vendor management
DESCRIPTION
TRANSCRIPT
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Overview & Structure
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Vendor Management FunctionVendor Management Function
July 2009July 2009
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Need for Centralized VM function @NJM
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1. Vendors often don’t communicate changes in processes/technology/services
which can impact NJM business ( This is happening quite frequently)
2. 1000+ Contracts to manage ( Too many to manage)
3. Vendor service levels/performance monitoring – No structured process to
make vendors accountable for outcomes. (Difficult to measure the value of a vendor to NJM)
4. Too many vendors ( No categorization of vendors to focus on few )
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Vendor Management Process – Touch Points
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Key Players
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Players Responsibilities
Vendor Various Categories of Service providers to NJM1. Hardware2. Software3. Telecom4. Services
Business Unit Various Business Units in NJM who need products/services1. IT, Admin Services, HR, etc.2. Business units ( Claims, U/W, Finance, Statistical etc )
VMO – Vendor Management Office
Dedicated centralized function to co-ordinate between key players of NJM ( Business Units, Contract Management, Purchasing ) with Vendors. Key functions of VMO
1. Vendor Management Policy & Guidelines (Standard Templates)2. Assist business units in Vendor Selection3. Contract Management (Coordinate/Negotiate Contracts with support from
LoB sponsor and Corporate Legal)4. Vendor Service Level Management (Performance Management)5. Vendor Relationship management (LoB sponsor, Corporate Legal, Vendors)
Corporate Legal Contract Management
Purchasing Vendor Payments
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Vendor Management Office (VMO)
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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 ManagementOverview & 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
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Vendor Management Office
Who?
“A dedicated group of staff who focus on providing the governance and
processes to oversee and manage suppliers pre and post contract”
What Vendor Relationship should this group manage?1. Hardware – mainframe, servers, storage and PC’s (IBM, HP, EMC, Lenovo, Dell, etc)
2. Networking equipment (Cisco, Checkpoint, etc)
3. Software Vendor / Products (Guidewire, Oracle / Peoplesoft, Hyland, StoneRiver, etc)
4. Telecom Services (AT&T, Verizon, Tricomm, etc.)
5. IT Consulting & Systems Integration services (HCL, Beacon, etc)
6. IT research services (Celent, Gartner, etc)
7. Data Services (Lynx, MVR, etc )
8. Other Non IT services
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Vendor Management Office @ NJM – Current State
Current Practice @NJM Gap/Desired Practice
VMO as a separate function
Doesn’t Exist TBD
Vendor Management Function
IT, Business units perform vendor management function and hence no centralized policy
*** Need for Centralized process repository consisting of policies, guidelines, templates…
Vendor Selection Process exists but is mostly used for and specific to software vendor / product selections
Process variations or missing for other types of vendors – Professional Services, Business services, etc, and needs to be built
Contract Negotiations
Contract Management – Corporate legal recently (May 2009) rolled out NJM contract policy
VM function owner (VMO) needs to interface with vendors – by collaborating with Corp Legal and Business units
Master List of Vendors
Categorized “master” list of vendors doesn’t exist
Need to create a master list of vendors with key attributes
*** One of the objectives of this exercise is to create a framework for a centralized VM processes
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Master List of Vendors - Proposed
Vendor Category Vendor1 Hardware
123
2 Networking Equipment3 Software
12
4 IT Consulting Services5 Telecom Services6 Data Services7 IT Research Services
8 Other Non IT Vendors
High High Strategic >1M YesMed Med Tactical 500K -1M NoLow Low Operational100K-500K
Other 25K-100K<25K
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VMO Vendor Classification - Proposed
Vendor Classification – helps
define Vendor Management
policies tailored to specific types of
vendors
NJM can spend more time and
attention with strategic vendors
driving more value through
controlled service level agreements
Vendor consolidation can be
considered
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VMO and Key Functions - Proposed
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Vendor Management Life Cycle
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Vendor Management Life Cycle
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Vendor Management Policy Key Components
Vendor Selection Process
Vendor Selection Process
Contract Management
Contract Management
Vendor Management Policy
Vendor Management Policy
Service Level ManagementService Level Management
Relationship ManagementRelationship Management
This presentation and attached Visio files – provide a high level framework for drafting a detailed Vendor management policy.
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Vendor Selection Process
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Vendor Selection Process
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Vendor Selection Process NJM Artifacts/Templates
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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
Software Vendor - Evaluation
RFP Template Vendor Selection Process
• 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
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Contract Management
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Contract Management Touch Points
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Contract Management NJM Artifacts
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Artifact Current State Desired State
NJM Contract Policy AvailableMay 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?”
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Contract Management Essentials of Formal Contracts
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1. Security Requirements
2. Business continuity requirements
3. Mandated Technical standards
4. Migration plans (Agreed pre-scheduled change)
5. Disclosure agreements
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Vendor Service Level Management
Performance Metrics
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Service Level Management
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Service Level Management
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1 PerformanceDelivery TimelinesEstimation AccuracyNumber of Change RequestsProductivityConnectivity AnalysisActual/Planned delivered work requests
2 QualityDefect DensityDefect Density during UATPost implementation defect density
Does Vendor provide these performance metrics?
Does Vendor have these in place?1 Disaster recovery plan in place2 Internal procedures to track service requests from NJM3 Single Point of Contact (SPOC) for NJM Relationship
Does Vendor Communicate the following?1 Vendor roadmap and changes which can impact NJM business
2Status reports/Metrics on how they are performing on agreed SLA's in the contract? (At Agreed Frequency)
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Vendor Relationship Management
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Vendor Relationship Management
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1. Identify “single point of contact” at Vendor organization
2. Communication at agreed frequency
Monthly/Quarterly
3. Vendor to keep NJM informed of all the events which can impact NJM
business
4. Vendor to encourage / arrange knowledge sharing sessions with other
customers (Best Practice sharing)
5. Vendor to provide access to NJM to training materials, forums, events
6. NJM to treat – Strategic vendors as partners – by sharing information on
initiatives and plans
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Change Management @NJM
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How to implement the VMO framework with minimum impact to NJM operations?
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Change Management How to implement VMO framework
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1. Select VM leader
2. Have leader develop communications plan regarding creation and roll-
out of vendor management function at NJM
3. VM leader works with corporate communications developing ongoing
information communication events, articles, and testimonials as
experiences are acquired
4. 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
5. VM leader works with NJM leaders and LoB leaders to establish
oversight guidelines for adhering to Vendor Management best practices