vendor performance management

Vendor Performance Management – Part 2

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As the number of vendors per company keeps increasing, the complexity of vendor performance management is growing as well. Fortunately, an ITSM platform can be an efficient tool for organizing the process.

In the previous part of this article, we figured out how an ITSM solution can help to get a single view of the vendor relationship, make SLA fulfillment visible in real time, and uncover the business outcomes of service downtimes. Now let’s see how such an application can overcome two more challenges of vendor performance management and what new role emerges for the in-house IT department with the implementation of an ITSM solution.

Challenge 4: SLA is fulfilled, but user satisfaction is missed

To enrich information on vendor performance further, the company can analyze such ‘soft’ aspects of relationships as vendor reliability and users’ service perception. For sure, the opinions of stakeholders can be gathered with no software at all. Yet, to translate qualitative answers from respondents into numbers that can be compared and trended, there needs to be some algorithm for standardizing and processing users’ feedback.

How an ITSM system helps

The out-the-box survey functionality of most ITSM platforms allows you to periodically gather data on vendor reliability and user satisfaction using form templates. Surveys are automatically sent to relevant stakeholders (say, to sales representatives who use a CRM system), and the gathered data is turned into quantitative metrics. No doubt, surveys will require configuration to match the company’s workflows, but these efforts will result in more detailed information on vendor performance.

Challenge 5: Much managerial effort is required for analyzing and comparing vendors’ performance

With multiple vendors providing similar services, the company’s management is challenged by the need to compare vendors and decide on whether or not to do further business with them. This means you need to understand vendor performance over time, analyzing trends in their SLA fulfillment and costs of vendorship, as well as tracking changes and trends in stakeholder feedback. Apart from being time-consuming, a complicated process of getting metrics together can lead to data slips and inaccurate judgements about relations with vendors.

How an ITSM system helps

Within an ITSM-based application, all the analytical work can be done behind the scenes, with decision-makers getting ready-made dynamic reports on vendor performance whenever they need it. Visually represented SLAs and cost-to-business, shown by months or other timeframes, help the company’s management to objectively decide on future relationships with vendors.

In addition, as all vendor information is stored in a standard form within a single system, it’s easy to compare vendors, as well as rank them by such parameters as SLA compliance and costs incurred, or ‘soft’ ones such as reliability and user satisfaction.

Apart from analyzing vendors in particular, the company can get a complete picture of their vendor network. For this, an ITSM application for vendor performance management can allow you to build reports on SLA breaches, open incidents and expenditures broken down by vendors. This list of reports can be extended depending on a company’s business. For some enterprises, it makes sense to report vendor share in different types of breaches. For example, a bank could differentiate between service downtimes based on their impact on the core business, with Group A denoting a high impact (e.g. branch network unavailability) and Group B a low one (e.g. an ATM failure).

The new role of an IT department

All that said, along with a new ITSM application introduced to handle the challenges listed above, there comes a new role for an in-house IT department – vendor performance observance.

Yes, it’s possible to standardize and partially automate continuous communication about vendor service performance via emails, with an ITSM system sending notifications to vendors and retrieving performance data from vendors’ email reports in line with defined requirements. Still, the process would require the company’s IT department to promptly input vendor data in the ITSM system, as well as close incident tickets and mark resolved problems. The accuracy of vendor assessment would thus depend on the IT department’s work and timely information updates on the vendor’s side.

To enhance the process of communicating vendor data, a company can agree with vendors on automatic in-house monitoring of vendor services based on one of the following options:

  • Integration of the company’s ITSM solution with vendor systems (e.g. vendors’ customer portals providing real-time data on service performance)
  • Integration of the company’s ITSM solution with a dedicated monitoring tool that automatically requests the access to outsourced systems and checks their performance

In both cases, the company can derive an additional benefit from using an event management application that may be affected.

What do you think about ITSM-based vendor performance management? Feel free to share your ideas in the comments.

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Sergey Dureiko

Sergey Dureiko is an ITSM Consultant and Senior Software Developer at ScienceSoft, a software development and consulting company headquartered in McKinney, Texas. With 8+ years of experience, Sergei focuses on ITIL concepts and ITSM tools (ServiceNow and BMC Remedy platforms), with the last 5 years spent on ITSM tools integration practices. He holds a range of internationally-recognized certifications, including ITIL v3 Foundation, Certified ServiceNow System Administrator, and BMC Remedy AR System Skilled Professional Certificate.

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