can be time-consuming (between drawing up specifications, conducting the call for tenders, legal formalization, implementation, etc.).

6. Analyze IT spending to optimize the CIO’s budget.

How much does a particular CIO provider cost per year? What are the largest expense categories? How have a specific contractor’s invoices changed over time? How do actual costs compare to the budget?

Carefully analyzing IT spending is key to effectively steering relationships with suppliers. This can help identify opportunities for optimization, explore renegotiations, and raise awareness among CIO staff regarding specific aspects of the relationship. It is therefore important to implement dashboards to monitor IT spending (by expense category, business unit, etc.), as this provides relevant insights for steering your “pool” of IT vendors and the relationship with each of them.

7/ Implement supplier governance

It is important to establish a governance framework to build and maintain a strong relationship with the CIO’s suppliers. This involves, in particular, designating clear points of contact and appointing one (or more) individuals responsible for supplier relations, for example by business area. Periodic meetings can also be scheduled to discuss performance, potential issues, and opportunities for improvement. This governance—similar to vendor management—will promote open communication and facilitate the rapid resolution of potential difficulties.

8/ Be vigilant about risk management.

Like any external interface, supplier relationships require particular attention to risk management in order to reduce vulnerabilities and ensure the continuity of business operations. The stakes are undoubtedly higher for CIOs due to the often “critical” nature of information systems. Before beginning a partnership with a new supplier, particular attention should be paid to:

• Identify and assess potential risks: delivery delays, service failures, data security, financial risks.
• Identify the existence of business continuity plans to deal with potential interruptions to the services provided
• Establish rigorous contract design: clearly define terms and conditions, obligations and responsibilities, particularly in terms of data security, confidentiality and regulatory compliance. Contracts must also provide for dispute resolution and termination mechanisms in the event of non-compliance.
• Keep a close eye on security: including regular assessments, audits and penetration tests to ensure compliance with established security standards.

9/ Establish key performance indicators (KPIs) and evaluate suppliers on a regular basis.

The first step is to define relevant KPIs to measure and evaluate the performance of IT vendors. These may include criteria such as the quality of deliverables, adherence to deadlines, the responsiveness of technical support, and so on. These metrics should be monitored regularly to identify any deviations and take corrective action. Periodically, it is also advisable to conduct more comprehensive vendor reviews of the CIO’s suppliers to measure their overall performance. These vendor reviews can be based on structured questionnaires, interviews, or audits. They will help identify each supplier’s strengths and weaknesses, highlight areas requiring improvement, and initiate corrective actions if necessary.

10/ Sharing transparency within the organization and with suppliers:

Whether it’s a question of resource catalogs or dashboards, don’t hesitate – within the organization – to share them, in complete transparency, with the stakeholders concerned: Business Units, Purchasing, CFO… There’s a lot to be gained from it: it’s a way of keeping a firm grip on the supplier base (that’s where you should be drawing from and not elsewhere), of shedding light on IT expenditure while at the same time highlighting the control and attention paid to the subject, of making certain stakeholders aware of abuses of which they are not necessarily aware, and so on.
This transparency is also essential for building a healthy relationship of trust with the CIO’s suppliers. This encourages them to share relevant information about their processes, performance, and continuous improvement initiatives. In turn, the CIO will benefit from clearly and openly sharing its objectives and expectations. This mutual transparency will foster closer collaboration and a better understanding of each party’s needs. It allows the “client-supplier” relationship to be repositioned as a partnership in which both parties stand to gain.

If implemented within CIO departments, these 10 best practices will contribute to better vendor management, thereby fostering more effective relationships, higher service quality, and optimized investments—and thus the CIO’s budget. In fact, every party stands to gain from building a sustainable win-win relationship between the CIO and its suppliers, driven by a common goal: value creation.

What can you expect from a dedicated supplier and contract management solution?

Given the stakes involved, it makes sense for an IT department looking to strengthen its oversight of suppliers to adopt a management tool that will streamline and improve the efficiency of tracking expenses and contracts. Such a solution allows for the centralization of contract information, the monitoring of deadlines, the automation of reminders, and the streamlining of contract renewals and modifications.

• In the absence of dedicated software, many CIOs steer their supplier databases using Excel spreadsheets, with all the well-known drawbacks of that tool: lack of collaboration, Automation, and so on.
• On the other hand, there are solutions on the market designed exclusively for supplier and contract management; however, these sometimes offer features that are too advanced for the way most CIOs use them (and therefore come with an unnecessary cost).
• We will also be interested in solutions that integrate the vendor repository with the IT department steering within the same platform, as Abraxio does. Since these two areas are closely linked, this is an effective way to manage them without “duplicating” the time spent tracking and updating data in either system, and in particular to easily control commitments in order to avoid any overspending or unpleasant surprises.