The second quarter of 2020 launched many digital transformation projects that didn’t necessarily happen at the behest of chief innovation officers, but because of the wrecking ball of disruption known as covid-19. Even if companies did succeed at rapidly orienting operations and services to digital, the transformation journey is far from over—and that means procurement and vendor management professionals now need to work some IT budgeting magic.

This content was produced by Insight. It was not written by MIT Technology Review’s editorial staff.

Jamie Werve is director, e-commerce strategy, at Insight.

The reality is, you can’t invest in innovation without first optimizing procurement. Sourcing, procurement, and vendor management (SPVM) professionals face critical objectives this year: optimize operations to reduce costs and free up funds to invest in innovation. How do you accomplish both when your budget has been wildly thrown off track?

While organizations are trying to go lean during challenging economic times, a bloated vendor portfolio conceals a lot of opportunities to get more with less.

Why is vendor management so difficult?

Business IT ecosystems today are highly sophisticated and ever-increasing in complexity in order to realize the return on investment promised by digital transformation. Events of 2020 have further emphasized the critical need for modern infrastructure and digital experiences. However, a robust IT ecosystem can also be expensive to maintain, resource-intensive to manage, and inefficient to operate.

On average, organizations are trying to manage more than 10 vendor relationships for a single initiative—and may have upward of hundreds of vendor relationships to fulfill the vast array of needs across the organization. Adding to the complexity is the reality that IT systems and technology-related decisions are actually happening outside of IT.

SPVM professionals are all too familiar with the painful and time-intensive coordination required to purchase across numerous vendors and their disparate fulfillment operations. Stack on top of that disparate software licensing agreements and rogue employee IT purchasing. This

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By: Jason Sparapani
Title: Going lean: How vendor consolidation creates big gains
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Published Date: Tue, 30 Jun 2020 20:00:00 +0000