vendor management office (VMO)

A vendor management office (VMO) is an internal unit within an enterprise that is charged with evaluating third-party providers of goods and services, supervising day-to-day interactions and managing longer-term relationships.

In some cases, an IT vendor management office is established to create and monitor vendor relationships with regard to IT, including establishing the organization’s proper mix of IT outsourcing and insourcing opportunities and setting vendor risk management policies.

Vendor management typically involves numerous oversight duties for a CIO or IT executive, including negotiating and then monitoring the length and substance of contracts; keeping tabs on new technologies; maintaining contact with current vendors and reaching out to vendors with which the organization has not yet worked.

For those organizations not prepared to leap into a full-scale VMO, it's also possible to establish an IT governance or standards body of employees from across the company to oversee purchasing policies and assess new vendor technologies and other offerings.

When assembling either a VMO or a standards body, it's vital to have broad representation from procurement, legal services, IT and business units. It can help to involve individuals who have backgrounds in project management as they are often more comfortable in supervisory roles. It’s also important to include people who have a far-reaching view of the organization and who, above all else, understand the importance of good relationships with vendors.

This was last updated in September 2011

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