The Perils of Strategic Vendor Management (What your Consultants Didn't Tell You)

Throughout my career I have heard consultants tell the same story, in order to improve efficiency and performance surrounding vendor management, "focus on your strategic vendors." These are the vendors that are engaged on your most critical business processes, initiatives, and systems and are the most difficult to replace. They are not necessarily the ones you spend the most money with – but they are critical to your performance as a business.

You should take these strategic vendors and manage them closely, understand them, build monthly scorecards and performance reports that inform you on all aspects of the relationship. Then build action plans for continuous improvement.

> You - "OK, I've done that. That is about 8 – 10 vendors, and around 30% of my total spend – what about the other vendors?"

> Consultant - "You do not have the resources to manage those vendors. They must be automated. Put them on e-procurement, they can be replaced easily, and you will save lots of money."

> Future You – "They were not easily replaced, identified and lots of money was not saved."

The Five (5) Myths Surrounding Your "Non-Strategic" Vendors

1) The Financial Myth – "We don't spend a lot of money on them."

Reality - yeah, you do! Strategic suppliers, depending on industry, are between 15 and 30% of your total spend; that means over 75% of your budget can be attributed with these non-strategic suppliers. That is a lot of cost not being pro-actively managed.

2) The Substitution Myth – "These non-strategic vendors will be easy to replace."

Reality – your consultants' advice to automate your vendor relationship or leverage e-procurement is a synonym for "set it and forget it."

The consequences of this are far reaching – often you are either paying for services you no longer use or are paying yesterday's, more expensive, rates for today's services.

3) The Subscription Myth – "Moving to monthly services subscriptions saves you a lot of money."

Reality - monthly subscriptions seem easier to manage because few people actually manage them. These monthly services grow at such a steady state you become the analogous "boiled frog;" never willing to jump into the boiled water but OK letting the water heat up all around you. With the pace of organizational change and transient workforces, the original business owners or need for many ongoing service commitments are no longer known. Simply, you are paying for services you do not use, and the vendors are happy to continue to bill.

4) The Non-Important Myth – "They're not strategic – they do not matter."

Reality – while big ticket items get big exposure, smaller vendor commitments are more distributed throughout your organization with employees, initiatives, and locations. These multipliers leave the collective group of non-strategics with a greater annual expenditure.

Also, as these smaller services germinate uncontrolled, they become increasingly difficult to identify and turn into significant exposure points for data breaches and security lapses.

5) The Chaos Myth - "There's so many non-strategic vendors it is impossible to manage them."

Reality - this myth has historically been true (until now). You do have limited resources; you cannot put the level of effort exerted on your strategic vendors to all vendors. You need vendor alignment technology that tracks and reports on your vendor, to service, to need, to action relationships.


Even the largest enterprise and organization do not have the resources or capabilities to proactively manage non-strategic vendors – that's why information has been languishing in spreadsheets and disconnected across the organization. MISO3 is a new business solution which provides three essential capabilities to today’s over-worked vendor management teams.

  1. Start with a source of truth
  2. Build a workflow
  3. Focus on decision points


The vendors may not know how you are using their services – but they know what they are charging you and what you are paying for – that's why MISO3 starts with your invoices. MISO3's unique automated ingestion capability takes in all your invoices, validates the vendor and account data and gives you a single repository of all your outstanding commitments.


The spreadsheets you have been using to track vendor data do not have enough cells or intelligence to track all vendors relationships and decision points - MISO3 does. Know what you have, what you don’t and act timely.


When it comes to your vendors you have many options – cancel, re-negotiate, renew or simply do nothing (auto-renew). Too often vendors are left on "set it and forget it" and companies do not take advantage of cost optimization opportunities. MISO3 highlights all these decision points and gives you ample notice to act.

About MISO3

MISO3 is the leading SaaS financial intelligence solution, focused on identifying waste and tracking spending on recurring service commitments. MISO3's cloud technologies helps companies save both time and money by alerting users to upcoming events and enabling informed decisions. MISO analyzes data in real-time, making thousands of data queries so organizations are left with actionable information regarding their service inventories.

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