Today’s businesses are technology-reliant, with everything from hardware purchases to VoIP services taking time to plan. Software tools are also shifting to recurring subscriptions rather than one-time purchases, further complicating matters. As a result, third-party vendor management has become a growing but easy-to-mismanage task. With contract terms and feature sets becoming increasingly complex, managing vendors has frustrated and confused many teams.
Additionally, cybersecurity threats remain an ongoing challenge, as third-party vendors can create additional business risks. With 60% of companies not having the resources to manage vendor data handling, many don’t realize how vulnerable they may be. That’s shifted third-party vendor management outside the scope of what many internal teams can handle. In turn, outsourcing to an IT company has become a smart option, as they have expertise in managing both data security and technology solutions.
What Is Third-Party Vendor Management?
Third-party vendor management focuses on relationships with outside vendors and independent entities that provide a business with goods, services, or expertise. These include anything from software suites like Microsoft 365 to outside IT consulting firms. All of them have different contract requirements and costs involved.
Managing third-party vendors isn’t just about paying the bill, either. In the IT industry, that means navigating complex licensing terms and understanding what software is most needed by a business. Money waste commonly happens with vendor management, as companies that are poorly tracking them may be left paying the bill for services they stopped using months (or years) prior.
Third-Party Vendors Can Be an Ongoing Security Risk
Risk management is an ongoing challenge with third-party vendors. Potential issues, such as non-compliance with regulations, cybersecurity threats, or reputational risks, could arise. With 87% of organizations having a disruptive incident with a third-party vendor in the past three years, problems are a matter of when not if. That’s made vendor management more than simply managing relations, but mitigating risk and developing an incident response plan.
Managing Software Licenses Continues To Be a Headache
Software license management is an ongoing headache due to the complexity of managing features, user counts, compliance, updates, and renewals. To make matters worse, software providers constantly change contract terms, making it difficult to keep up. The terms and conditions of software licenses can be intricate, often including user limits, redistribution restrictions, modification limitations, authentication requirements, and data collection agreements.
Compliance is crucial to avoid costly mistakes, but IT demands a thorough understanding and careful management. Moreover, managing multiple software licenses can be complicated with different software vendors’ distinct licensing models. With the shift from perpetual licenses to subscription-based models, often tied to annual commitments, mistakes can be expensive.
Outsourced Third-Party Vendor Management Can Greatly Cut Costs
Outsourced third-party vendor management can be crucial in cutting costs and saving time for organizations, especially when handling software licenses. Rather than managing it in-house, it can be outsourced to an MSP or other type of IT company. Since they assist with technology daily, they can help prevent overspending and ensure that businesses get the best value for their investment.
The cost savings doesn’t just come from sound management but also from reducing risks and reacting to problems as they arrive. Concerningly, third-party breaches can cost up to $13 per record more than in-house breaches. That makes data handling and third-party monitoring especially important. Once the data is out of the hands of a business, that control is lost, and it becomes hard to fix the damage done.
Effective Vendor Management Can Lead To Substantial Time Savings
Vendor management can take up a lot of time, especially if a business doesn’t have a specialist familiar with the process or industry tools. Tasks such as invoice processing, dispute resolution, license acquisition, and contract renewal can be an ongoing process. Furthermore, effective third-party vendor management can also help to identify performance and licensing issues early, saving time on resolving problems or dealing with service interruptions.
Trust ITonDemand With Third-Party Vendor Management
Because of the risks and challenges, IT service providers have become a smart choice for third-party vendor management. IT companies are already involved with maintaining a healthy digital work environment through industry experience, plus they’re already familiar with software’s features, costs, and practical nature. By leaving vendor management in the hands of IT professionals, it saves time and cuts costs, and lets teams put the focus back on running their business.