A new vendor management strategy can accelerate innovation, enhance organizational resilience, cut costs, reduce managers’ workloads, and more.
The right platforms and the right strategy can even enable an organization to stay competitive in today’s business landscape—one where disruption and uncertainty have become the norm.
Driving digital transformation in vendor management, though, is not simply a matter of deploying and using new software. Choices must also be made around the types of platforms to deploy and the digital adoption process.
Choices such as these will directly impact the ROI of the vendor solutions in which you choose to invest and the outcomes of the digital transformation effort.
A roadmap for vendor management success
Effective outsourcing and vendor management lowers costs and improves the quality of service delivery. It can enable innovation, business growth, and contribute to the organization’s agility. In many cases, an organization’s competitive positioning partially depends on the relationships it maintains with its vendors.
This finding focuses on vendor management’s role in digital transformation, yet it also points to the importance of vendor management in digital maturity and organizational agility.
According to the vendor management platform provider, SupplHi, many organizations take the wrong approach to digital transformation in vendor management. They adopt many individual tools, which often results in more work for senior vendor management professionals.
SupplHi suggests that since senior resources involved in vendor qualification and evaluation processes amount to 77% of the total costs of vendor management, an innovative digital solution is needed to overcome these inefficiencies.
Below are a few key steps to take that can solve these types of issues and enable digital transformation in vendor management.
1. Composable business models
Composable business models view the organization and business processes as modular components that can be flexibly rearranged when needed. Teams and business units are also considered more malleable and flexible.
A composable enterprise is more agile than traditional business structures.
To enable this new approach to business and operations, several ingredients are needed:
- New mindsets and a new attitude towards business processes
- Processes and methodologies that are built upon more modern, agile business principles
- Digital tools that increase flexibility within vendor management, while decreasing the time spent on vendor qualification by senior leaders
- A permanent digital adoption function that enables continuous employee learning, growth, and innovation
Naturally, these types of organizational changes require a complete team effort, but the benefits of successful transformation will far outstrip the investments needed to enact those changes.
2. Cloud-based platforms vs. on-premises solutions
Another choice to make when upgrading vendor management solutions is the decision between a cloud solution or an on-premise solution.
In general, cloud-based solutions offer enormous advantages over on-premises solutions:
- Cloud solutions are flexible in that they can be deployed and upgraded simultaneously from just about anywhere in the world
- When they are used in conjunction with remote training software, such as WalkMe’s Digital Adoption Platform (DAP), employees can be onboarded and trained automatically and remotely
- Cloud platforms tend to offer advanced functionality that enables new levels of productivity, while simultaneously driving down costs
While cloud solutions do offer significant advantages over on-premises solutions, there are caveats.
When introducing any new cloud solution or remote-ready workflow, it is necessary to pay close attention to security protocols.
Typically, cloud security has been considered less robust than that of on-premises solutions. However, cloud platforms are becoming the standard in many industries. As a result, security solutions are advancing rapidly and, with the proper planning, it is possible to maintain operational security with a cloud-based solution.
The bottom line is that when secured properly, cloud-based platforms support composable business processes, fuel digital transformation, and deliver major efficiency improvements.
3. Workforce agility
To successfully drive digital transformation forward, employees must be free to continuously innovate and support organizational change efforts.
On one hand, this means cultivating a desire among employees to grow, learn, and support change. On the other, it means employees must have the required skills to drive that change forward.
To achieve these goals, business leaders should consider:
- Investing in enterprise change management, a strategic and structured approach to implementing organizational change
- Creating a permanent digital adoption function, as noted earlier, will enable employees to continuously learn new software, new workflows, and new ways of thinking
- Using composable software and automation platforms to rearrange workflows, redistribute workloads, improve productivity, and increase efficiency
Employees are ultimately the ones enacting change—and, as many change management experts have pointed out, organizational transformations can often be blocked by employees who are resistant to change.
Fostering the right culture and the relevant skills, though, can go a long way towards minimizing that resistance and enabling digital transformation in vendor management.
Digital maturity in vendor management depends not on the number of tools implemented but on the capabilities of those tools and how they are used.
The wrong set of tools and processes can add to managers’ workloads, increase costs, and increase workflow complexity.
The correct selection of tools with the right approach, however, can enable remote working, composability, employee agility, and digital maturity in vendor management. To achieve these goals, it is important to focus on the key areas covered above: composable business processes, modern vendor management tools, and a permanent digital adoption function within the business that will act as the core enabler of digital maturity, digital transformation, and digital innovation.