VIMRO IT Blog

The Hidden Costs of Multi-Vendor Management

Working with multiple, locally-sourced vendors may seem a better solution than flying central staff from location to location, but when it comes to ROI, there is a third, more profitable and far more streamlined option.

The Hidden Costs of Multi-Vendor Management

When multiple sites need technical support, it is easy to assume that paying a local vendor at each location is cheaper than flying centrally-located staff from place to place. But companies are often disappointed when the financials come back and they don’t see the ROI they hoped for. Where is the disconnect?

Managing multiple service vendors requires overhead in the form of project management and administrative support, and both can be exorbitant. Compare saving a few thousand on travel costs versus spending ten thousand on management, poor productivity and persistent problems repeated across locations.

While multiple locally-sourced vendors or tiers of suppliers may be appropriate for commodity products, a single IT support vendor can deliver unexpected but real, direct financial benefits such as reduced procurement time, more efficient centralized communications and consistent support and problem solving.

Strategic Network Support: A Case Study

Consider a company with multiple local network support vendors for multiple office locations and datacenter operations around the U.S. The communications between the company and the vendors took forever as each one used a separate process for receiving support tickets, implementing network and hardware changes and reporting results. The client wasted a lot of time managing the different flows of information and consolidating the reporting into a single document. Some information just didn’t transfer or was reported in different categories by each vendor.

After digging deeper into the pricing and cost of each vendor’s services, it was determined that each one charged differently for the same services. That’s when the company decided to strategically align with a single vendor. The result of that switch was a lower cost per site, a single point of contact with streamlined communications, a single invoice and consistent reporting that matched what the client needed.

More importantly, the different client’s IT groups—such as Infrastructure, Web and Communications —began receiving consistent communications and maintenance across their networks and datacenter operations. This resulted in lower operational and maintenance costs, as well as increased availability of hardware and networks with fewer issues. In the event of downtime or problems, support requests were responded to and dealt with faster and in a more efficient manner.

This is achievable, real world experience.

Single-Source Vendor Benefits

All the benefits of a single-source vendor converge when there is a problem. If there are issues, multiple and distant vendors will often blame each other rather than taking responsibility and resolving the problem. A single-source vendor is the fastest, most efficient and cost-effective way of addressing critical problems that invariably arise.

The tangible ROI gained by investing in a single-source vendor include:

  • Better pricing, often due to volume or multiple services
  • Less employee time spent managing the vendor relationships and administration
  • Simplification and automation of interactions and communications
  • Greater client negotiating power for products, services or SLA’s
  • Reduced costs due to less variability of products and services
  • Less time spent procuring multiple services and products or training new vendors and personnel
  • Reduced travel costs on managing or providing services
  • Minimized technology and services/maintenance compatibility issues

Some additional, and sometimes little-appreciated benefits of single vendor partnerships are:

  • A strong face-to-face personal relationship
  • Single streamlined payments to one provider
  • Less time spent managing Service Level Agreements (SLAs)
  • Less time spent on supplier performance monitoring and evaluations

There is a saying for having a single vendor–one throat to choke. We like to think of it in different terms–one hand to shake!

Find out more about how VIMRO can help streamline your vendor relations HERE >>

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