Join at metrics.ning.com

1. A Case Study for Metrics
Driven Vendor Management
Services (VMS)
Danniel Martinez-Iller
05.05.2010

2. Agenda
What is Vendor Management
Goals & Benefits
Landscape Analysis: Sourcing Systems, Data,
Technology, and Process
Framework Design Principles
VMS Metrics Framework
Dashboard
Sample Scorecard
Results Accomplished
Lessons Learned

3. What is Vendor Management?
“Vendor management is the discipline of
establishing service, quality, cost, and satisfaction
goals and selecting and managing third party
companies and their resources—people,
proprietary solutions, innovations ,and systems--to
consistently meet these goals.”
- 360o Vendor Management: "Definition of Vendor
Management", page 1, 2007, with modifications in
italics by Danniel Martinez-Iller & Joseph Choi.

4. Goals & Benefits
Single Source of Truth (SSOT)
1) Resources
1) Average cost analysis (how much are we paying)
2) Consumption type (what are we buying)
3) Tenure limits (co-employment risks)
2) Vendors
1) Reduction (leverage economies of scale)
2) Core competency identification (who/where are our best vendors)
3) Risk mitigation (reduce or eliminate risks)
3) Spend
1) Where are we spending our budget?
2) How can we get more with less?
3) We need to reduce our budget, and where can we cut?
4) Performance
1) Supplier “hit” rates (How often do they fill)
2) Benchmarking (how can we increase if we don’t have a baseline)
3) Vendor Satisfaction Survey (VSS) (how can we tell if our vendors are doing
well)

5. Landscape Analysis: Sourcing Systems

6. Landscape Analysis: Data
Org Name US India China Etc., etc. Total
Org_1/SVP_1 $1,1 $1,2 $1,3 $1,m Total_1
Org_2/SVP_2 $2,1 $2,2 $2,3 $2,m Total_2
Org_3/SVP_3 $3,1 $3,2 $3,3 $3,m Total_3
…
…
Org_n/SVP_n $n,1 $n,2 $n,3 $n,m Total_n
Total: Tot_US Tot_India Tot_China Tot_?? Gr. Total
1. Data can come from different data sources, e.g, ERP, SAP, etc.
2. Data can be generated weekly, monthly, quarterly or annually
3. Data can have many dimensions: By Sr. VP, VP, Director, Vendor, etc.

7. Landscape Analysis: Technology
Here are some technology and/or process providers…

8. Landscape Analysis: Process

9. Framework Design Principles

10. VMS Metrics Framework
Relationship Scorecard Operational Scorecard
These metrics address: These metrics address:
1. The overall Relationship – Size, 1. Delivery capability
Spread, Depth 2. Quality of delivery
2. Growth – Overall growth, Areas of 3. Compliance
growth, Spread of Growth
3. Breakdown of the Relationship –
By Skill, by Levels, by Contract
type, by Location
Financial Scorecard Satisfaction Scorecard
These metrics address: These metrics address:
1. Partners Financial performance in 1. Client satisfaction with the Partner
Industry 2. Partner satisfaction with the Client
2. Partner Financial parameters for the 3. Strengths and Weaknesses of the
engagement Partner across multiple dimensions
3. Key Financial parameters driven by
Corporate goals – Savings, etc.

11. Dashboard
Consolidated
Scorecards
Metric
Listing
Dashboard
(Drillable)

12. Sample Scorecard
Metrics Target Current Value
Outside Services Spend $10M $12.5M
FTE-to-Consultant Ratio 70:30 ~50:50
Offshore Leverage % 85% ~45%
Blended Rates for India $15k $20k
Partners
Consolidation % from US 30%?? 0%
vendors to India Partners
Qualified Spend % 85% 80%
Cost Savings $100k Monthly $125k
Average CSAT Score for India 4.50 4.25
Partners
Average CSAT Score for US 4.50 4.15
Qualified Vendors
Tenure Exposure <= 5%?? 6%
Compliance 100% 92%
Etc., etc.

13. Results Accomplished
Metrics available anytime and anyplace
Creation of “Derived” metrics from
“Generic” metrics through configuration
(e.g., FTE-to-Consultant Ratios)
“Any-to-Any” drilldowns to see “hot spots”
Availability of “Leading” as opposed to
“Lagging” metrics—No longer as an event
SSOT for all to consume—No more
duplicated effort!

14. Lessons Learned
Must understand the DIKW hierarchy
Management wants wisdom, not data
Management wants access to wisdom
now
Data and system nuances can derail the
most sophisticated metrics framework
QA, QA and more QA until death
Re-org can be a deal breaker!

15. Questions?