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  • Writer's pictureMark Voytek

The Essential Role of a VMO in a world with Generative AI

In an age where companies are increasingly leaning towards outsourcing and diverse Service Delivery Models (SDMs) like ITO, BPO, Industry back-office, and Captives/Shared Services, the relevance of a Vendor Management Office (VMO) has never been clearer. A VMO is not just another corporate acronym; it's the cornerstone of holistic supplier portfolio management. I am speaking to several companies that need a boost in this area, and it will come with a combination of the right people, process and technology, including Generative AI.


Why is a VMO so vital?

In simple terms, a VMO provides a 360° view of all vendor interactions, powered by critical supplier analytics. This holistic view is imperative for nurturing and sustaining trusted partnerships. More than just a monitoring tool, a well-implemented VMO shifts the paradigm from reactive mishandling to proactive, strategic management. Just score cards and reporting is table stakes, and it's all about driving insights and actions.


Yet, without a proper VMO in place, companies find themselves grappling with issues. One of the most pressing is the strain on outsourcing relationships due to a lack of management and controls. Imagine navigating a ship without a compass – that's a business without VMO in the outsourced ecosystem. Then, there’s the disparity in platform pricing. SaaS vendors, for example, sometimes charge for a vast number of supplier relationships, far exceeding what's needed and aligned to your strategic relationships. The ones that need to be managed. This lack of transparency not only affects the bottom line but could also erode trust.


So, what's the true value of integrating a VMO?


  • Relationship Success: With a VMO, companies can efficiently track and report across diverse functional areas, laying the foundation for sound business relationships. It's not about overseeing but rather understanding and nurturing these partnerships and relationships.

  • Transparency & Trust: VMO ensures that every deal, every transaction, and every interaction is transparent. In doing so, it builds trust within and throughout the supplier ecosystem.

  • Performance Management: With real-time performance metrics at your fingertips, issues are identified and rectified swiftly. No more waiting for quarterly reviews – real-time data drives real-time solutions.

  • Contract Managment: An area where Gen AI will play a major role as it combines what's included in the contract, to market metrics and benchmarks to make informed decisions about your GBS.

  • Engagement: Active relationship management means that you're not just working with vendors; you're engaging with them. This deeper connection ensures that you get the most out of these partnerships, from value to innovation.


And as we look towards the future, factoring in the desired state of maturity becomes paramount. Where do you envision your company's vendor relationships in the next 2 or 4 years? What role will Gen AI play in my current and future state platform decision? Your answers to these questions will shape your VMO and governance needs.


In conclusion, the pressing question isn't just about whether you need a VMO but rather understanding your "Why" behind it. Is it compliance, to mitigate value leakage, to drive best practices, to leapfrog technology, or simply to get the best out of your suppliers? Whatever your reason, remember that in the intricate dance of business, a VMO ensures you lead with confidence and strategy.


As you navigate the complex world of vendor relationships, ask yourself: Are you reactively managing or are you proactively leading? If it's the latter, a build for purpose VMO might just be your compass. And yes Gen AI, will play a role to help facilitate this.


About Voytechnology Partners


Voytechnology Partners is a leading technology-enabled advisory firm specializing in Contract Lifecycle Management (CLM) services. Our deep expertise, combined with an innovative approach, enables us to guide Fortune 500 companies through the complexities of contract management, making their business operations more efficient, compliant, and effective.


For IAOP, I am the recently named Chief Advisor and Thought Leader. This post is something that the Governance Center of Excellence (COE) for IAOP continues to refine and update. Ask me how you can help with this, and I’ll include you in some of the inputs and outputs of IAOP’s Governance COE.


At Voytechnology Partners, we strive to understand the current state of your operations, identifying gaps and inefficiencies to create a roadmap for transformation that aligns with your strategic objectives. Leveraging our extensive market data, intellectual property, and industry best practices, our team of top-tier advisors delivers insights and actions that drive real value for our clients.


Our commitment to open dialogue and thoughtful questioning is instrumental in encouraging innovative problem-solving, while our robust network of alliances and partnerships helps us meet diverse business challenges effectively. As a partner, our clients can expect a creative approach to delivery, with solutions crafted to inspire change and drive progress. In a rapidly evolving business landscape, we understand the power of technology and its potential to transform organizations. That’s why we're passionate about harnessing the benefits of Generative AI in the future of CLM, helping businesses navigate change with confidence.





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