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Proactively Work With IT Vendors To Maximize Investments, Reduce Risks

Work to keep relationships with vendors strong and transparent.

Companies of all sizes are facing intense competition amid an uncertain economic climate. To stay on course for strong performance and future growth, many enterprises continue to outsource IT services and infrastructure management to third-party providers. These partnerships can offer significant cost savings that free up capital for other aspects and projects within the business.

The perks of outsourcing does not need to stop there. Rather, CFOs and other executives could work collaboratively with IT vendors to manage the partnerships and get a higher return on investment. Because IT vendors are experts in their fields and understand how best to optimize technology solutions in various business contexts, they have mastered best practices for efficiency and productivity. 

To What Extent Should You Work with Vendors?
Any partnership or outsourcing project should include opportunities for executives to interact with the provider or consultants to ensure both entities are striving toward the same goals and tasks are being streamlined into other operations, not disrupting workflow. Taking steps to regularly ensure both players are on the same page can reduce errors or setbacks that may have a lasting impact on the partnership or lead outsourcing projects to fail.

Unfortunately, too often vendors and their clients are not speaking the same language. Service providers encounter all sorts of businesses - it can be a learning curve every time. For that reason, companies have to take on some of the burden of teaching their vendors about the business and highlight the specific areas that could use more efficient processes.

When the service provider is not introduced to the business model or provided with the necessary knowledge and resources to enact cost benefits, then delays and disruptions occur. These consequences can slow the realization of return on investment or even deride projects far enough to result in increased costs and dissolution of the initiative altogether. Working more proactively and collaboratively with IT vendors can help CFOs ensure savings are achieved and long-term benefits are acquired.

Management Best Practices 
When working to build stronger relationships with IT vendors and outsourcing consultants, CFOs should create strong contracts that clearly lay out expectations and consequences if problems arise. The more straightforward the agreement, the less likely there will be discrepancies or misunderstandings down the road that can further complicate a fragile partnership.

After both parties have signed on the dotted line, CFOs should understand how the third-party provider operates, as they are most likely not located in the company's office space. Take a tour of their workplace, see how the environment functions, and note the behaviors of management and staff. The greater understanding of how work is completed and communications are shared within the outsourced work culture, the easier it will be to discuss any changes that might need to be made in the future.

Another important aspect of vendor relationship management is making sure the third party is aware of how much risk the company is willing or prepared to take on. This can help companies assess whether enough security precautions are in place to make both parties comfortable. Some IT providers may feel confident in their staff and infrastructure to handle a certain level of risk based on past experience. The risk, however, falls on the shoulders of the hiring enterprise as well and should be determined by CFOs and other executives. Without guidance on what the company is willing to stomach, IT providers may determine risk levels on their own. Therefore, discuss with CEOs and CIOs how much risk can be handled at this time and what the company is willing to pay to bring the risk down to this level.

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