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Economic Rollercoaster shows the need for Strategic Vendor Management

by Frank Ridder  |  May 3, 2010  |  1 Comment

During 2009 and the beginning of 2010 – the economic rollercoaster – many organizations looked into their vendor relationships. Well they said they do, but in reality they only looked into the price they have to pay for the service they get. Goal: Getting the same for less, or worse, getting less for far less, accepting a drop in service quality. Short sighted thinking as a survival act. It is already clear that the changes made under these specific circumstances will lead to further necessary changes once the economic pendulum returns.

It was those organizations experiencing problems that had established rigid, inflexible relationships with their vendors; tactical relationships (do just what I asked you to do). Quickly changing relationships like this is very though, and the possible scope of those changes is very limited. But good vendor relationships should work in good times as well as in bad times. And as those come and go and every time in a different shape, vendor relationships have to be open and flexible, strategic relationships (help me facing my challenges).

In well managed relationships between vendors and organizations, the economic challenges were faced collaboratively with a short term and a long term thought; allowing changes that helped not just meeting the short term requirements (cutting cost) but also preparing for the next crisis (increasing variability). This is how vendors reach trusted advisor status – and long term success.


The recent crisis has shown – the Ying-Yang of great relationships between a vendor and an enterprise is based on strategic thinking – not tactical thinking. Vendors that aim for long term trusted advisor level relationships have to say good-bye to multi year steady revenue guarantees. They need to allow prepare for more flexibility. And Enterprises have to implement strategic vendor management for that – facilitating a much better alignment between demand and supply.

Category: sourcing  vendor-management  

Frank Ridder
Managing VP
6 years at Gartner
21 years IT industry

Frank Ridder is a vice president in Gartner Research in the area of IT services and sourcing. He is mainly helping organizations through the sourcing life cycle for infrastructure services, including the data center and the end-user side. He is a leading… Read Full Bio

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