A practical guide to getting more for less: 5 steps for consolidating vendors
Unpredictable macroeconomic conditions, combined with evolving cyberthreats and emerging regulations, make inefficiency and overlap in software vendors a nonstarter for businesses looking to retain their competitive advantage.
In our previous blog in this series, we covered the myriad challenges that come with a scattered and redundant approach to software partnerships: unnecessary costs, integration headaches, security gaps and strategic misalignments. We also touched on why GRC (and the sprawl of reporting and insight solutions that often come with it) is a prime target for vendor consolidation efforts.
5 steps to successful vendor consolidation
In this blog, we’re moving past the problem and into the solution. Here is a roadmap for organizations looking to cut costs and eliminate redundancies through vendor consolidation.
1. Conduct an inventory
Redundancies are generally born during periods of aggressive growth, when teams across an organization are empowered by an influx of cash to increase headcount and buy new software. The focus during these periods is maximizing team capacity, often at the expense of team efficiency.
As a result, when the time comes to cut costs and streamline, leaders often find themselves sifting through a mess of unused or underutilized software. Worse, it can sometimes appear as though no one is managing the use of that software, making it difficult to get an accurate read on whether it’s delivering any value to the business.
Fixing this problem begins with a thorough inventory.
Put together a team in charge of assembling a full list of software vendors, complete with the products and service-level agreements (SLAs) they provide as well as their primary point of contact within the organization. Work with all levels of management to get a detailed picture of how any given software is being handled within and across teams––sometimes, management responsibilities can shift from one person to another without formal documentation.
2. Analyze vendor performance
Now that you have a thorough, centralized list of vendor information, develop an analysis of how those vendors are performing.
This analysis should be catered to your company’s product offering and KPIs, but it will likely consist of a combination of objective and subjective assessments.
Objective factors to consider:
- How is the vendor performing against SLAs?
- What are the proven cost savings to date resulting from this vendor?
- Does this vendor provide the exact same service as another vendor, or a service that significantly overlaps with that of another vendor?
Subjective factors to consider:
- What value does the vendor deliver to individual teams and the business as a whole?
- Does the vendor demonstrate top-level ease of use?
- Does the vendor offer high-quality training and support?
As you’re identifying and analyzing your vendors, make sure to simultaneously conduct interviews with primary users to determine what they need to do their work at the highest level. This information will give you a detailed portrait of a given vendor’s role within business operations, which will make the task of consolidation more straightforward and effective.
3. Develop a consolidation strategy
It’s time to leverage your analysis. Weigh what you learned from primary users against the organizational value of each vendor. Identify vendors that can cover multiple needs with the appropriate level of quality, productivity and security.
Assess the technical advantages of vendor consolidation. Among other benefits, consider improved integration experience, centralized data management, heightened security and simple customization tools that allow your organization to achieve multiple goals under the umbrella of a single platform.
At the same time, assess potential risks and challenges that may arise from vendor consolidation. Your company may need to consider particular regulatory issues, contractual restraints or the potential impact of consolidation on compliance. Keeping these considerations top of mind will prevent new gaps from emerging during your consolidation process.
Finally, perform an ROI analysis of vendor consolidation complete with key metrics you will use to evaluate success. What financial and non-financial benefits do you expect to see? What is the projected monetary value of these benefits (taking reduced labor costs, time savings, improved risk management and higher customer satisfaction and retention into consideration)?
4. Negotiate and communicate with vendors
Now that you’ve identified your primary vendor(s), make time to discuss the full scope of your needs, negotiate pricing and set SLAs based on your expanded partnership. Remember that most vendors offer package deals or volume discounts to clients who decide to expand their partnership. In addition to this pricing improvement, many vendors can offer improved delivery times and customized service. Think expansively about what your primary vendor(s) can do in order to get the best deal for your organization.
Identify any additional training needs that may have cropped up in the consolidation process. Make sure all affected team members have what they need to properly leverage the tools available to them.
5. Monitor vendor performance post-consolidation
Tracking vendor performance shouldn’t be a periodic activity, nor should it only become a priority in lean times. It should be a consistent practice that is woven into everyday business operations.
Establish consistent KPIs or performance benchmarks your company can use to hold vendor(s) accountable over time. Schedule a yearly evaluation to serve as a miniature version of the consolidation process you just went through and use this analysis to evaluate opportunities for further consolidation.
Explore a cost-saving consolidation strategy with Diligent
As a trusted provider of governance, risk, audit, compliance and ESG solutions, the Diligent One Platform is uniquely positioned to give you increased visibility and control over multiple lines of business, while saving money in the process — all from a single, consolidated platform.
These aren't mere talking points –– they're data-backed advantages that come with switching to Diligent. A recent Total Economic Impact™ study from Forrester Consulting examined the potential ROI of deploying Diligent’s Board & Leadership Collaboration board management software. The results showed:
- 50 – 60% time savings for board and committee material creation
- More than 1,600 hours saved creating and distributing materials
- Reduced risk of a breach through lost materials or compromised accounts
To learn more about why governance, risk and compliance (GRC) systems present a prime target for cost-effective and value-added tech consolidation with solutions like the Diligent One Platform, check out the next blog in this series.
