Infrastructure Vendor Management: Tech Essentials INF 80042 Report

This report provides a comprehensive overview of vendor management within infrastructure management, focusing on essential components and processes within an organization. It discusses vendor selection, the vendor management process (including centralized, decentralized, and hybrid approac...Read More

Vendor management
INF 80042 – TECH ESSENTIALS
ASSIGNMENT-3
Infrastructure Management
Vendor Management
Student: Sarat Chowdary Mullapudi
ID: 101680092

Vendor Management
ABSTRACT
Every industry in the world has its own requirements and its own
infrastructure management. It is often very important to manage infrastructure.
No matter what the industry, it’ll definitely have vendors and suppliers. Many
industries are very good at managing their vendors and it is very crucial to know
how to manage vendors and suppliers. It starts from obtaining the best possible
supplier among the available options and to know how quickly can the vendor
react to the requirement and to supply the required things on time. It is a
complex process and a company or any industry should know how to manage
vendors in order to succeed.

Vendor Management
Table of Contents
1) Introduction
2) Vendor Selection
3) Vendor Management process
4) Vendor Management Inventory
5) Importance of Vendor Management
6) Best Practices to build Vendor Relationships
7) Issues in Vendor Management
8) Over Coming the Issues
9) Trends in vendor management
10) Complexity
11) How to deal with Complexity
12) Conclusion
13) References

Vendor Management
INTRODUCTION
Infrastructure management (IM) refers to management of essential
components in an organization. Managing infrastructure aims to reduce
duplication, ensure standards are adhered to, enhance information flow and
maintain policies within an organization (Purcell, 2014). The Infrastructure-as-a-
service (IaaS) cloud model has led to the emergence of virtual infrastructure
management. Organizations can now manage its infrastructure as private or
hybrid cloud. One of the main reasons for using virtual IM is to provide a
homogeneous access to resources (Sotomayor et al., 2009). This report discusses
the vendor management aspect in managing infrastructure. Vendor management
issues, the management complexity and ways of reducing this complexity are also
discussed. Microsoft will be used as the case study for vendor management.
Vendor management is a discipline that helps an organization to ensure
control on costs, ensure quality service delivery and risk mitigation for improved
value from its vendor’s throughout the deal. It is part of the supply chain
management business function. It includes searching and sourcing for vendors,
quoting, negotiation, job assignments, performance evaluation and payments.
The process involves creation of relationships. A company might have different

Vendor Management
vendors to supply different goods for their operations. The vendors have different
contract terms and rates of payment. Managing vendor relationships is vital in
order to realize benefits for both parties. An organization needs to understand
what service or goods they need and what type of vendor is going to be
outsourced (Kumar and Van Hillegersberg, 2009).
Vendor selection
Vendors are not only selected by their ability to meet requirements,
performance and price. Selection is not only done to meet current needs but also
for future requirements. Vendors could be analyzed using their dependency and
drive or willingness to do business. An interpretive structural modeling (ISM) is
used to carry out this evaluation (Govindan et al., 2012). In Microsoft, sourcing
commitments are advanced through analyzing risks and opportunities,
accountability and assurance; and capacity building (Michalski, 2008).
Vendor management process
The vendor management process begins by creating a relationship after the
type of vendor is selected. Forming third party relationships helps a business
obtain value in the services provided through relationship oversight. Microsoft

Vendor Management
also focuses on building relationships with its vendors or suppliers. They seek to
work with suppliers who are capable, competitive and compliant in order for
them to achieve their goals.
There are three approaches in that could be used in vendor management.
The first approach is to the centralized approach. In this approach consistency and
control are offered. The vendor management or the procurement officials handle
this approach. The second approach is decentralized. It offers responsiveness to
issues. It is handled by business officials or the information technology
department. The third approach is hybrid. In this approach all vendor
management functions are shared within the organization depending on where
they fit (Willcocks, Venters and Whitley, 2013).
When building a relationship with Microsoft, there are documents provided
by the organization in order to work with them. It has a Master Supplier Services
Agreement (MSSA).This document has specifications on standard payment terms
and spend reporting. A Supplier Code of Conduct (SCoC) is also provided.
Microsoft business partners are expected to follow these standards of conduct.
The Supply Guidelines outlines the requirements that vendors should follow. The
Supplier Security and Privacy Assurance (SSPA) is a program that drives

Vendor Management
compliance of vendors in processing of data and requirements protection. It also
has the Accounts Payable Support Desk for vendors’ support (Jeon, Lee and Park,
2011).
The next step is managing suppliers. According to Webb (2018), managing
suppliers ensures competitive advantage for a business. The Strategic Supplier
Management (SRM) framework is used. To ensure strategic supplier relations, it is
first important to ensure the suppliers have a clear and honest view about the
organization. Microsoft ensures that its employees are familiar with the company
by giving guidelines and documents for referencing purposes.
The communication between the parties should be able to strengthen the
relationship. Microsoft ensures effective communication by having a support
system for vendors. Holding meetings with suppliers is also important. During
these meetings, discussions on performance and goals could be discussed. Such
meetings also help the suppliers gain more knowledge about the organization.
Microsoft also has training programs and conferences for its employees.
Another way to ensure strategic supplier management is to ensure the
suppliers act accordingly. Formulating policies and guidelines is therefore
necessary. Behaviors such as late delivery show the supplier is not well invested in

Vendor Management
doing business with the organization. Microsoft strives to ensure that its suppliers
uphold human rights, labor health and safety, environmental and business ethics.
It has a supplier code of conduct document publicly available. Microsoft devices
suppliers’ are evaluated through its Social and Environmental Accountability (SEA)
program (Chan, 2014).
Vendor management inventory
A vendor-managed inventory is an initiative in which the supplier can
manage the inventories agreed upon. The system helps reduce stock-outs and
inventory costs are reduced. It helps in making decisions on resupply. Tracking of
the supply process can also be done using the system (Darwish and Odah, 2010).
Microsoft Dynamics 365 is a product that has enterprise resource planning (ERP)
capabilities. It has an inventory management feature that helps in carrying out
inbound and outbound operations, quality assurance, inventory activities and
inventory control (Bauer et al., 2012).
Importance of vendor management
Outsourcing vendors helps improve service quality, improve operational
efficiency, reduce on costs, accelerate delivery of services and more focus on

Vendor Management
business functions. Having a consolidated vendor management helps reduce on
cost. Consolidating among reduced number of vendors increases purchasing
power (Bookbinder, Gümüş and Jewkes, 2010).
Vendor management is important because changes in responsibilities like
infrastructure support maybe be shifted to the third parties. The vendor needs to
access the organization’s assets like servers in order to provide the appropriate
service. Vendor management helps promote quality service delivery, provide user
support during a system’s deployment and it allows for sharing of the
responsibility of adjusting to changes (Muhart et al., 2014a).
Best practices to build vendor relationships
(Tan, Cater-Steel and Toleman, 2009) suggests that staying in sync with
vendors requires understanding of what in required in the same language,
identifying handoffs and development of expectations. For effective
communication, meetings could be used in order to stay in contact. It also
suggests evaluation and management of risks and dealing with issues as they
come before enforcing them into the contract.

Vendor Management
Issues in vendor management
There are several challenges faced when working with vendors. The first
challenge is unresponsiveness to help requests. Vending companies face
problems that could translate to clients’ problems. Security conflicts and issues in
interests could arise as in the case of Walmart. Slow products’ improvements are
also another issue (Malthouse et al., 2013). Tracking of a vendor’s supply records
is challenging. If the vendor is not well known by the organization, building
healthy relationships becomes an issue.
The different culture between the buyer and the vendor is also an issue.
Microsoft allows contracting with individuals or organizations form all ethnic
groups. Since Microsoft carries out its operations in English, individuals from
other natives may not communicate effectively with the employers. Lack of
effective communication leads to poor service delivery. Lack of understanding the
organization’s goals is also an issue. Some vendors do not give interest in
understanding the organization’s goals. A gap in the relationship could be created
by lack of transparency in the processes.

Vendor Management
Another issue that would affect vending is overload on the vendor. Some
vendors take contracts from different vendors. They might deliver poor quality
services due to the pressure of delivering to different customers. This could
sometimes lead to late delivery of services. Timely delivery is one of the ways of
building the relationship. If delivery is not done on time, the relationship could be
weakened. Due to the different requests given from different clients, a vendor
might deliver incomplete service. Sometimes the products are supplied while
broken. Some of the vendors need proper training and nurturing on how to carry
out delivery or supply. While outsourcing, a company might not receive quality
work from vendors with inadequate skills and understanding of what the business
is about.
Nurturing the relationships after a project or the contract is terminated is
also an issue. This means that whenever the company needs to outsource for
vendors, new relationships have to be formed. Carrying out the entire process of
requirement determination and vendor selection becomes time wastage. New
costs would be incurred compared to if the relationships are maintained for
future projects (Carter and Rogers, 2008).

Vendor Management
Automating the vending process and acquiring the right documentation is
challenging to small business. While in big businesses, risk assessments and
security are a challenge. Small companies do not have the power to demand
appropriate documentation form vendors. The small organizations also do not
have required skills to analyze reports. Lacking expertise in a large organization is
a challenge in vendor management. Experts are needed in order to carry out risk
assessment (Behmoiras et al., 2010).
Overcoming the issues
Creation and refreshing of vendor management should be made a priority.
The programs set should be reviewed often to ensure it performs as required.
Specific assignation of a vendor manager is important. This assists in management
of the vending programs. The vendor manager should follow the guidelines stated
and no traces of biasness either in vendor recruitment or vendor management
should be noticed (Muhart et al., 2014b). Microsoft has a procedure for hiring
vendor managers. Available vacancies are announced publicly through their
website for all legible candidates to apply.
Implementing a risk management solution is also important. Risk
management programs ensure the company understands its risks and initiates

Vendor Management
risk mitigation. Spreadsheets are not as effective as risk management solutions in
making changes to huge amounts of data. Meeting writing during board meetings
should also be done. Vendor relationships should be strong to prevent cases of
cyber security as a way of ensuring information security (Liu and Yetton, 2010).
Trends in vendor management
Trends in vendor management include standardization. Standardization
helps improve an organization’s vendor management to obtain a competitive
advantage. Vendor consolidation is another technique that increases purchasing
power. This technique is beneficial to companies with few employees. Robotic
Process Automation (RPA) is a technique in which robots are used in management
on behalf of humans. This technique reduces operational costs. Governing a
multi-vendor model has been shown to improve profit compared to labor
management. The multi-vendor governance model is implemented by
transformation of the model into a service, accountability of the model.
Compliance in vendor management is also a trend. Apart from compliance
being implemented in a company’s departments alone, it has also been enrolled
in management. Microsoft ensures compliance from its employees by setting

Vendor Management
guidelines and compliance terms. These terms are given publicly. Corporate
culture helps protect a company’s reputation.
Third party governance is another trend. Companies are also venturing into
innovative ways of having a competitive advantage. In order to reduce costs and
ensure continuous profitability, organizations are opting for long term contracts.
Vendor governance is not only about managing vendors, but also managing the
relationships formed. Experienced clients and vendors understand the
importance of managing relationships for long term benefits of outsourcing (Wu
and Olson, 2010).
Complexity
Some vendors do not keep up to the requirements of the contract. They
might not deliver timely or not comply with the terms set. Language and cultural
differences are among the reasons for these problems. This in turn leads to
increase in costs, poor quality in deliverables and delays. The multi-vendor
complexity and dependency add to the short comings. Vendors might have also
not understood the requirements of the business. However, there are guidelines
on handling vendor management complexity.
How to deal with the complexity

Vendor Management
Communication is very important in vendor management. Effective
communication between vendors and the company is important. Holding regular
meetings with board members, the project team and the vendors is important.
Assigning roles and responsibilities is also important. If possible, a project leader
should be appointed (Rosemann and vom Brocke, 2015). Performance reports
should be given on a regular basis. The report should contain progress updates
and issues that emerged during the processes. Problem solutions, and mitigation
plans should be suggested in the report .
Spending more time on issues and risk management is recommended to
ensure that the deliverables are timely and of good quality. Multi-vendor projects
have higher chances of having issues. Having a centralized system in which issues
can be raised is important. Microsoft has the Accounts Payable Support Desk for
vendors’ support.
Change management should also be looked into. Before any proposed
changed is considered, its effect should be determined. Effective change
management processes should be put in place. Changes in work scope, project
schedule and costs are dealt with differently. Dividing the project into different

Vendor Management
phases should be done. Each vendor should know what deliverables should be
given at the end of each phase. Gantt charts could be used for the planning.
Conclusion
Vendors in an organization are managed using a vendor management
system. Companies that have vendors for their different requirements have
complex multi-vendor systems. Such systems are prone to issues thus proper
measures are taken to handle the complexity. Guidelines and codes of conduct
are important for vendor management. Building strong client-vendor
relationships is also important to derive value from outsourcing. Microsoft is one
of the companies that manage its vendors through effective codes of conduct,
programs and vendor support systems.

Vendor Management
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