The IT landscape of an organization has become more like a web with several vendors involved in the IT-enabled delivery of business solutions. With the increasing customer demands, vendors are proving to be crucial for enterprises. As the outsourcing duties in cloud computing are increasing, vendors are also taking on fundamental roles in enterprise operations. Additionally, with the increasing scope, complexity and scale of the relationships of vendors, the challenges associated with them have also expanded. Consequently, the importance of effective vendor management on the cloud has increased proportionately. In this article, we have discussed vendor management challenges on the cloud in detail to help you build the framework of a potential and successful long-term relationship with your vendors.
Vendor Management Challenges on the Cloud
Challenge #1. Security is a big concern
Cloud business models include third-party vendors, and this has given rise to security concerns in vendor management. To deal with security concerns, enterprises need to focus on developing an enterprise public cloud strategy that includes security guidance on acceptable uses for SaaS. They must also learn to incorporate sourcing and procurement solutions into this cloud strategy. Additionally, they can implement and enforce policies on cloud risk acceptance processes and usage responsibility. It is very important to follow a life-cycle governance approach that highlights the ongoing operational control of your public cloud.
Challenge #2. Integrating modules are difficult
Many sourcing and procurement suites are combined by making use of individual modules originally designed as stand-alone solutions. Although the integration of modules is improving, they don’t always work evenly or meet customer expectations. Therefore, enterprises are recommended to thoroughly review the limitations and performance of integrated suites for better vendor management. Also, vendors need to comprehend their plans and timing to resolve integration issues and bring in new improvements and functionality. Enterprises should focus on developing sourcing and procurement automation strategy that considers specialized solutions and innovation to solve complexity in integration in order to have a better vendor management.
Challenge #3. Selecting the proper pricing model is challenging
For businesses selecting proper pricing model is very challenging. It is important for an organization to have a proper understanding and a detailed knowledge of the solution service delivery model and its corresponding pricing model. It is advisable for the businesses to develop a detailed total cost of acquisition analysis that takes into account the pricing model, time to implement and follow up processes such as monitoring and maintaining the procurement. Vendor management on the cloud should be a key competency for every enterprise. Successfully doing so results in optimally migrated risk and optimum benefits.
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