Vendor Management

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Vendor Management

  1. 1. Overview & Structure Vendor Management Function July 2009
  2. 2. Need for Centralized VM function @NJM <ul><li>Vendors often don’t communicate changes in processes/technology/services which can impact NJM business ( This is happening quite frequently) </li></ul><ul><li>1000+ Contracts to manage ( Too many to manage) </li></ul><ul><li>Vendor service levels/performance monitoring – No structured process to make vendors accountable for outcomes. (Difficult to measure the value of a vendor to NJM) </li></ul><ul><li>Too many vendors ( No categorization of vendors to focus on few ) </li></ul>
  3. 3. Vendor Management Process – Touch Points
  4. 4. Key Players Players Responsibilities Vendor <ul><li>Various Categories of Service providers to NJM </li></ul><ul><ul><li>Hardware </li></ul></ul><ul><ul><li>Software </li></ul></ul><ul><ul><li>Telecom </li></ul></ul><ul><ul><li>Services </li></ul></ul>Business Unit <ul><li>Various Business Units in NJM who need products/services </li></ul><ul><ul><li>IT, Admin Services, HR, etc. </li></ul></ul><ul><ul><li>Business units ( Claims, U/W, Finance, Statistical etc ) </li></ul></ul>VMO – Vendor Management Office <ul><li>Dedicated centralized function to co-ordinate between key players of NJM ( Business Units, Contract Management, Purchasing ) with Vendors. </li></ul><ul><li>Key functions of VMO </li></ul><ul><ul><li>Vendor Management Policy & Guidelines (Standard Templates) </li></ul></ul><ul><ul><li>Assist business units in Vendor Selection </li></ul></ul><ul><ul><li>Contract Management (Coordinate/Negotiate Contracts with support from LoB sponsor and Corporate Legal) </li></ul></ul><ul><ul><li>Vendor Service Level Management (Performance Management) </li></ul></ul><ul><ul><li>Vendor Relationship management (LoB sponsor, Corporate Legal, Vendors) </li></ul></ul>Corporate Legal Contract Management Purchasing Vendor Payments
  5. 5. Vendor Management Office (VMO)
  6. 6. Vendor Management Function/Office Vendor Management Office Select Function Owner Name function owner to organization Leadership / Function owner define agree on function mission , goals and objectives Vendor Management Function Build Out Vendor Management Overview & Structure Define Components Build out component processes and supporting templates where needed Integrate into existing work models as needed ( e . g . , PMLC / SDLC / Contract Mgmt ) Define structure for housing and using VM Materials Define Roll - Out Program
  7. 7. Vendor Management Office <ul><li>Who? </li></ul><ul><li>“ A dedicated group of staff who focus on providing the governance and processes to oversee and manage suppliers pre and post contract” </li></ul><ul><li>What Vendor Relationship should this group manage? </li></ul><ul><li>Hardware – mainframe, servers, storage and PC’s (IBM, HP, EMC, Lenovo, Dell, etc) </li></ul><ul><li>Networking equipment (Cisco, Checkpoint, etc) </li></ul><ul><li>Software Vendor / Products (Guidewire, Oracle / Peoplesoft, Hyland, StoneRiver, etc) </li></ul><ul><li>Telecom Services (AT&T, Verizon, Tricomm, etc.) </li></ul><ul><li>IT Consulting & Systems Integration services (HCL, Beacon, etc) </li></ul><ul><li>IT research services (Celent, Gartner, etc) </li></ul><ul><li>Data Services (Lynx, MVR, etc ) </li></ul><ul><li>Other Non IT services </li></ul>
  8. 8. Vendor Management Office @ NJM – Current State *** One of the objectives of this exercise is to create a framework for a centralized VM processes Current Practice @NJM Gap/Desired Practice VMO as a separate function <ul><li>Doesn’t Exist </li></ul><ul><li>TBD </li></ul>Vendor Management Function <ul><li>IT, Business units perform vendor management function and hence no centralized policy </li></ul><ul><li>*** Need for Centralized process repository consisting of policies, guidelines, templates… </li></ul><ul><li>Vendor Selection Process exists but is mostly used for and specific to software vendor / product selections </li></ul><ul><li>Process variations or missing for other types of vendors – Professional Services, Business services, etc, and needs to be built </li></ul>Contract Negotiations <ul><li>Contract Management – Corporate legal recently (May 2009) rolled out NJM contract policy </li></ul><ul><li>VM function owner (VMO) needs to interface with vendors – by collaborating with Corp Legal and Business units </li></ul>Master List of Vendors <ul><li>Categorized “master” list of vendors doesn’t exist </li></ul><ul><li>Need to create a master list of vendors with key attributes </li></ul>
  9. 9. Master List of Vendors - Proposed
  10. 10. VMO Vendor Classification - Proposed <ul><li>Vendor Classification – helps define Vendor Management policies tailored to specific types of vendors </li></ul><ul><li>NJM can spend more time and attention with strategic vendors driving more value through controlled service level agreements </li></ul><ul><li>Vendor consolidation can be considered </li></ul>
  11. 11. VMO and Key Functions - Proposed
  12. 12. Vendor Management Life Cycle
  13. 13. Vendor Management Life Cycle
  14. 14. Vendor Management Policy Key Components Vendor Selection Process Contract Management Vendor Management Policy Service Level Management Relationship Management This presentation and attached Visio files – provide a high level framework for drafting a detailed Vendor management policy.
  15. 15. Vendor Selection Process
  16. 16. Vendor Selection Process
  17. 17. Vendor Selection Process NJM Artifacts/Templates <ul><li>NJM existing templates can be refined and improved to evaluate multiple additional parameters like – vendor financials, business risk, vendor acquisitions, customer references, site visits, etc </li></ul>Artifacts Current State/Gaps Desired State Vendor Selection Process Vendor Selection Process exists for Software vendors This needs to be expanded to accommodate other types of vendor selection (Business Services, Data Services, etc) Vendor Evaluation Template Vendor Evaluation Template exist for Software Vendors Templates need to be developed for other categories of vendors RFP/RFI Template Exist for Software Vendors only Templates need to be developed for other categories of vendors
  18. 18. Contract Management
  19. 19. Contract Management Touch Points
  20. 20. Contract Management NJM Artifacts Artifact Current State Desired State NJM Contract Policy Available May 2009 – Rolled Out TBD Referral to Contract Management Available TBD Contract review guidance Law & Regulation Vendors often provide contracts favorable to them. Hence it is important to have a check list of items – which should be part of NJM contracts. NJM Contract Management function could build awareness with NJM Officers and Manager regarding – “What to look for when reviewing a contract?”
  21. 21. Contract Management Essentials of Formal Contracts <ul><li>Security Requirements </li></ul><ul><li>Business continuity requirements </li></ul><ul><li>Mandated Technical standards </li></ul><ul><li>Migration plans (Agreed pre-scheduled change) </li></ul><ul><li>Disclosure agreements </li></ul>
  22. 22. Vendor Service Level Management Performance Metrics
  23. 23. Service Level Management
  24. 24. Service Level Management
  25. 25. Vendor Relationship Management
  26. 26. Vendor Relationship Management <ul><li>Identify “single point of contact” at Vendor organization </li></ul><ul><li>Communication at agreed frequency </li></ul><ul><ul><li>Monthly/Quarterly </li></ul></ul><ul><li>Vendor to keep NJM informed of all the events which can impact NJM business </li></ul><ul><li>Vendor to encourage / arrange knowledge sharing sessions with other customers (Best Practice sharing) </li></ul><ul><li>Vendor to provide access to NJM to training materials, forums, events </li></ul><ul><li>NJM to treat – Strategic vendors as partners – by sharing information on initiatives and plans </li></ul>
  27. 27. Change Management @NJM How to implement the VMO framework with minimum impact to NJM operations?
  28. 28. Change Management How to implement VMO framework <ul><li>Select VM leader </li></ul><ul><li>Have leader develop communications plan regarding creation and roll-out of vendor management function at NJM </li></ul><ul><li>VM leader works with corporate communications developing ongoing information communication events, articles, and testimonials as experiences are acquired </li></ul><ul><li>VM leader works with Corporate Legal, Contract Management function, Communications, and Learning & Development to create a comprehensive awareness-building, and training video on the key concepts of vendor management </li></ul><ul><li>VM leader works with NJM leaders and LoB leaders to establish oversight guidelines for adhering to Vendor Management best practices </li></ul>

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