Managing Relationships with Third-Party Vendors

Today, more than ever, companies of all sizes are turning to third-party vendors to outsource certain business functions. Third-party vendors can supply a variety of services, such as marketing or security. Over one-third of small businesses in the US use a third-party vendor for at least one area of their operations, with IT and tech support being among the most commonly outsourced functions.

Choosing to go with outsourcing for processes like IT carries a wide variety of benefits compared to handling these functions exclusively in-house, from lower overhead to more targeted expertise. Even so, it’s important to ensure that you continue to get the most from your vendors. Well-managed third-party vendors can make your daily operations easier, but without proper care, you can end up overpaying for services that are not optimized for your business. Re-evaluating your relationships with your vendors can make a significant difference to your business and play a pivotal role in your overall cost-optimization strategy.

How Do Third-Party Vendors Work?

A third-party vendor is any company or individual that your company hires to handle specific parts of your business. While the vendors you hire may become an integral part of operations, there are a number of factors that separate vendors from other types of contractors. 

For one, third-party vendors are generally not exclusive to your company. Vendors tend to specialize in one particular area and offer their services to multiple companies as needed. While this can occasionally be less convenient than retaining hired staff for this function, vendors can usually offer similar services for far less training, oversight, and expense than full-time employees would require to fill that particular need. 

Toward this goal, vendors are generally hired by choosing from the pre-set services that they offer. These services are often grouped into tiers or sold as individual packages that companies can select according to their requirements.

Choosing the Right Third-Party Vendors 

Even if you’ve already determined that your organization can benefit from outsourcing, choosing which vendor team to work with is critical. There are many factors that play a role in whether or not a particular third-party vendor is right for you. Just like with regular employees, suitable third-party candidates need to possess both the technical capabilities your company needs, as well as fitting into your organizational structure. 

It’s also important to vet the quality on offer. Theoretically, third-party consultants should offer exceptional skills and specialized knowledge, but never take that as a given. Ensure your ideal partner brings genuine expertise to the table rather than simply providing manpower to cover basic needs. Ask detailed questions or check for relevant certifications. It’s also important to know which systems potential third-party vendors utilize. The best vendors are constantly adapting and upgrading their systems to ensure that their services are up-to-date. 

On the organizational side of things, the most basic concern is whether or not you feel that you can get sufficient value for what you pay. When choosing a third-party vendor, many businesses overlook the real cost of the vendors they work with. Actual cost includes the stated up-front price of a system or service subscription as well as secondary and one-time costs, such as implementation, training, configuration, and any other add-ons.

Maintaining Good Vendor Relationships

Even once you have established relationships with your outsourcing partners, managing and maintaining those relationships is essential. The above considerations aren’t just crucial when choosing a partner — they are all equally valuable when reviewing your current vendors, ideally on an annual basis. This ensures that you continue to get the value you expect from the third parties you work with. 

Like any business relationship, maintaining a positive working relationship with your third-party vendors relies heavily on ensuring that you’re getting value in line with what you’re paying for. Sometimes, as your business evolves, you may need to increase or decrease your subscription with a given partner to keep their services in line with your needs.

You may also come across seemingly better offers from competing vendors. If you have a well-maintained relationship, you can often discuss this openly with your current partners to find the best solution, whether that is a change to your service package or a re-negotiation of costs.

However, managing, updating, or re-negotiating your vendor partnerships can be tricky to navigate if nobody within your organization is an expert in your vendors’ areas. That’s why working with a specialized vendor management consultant can be a valuable tool to take the guesswork out of your third-party vendor relationships. 

Maximize Your Results with Populus

Often, you can find ways of getting more from your partners without having to go through the process of changing vendors. Providers are usually content to maintain the status quo (or upsell you on new services), but with the right approach, you may be able to get more from a vendor you already use without shelling out for a new program or service subscription.

Having a strong understanding of the market and what your company should expect is a real advantage, but in most cases, companies that outsource their IT departments may not have this expertise available in-house. Fortunately, you can still benefit hugely from working with an experienced IT vendor management consultant. An expert in the field of data and information technology can help you work with your current vendors to ensure that you’re getting the best possible service across the board.

Getting the most from your vendors can be challenging, especially if you want to keep your partnerships competitive and implement regular service audits. But vendor management professionals can help streamline everything from facilitating and optimizing your current third-party relationships to seeking out valuable new partners. 
Populus Technology has years of experience providing digital solutions, including vendor management. We help support your growth by directing your team to the best IT vendors in the industry. We also assist organizations in updating and automating their business processes, even creating custom software solutions for unique workflows. Whether you need help managing vendors or transforming your own IT processes, Populus has the solutions you need. Get in touch with our team today to learn more.