The Executive’s Guide to Information Technology, Second Edition

Chapter 13. Vendor Management and Outsourcing

	People who work together will win, whether it be against complex football defenses, or the problems of modern society.
	--Vince Lombardi[1]

	If, after the first 20 minutes, you don’t know who the sucker at the table is, it’s you.
	--Unknown

This chapter outlines management practices for ensuring that the IT department manages outside vendors in a manner that delivers the most value to the company in exchange for considerations paid to the vendors, all the while working in a partnership with the vendor to further the aims of both the company and the vendor. The chapter emphasizes the importance of properly managing vendors and provides techniques for monitoring and assessing vendors’ performance. The chapter also covers the vendor management role within the IT department, how to take control of vendor relationships, especially those inherited, how and when to recompete vendor contracts, and provides guidance to the CIO on managing vendors in turmoil or financial trouble. This chapter is a companion to Chapter 12, which also contains a variety of critical vendor management concepts.

Why This Topic Is Important

Almost without exception, IT departments are highly reliant on a wide variety of vendors. Outside vendors provide the hardware, system software, application systems, networks, and peripherals that power most of the IT functions. Because IT managers get little training in managing outside partners, including measuring service levels, ...