Pros and Cons of Using Vendor Management Systems

A vendor management system helps businesses find, engage, and manage their workforce through a software suite designed to take care of business processes from end to end. From the very first meeting to the final closure of a deal, vendor management systems are designed to accurately monitor and evaluate time, cost, and quality through data-driven reporting.

Although a seemingly good option for any business to get ahead, many specialized industries, like IT, are finding difficulty aligning their vendor management systems to their business processes. Due to obstacles faced in setup and configuration and the challenge of organization-wide adoption, businesses are left comparing if it’s better to use vendor management software or hire consultants to manage their third-party vendor dealings. Before deciding for your organization, you may consider the pros and cons of solely using vendor management system software. 

Pros of Vendor Management Systems


One of the biggest perks of using a vendor management system is the efficiency it can bring to an organization. Companies worldwide have leveraged vendor management software to implement consistent procedures across entire organizations, regardless of different departments, geographic locations, or divisions of programs. Connecting all sources of vendor management through a single software enables better efficiency for the company. In addition, this allows an organization to become holistically compliant with governmental and regulatory policies.

The vendor management software can also ensure employees are following business processes according to approved methods and documentation. In turn, you’ll be able to track discrepancies and make adjustments to avoid mistakes.

Better Reporting

Reporting can be a massive task for any organization. With the average Business to Consumer team reportedly wasting over 350 hours a year in communication silos, connecting data between isolated departments and disconnected branches of an organization is a difficult but necessary process.

However, vendor management systems controlled by software can make it much easier for your organization to streamline data collections and delve into data-driven insights. Instead of cobbling together different vendor communications, files, and difficult-to-manage spreadsheets, vendor management software can provide you with robust reports that give you an unobstructed view of current vendor relationships, costs, and communications between your vendors and your departments.

Clear View 

Vendor management systems can give you a clear picture of your business’s future while tracking the past. While great for compliance, good vendor management systems can help you log every step of internal and external vendor communication. Automated management allows you to organize your vendor processes according to the insights you’ll want to analyze first, making risk assessments and organization a breeze.

Cons of Vendor Management Systems


Although vendor management systems are touted as automated software solutions focusing on hard data, vendor relationships and communication still require manual setup and oversight by employees. Someone must take responsibility for implementing the new system and training any staff who are going to have access. Even once it’s up and running, when viewing the progression of vendor relationships or ensuring compliance, employees who may not be experts in the subject must provide a system of checks and balances for the product to work optimally.

In contrast, using vendor management system software with an IT consultant’s guidance ensures that you’re maxing the options presented by a vendor. Vendor management system consultants bring a deep understanding of the market, market conditions, and your business goals when making decisions on your behalf, eliminating errors possible when using internal vendor management software management alone.


Another limitation of basing your vendor management strategy on only software is that you’ll be disconnected from the management process. The disconnect may initially increase overall efficiency for a short time, but the impersonal gap between your vendors and your departments could create a more significant divide in the long run.

By working with a vendor management partner instead of (or in addition to) VM software, such communication gaps become bridged by legitimate connections. A benefit of using an IT vendor consultant is that they strengthen your vendor relationships and maximize the bottom line potential not through impersonal data-based reporting but by establishing vendor relationships deeper than what you or an employee may have.

Analytical Limitations

Although the data-backed insights delivered by vendor management system software are useful, it’s limited to empirical data. Organizations are prevented from gathering deep insights from the established relationships or partnership history with vendors and must rely solely on an analytical interpretation of a good potential vendor relationship. 

Utilizing software for vendor management but not getting help from a trusted consultant is like seeing your business’s future through half a pair of prescription glasses – you’ll never clearly see the complete picture. 

The accountability, follow-up, and critical thinking of expert VM consultants give you the ability to weigh the impact of your existing relationships in conjunction with data-backed insights, giving you a holistic view of your business relationships.

The Future of Vendor Management Systems 

Although vendor management software is leaps and bounds ahead of manual vendor management, it isn’t quite ready to be a plug-and-forget solution. Vendor management requires a customized approach, an understanding of current partnerships, and the ability to drive decision-making with qualitative and quantitative data. 

If you’re considering integrating a vendor management system to make your business more efficient, also consider working with IT vendor consultants to help your organization trim the fat of dysfunctional processes and data silos from your business’s bottom line. 

At POPULUS Technology, you can work with leaders in vendor management systems to create and implement the type of bespoke solution that can help you update, manage, and strengthen your IT vendor relationships while maximizing your return on investment.

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