Leaders and Competencies
Essential Skills Non-IT Organizational Leaders Need for Successful Vendor Management
By Dr. Michelle Reeves and Dr. Sai Raghav
Every organization brings its unique offerings to the industry to stay competitive. Organizational leaders rely on vendors to supply things they do not have internally. Vendors are external entities providing the products, services, and skills an organization needs to help reduce risk, increase value, and grow the business (Verma & Girdhar, 2020).
As a result, organizational leaders must define vendor deliverables, duration, and any other requirements for the vendor relationship. Vendor management encompasses the vendor relationship, processes, and activities needed to run the organization. The vendor management system (VMS) is integral to vendor management because it helps the organization store, track, manage, and secure the data between the business, vendor, and customers, including budgets and labor (SAP, 2024).
Vendor management is not limited to the IT department or IT leadership. It is incorrect to assume that vendor management should solely be handled by individuals who support the vendor management system (VMS) and are responsible for IT decision-making, such as the Chief Information Officer or Chief Technology Officer (CIO/CTO). Each department within the organization, such as sales, marketing, strategy, and finance, plays a vital role in aligning with objectives and acquiring necessary resources for projects (Li, 2023). The convergence of interests is a fundamental aspect in accomplishing effective vendor management, and your role as a leader is crucial in facilitating this endeavor.
For individuals coming from a non-IT background, honing key skills is essential to increase their chances of success. From the multitude of skills available, we have narrowed it down to six that truly stand out, and we have briefly described each one below.
Basic IT knowledge
An organizational leader must understand how to translate their business deliverables to vendors and other stakeholders. The vendor management system (VMS) tracks these processes outside of direct meetings. However, expertise in IT is not a prerequisite for effectively managing vendor expectations with the VMS. When it comes to vendor management, leaders can leverage the skills they already possess and use.
As a business leader and stakeholder, you can expect your IT department to provide you with training to become proficient in using the tools. The IT knowledge necessary in this scenario can be likened to starting your day by logging into your computer, identifying the task you need to complete, and arranging the steps in the proper sequence. Your expertise is needed in the information you provide. In addition, IT leadership turns to you and your staff for suggestions on how to improve the system and to report any issues encountered with the vendor process.
Effective SLA Management
Service-level agreements (SLAs) are used in business to define vendor expectations. The SLA includes the service the vendor provides and any metrics to measure uptime, downtime, and response time. The agreement should also include penalties the vendor will incur if these expectations are not met. As a leader, understanding the SLA and its components is critical to business.
The task of defining vendor SLAs and guaranteeing adherence to the contract by all stakeholders and vendors necessitates specific skills. Given your stakeholder role, you are best equipped to determine the regulatory obligations that the department and organization need to fulfill, as well as their associated timelines. Furthermore, the unavailability or impairment of a service, application, or business component has an even greater impact on both the company and its customers. As a result, you are able to set the deadline for the vendor’s response to a request for assistance.
Many vendors have initial response times for critical issues and non-urgent requests (Overby et al., 2024). These time frames get written into the SLAs. Conversely, the vendor may seek improvements such as dashboards and software upgrades to enhance and evaluate performance, thereby fostering a stronger business relationship. Given the ongoing nature of the vendor relationship, the management of SLAs will persist. Establishing a regular cadence for SLA reviews will prove advantageous in ensuring alignment between business requirements and organizational goals for all stakeholders.
IT Project Management
It is imperative to highlight that IT projects, akin to every other project, involve personnel, scope, objectives, and a distinct set of expectations relating to the deliverables. To maximize the chances of project success, it is crucial that leaders have a general understanding of the tools (such as Microsoft Project, Asana, Monday.com, Jira, etc.) and methodologies (such as Waterfall, Agile, Hybrid, DevOps, etc.) used in IT project management to make strategic adjustments to the triple constraints (cost, time and scope) where necessary. The significance of this matter cannot be overstated, as leaders without an IT background often find themselves in a position of making critical decisions related to scope creep and risk management due to their hierarchical position within the organization.
Despite the near impossibility of mastering every set of tools and methodologies utilized in IT project management, it is strongly advised that leaders familiarize themselves with the foundational knowledge of the platforms employed by the current IT project teams. This will provide them with the necessary preparation to make informed decisions. Implementing this approach would not only enhance their ability to monitor and mitigate risks but also optimize their communication effectiveness (Hatamleh et al., 2024).
Continuous Learning
Sustaining a continual state of progress is an essential requirement for businesses, and this holds even more significance in the context of vendor management due to its inherent complexities. Participating in workshops or enrolling in online courses offered through executive education is among the various methods that non-IT organizational leaders can employ to foster ongoing learning.
Although it is crucial for organizational leaders to engage in continuous learning, it is not the sole factor. The primary focus should be on encouraging team development, which can be achieved by ensuring that the IT professionals have unrestricted access to the most up-to-date training and certification pathways in areas such as procurement, compliance, risk management, and more. It is crucial for the team members, as experts in their field, to adeptly navigate the complex waters of the IT landscape. Keeping up with regularly emerging best practices is one of the most effective ways to do so. The leader’s arsenal is bolstered by a well-trained team, whose ability to swiftly identify and address risks, adhere to compliance standards, and shield the organization from potential legal, ethical, and financial consequences is unrivaled (van den Hout, 2021).
Global networking and vendor interaction
In order to enhance their flexibility, manageability, and profitability, businesses are actively seeking quality supplies, services, and resources from the global marketplace. There is considerable value in building the right vendor relationships across the globe to sustain the business and push toward innovations to set the company apart from the competition. Therefore, global networking and vendor interaction are overarching skills that help foster the strategic collaborations needed to drive business.
Road maps for the future are skillfully crafted by leaders to ensure the success of their organizations. The strategic plans not only provide guidance on fostering long-term partnerships with vendors to ensure business sustainability, but they also explore the business’s aspirations and conduct a thorough analysis of the strengths and weaknesses of each partner (Matlis, 2019). Align and innovate for sustainability and to boost business for the future (Staubitzer, 2022). Remember that vendors help enable the organization where it was once limited. Collaboration begins with being direct with the vendor about business needs. As a leader and stakeholder, actively managing the relationship, ensuring timely vendor deliverables, and promptly addressing vendor requests can enhance the value of the vendor interaction.
Independent Vendor Assessments
Since non-IT leaders are constantly learning, they may occasionally make errors in navigating the complexities of vendor management. Needless to say, experiencing these challenges is an integral part of the learning process. In order to minimize errors and gain diverse perspectives, organizational leaders could involve external stakeholders in the evaluation of vendors, rather than solely relying on the IT department for key decisions pertaining to vendor management. For example, non-IT leaders can gain an advantage within the team by conducting third-party evaluations of short-listed vendors to assess performance, reliability, goal-alignment, risk, etc.
Additionally, gathering customer feedback to understand customer satisfaction levels, response time, and troubleshooting is another effective approach. Furthermore, reviewing the financial health of key vendors through independent audits conducted by external accounting firms is crucial for making informed decisions and ensuring long-term viability.
The Upshot?
Leaders with non-IT backgrounds can effectively oversee vendor relationships through the cultivation of a comprehensive skill set that integrates business and technology. Although extensive technical knowledge is not required, it is essential to have a basic understanding of IT principles, the ability to effectively manage Service-Level Agreements (SLAs), and familiarity with IT project management methodologies. The importance of continuous learning, for both individuals and their teams, cannot be overstated when it comes to effectively managing vendors. Through the development of international networking capacities and the utilization of impartial evaluations, leaders can establish robust and dependable vendor alliances that are in harmony with the strategic objectives of the organization. Ultimately, the integration of these competencies empowers leaders to cultivate innovation, mitigate risks, and propel sustainable growth, thereby guaranteeing their organization’s competitiveness in an increasingly interconnected and technology-driven marketplace.
References:
Hatamleh, M. T., Alzarrad, A., Alghossoon, A., Alhusban, M., & Ogunrinde, O. (2024). Strategies for improving project risk management via communication and integration: The case of Jordan. Engineering, Construction and Architectural Management. DOI Website (https://doi.org/10.1108/ecam-05-2024-0536).
Li, S. (2023). Internationalization of enterprise resource planning vendors: A case study of SAP and Oracle in the Chinese high-end market. International Journal of Business Strategy & Automation (IJBSA), 4(1), 1–14. DOI Website (https://doi.org/10.4018/IJBSA.326515).
Matlis, D. R. (2019). Collaboration and control are key to a successful global supplier network. Medical Product Outsourcing, 17(5), 34+. https://link.gale.com/apps/doc/A590651358/ITOF?u=uphoenix&sid=ebsco&xid=891a28b5
Overby, S., Greiner, L., & Paul, L. G. (2024). What is an SLA? Best practices for service-level agreements CIO. https://www.cio.com/article/274740/outsourcing-sla-definitions-and-solutions.html
SAP. (2024). What is VMS and supplier management? https://www.sap.com/products/spend-management/supplier-lifecycle/what-is-a-vendor-management.html
Staubitzer, K. (2022). Global network scaling: How we reach the next level in supplier- and partner collaboration. Siemens. https://blog.siemens.com/2022/09/global-network-scaling-how-we-reach-the-next-level-in-supplier-and-partner-collaboration/
van den Hout, J. J. J., & Davis, O. C. (2021). Promoting the Emergence of Team Flow in Organizations. International Journal of Applied Positive Psychology, 7(2), 143–189. DOI Website (https://doi.org/10.1007/s41042-021-00059-7).
Verma, S., & Girdhar, P. (2020). Integrated framework for vendor management: An interpretivist approach. Journal of Management Research (09725814), 20(2), 63–74.
ABOUT THE AUTHOR
Dr. Michelle Reeves
Bio
Michelle recently graduated with a Doctorate in Management for Organizational Leadership specializing in Information Systems and Technology (DM/IST) from the University of Phoenix in March 2022. Prior to receiving her doctorate, Michelle obtained her MIS (Master of Information Systems) in 2018, B.S. in IT with a concentration in Information Systems Security in 2016, and A.A. in IT with a concentration in Networking in 2016, all from the University of Phoenix.
Dr. Reeves was inducted into Epsilon Pi Tau’s Delta Sigma Chapter in 2018, the Golden Key International Honor Society in 2020, the National Society of Leadership and Success in 2020, the Order of the Sword & Shield’s Omicron Sigma Sigma Chapter in 2021, and Delta Mu Delta’s Lambda Sigma Chapter in 2021. Her primary interests include organizational leadership, culture, knowledge management, innovation, business and technology alignment. Specifically, Michelle is interested in understanding gaps in business and technology processes through leaders’ versus technology teams’ perspectives.
ABOUT THE AUTHOR
Dr. Sai Raghav
Bio
Dr. Raghav is an accomplished academic and scholar holding degrees in areas such as a Doctorate in Management (Organizational Leadership) from the University of Phoenix, an MS in Organizational Leadership with a specialization in Project Management from Northcentral University, an MBA with a specialization in Strategic Management from the Swiss Management Center, Switzerland, and a B.S. in Physiotherapy from N.T.R. University of Health Sciences, India. He is a presidential member of the National Society of Leadership and Success and a Fellow in Residence for the Center for Leadership Studies and Organizational Research.