Vendor Management: What It Is and How It Will Save Your Business Money

Vendor Management: What It Is and How It Will Save Your Business Money

As your business relies more and more on external vendors for your technological needs, you must find new, efficient ways to manage risk, reduce expenses, and improve vendor performance.

The question of whether to manage these needs in-house or to outsource them depends upon your company’s size, number of vendors, and future goals. Outsourcing the management of your technology vendors could be the decision that saves your company’s budget and security.

In this post, we will explore what vendor management is and how outsourcing it can help gain control of spending and online security.

What is Vendor Management?

Vendor management is the process of overseeing and controlling relationships and interactions with third-party suppliers or vendors that provide goods, services, or resources to an organization.

It involves activities such as selecting appropriate vendors, negotiating contracts, monitoring performance, resolving disputes, and ensuring that vendors meet their contractual obligations.

The goal is to optimize the value of vendor relationships, minimize risks, and ensure that the organization receives high-quality goods and services at competitive prices.

Here at Blue Tree, when we speak about Vendor Management, we are referring specifically to technology vendors. This includes managing relationships with suppliers of hardware, software, security & compliance, professional services, and telecom, to ensure they meet performance standards, compliance requirements, and strategic goals.

Technology vendors may include the following (and more):


  • Servers
  • Personal computers
  • Storage equipment
  • Networking equipment
  • Computer peripherals – monitors, keyboards, mice, printers, scanners


  • Operating systems
  • Productivity suites
  • Creative tools
  • PM System
  • HR System
  • Payroll System
  • Sales CRM

Security & Compliance 

  • Cybersecurity
  • Data protection and encryption
  • Identity and access management
  • Compliance and governance
  • Cloud security

Professional Services

  • Cloud computing
  • Data analytics
  • IT outsourcing
  • Staff augmentation
  • Consulting
  • Managed services


  • Landline phones
  • Mobile phones
  • Phone service providers
  • Telecom infrastructure providers
  • Internet service providers

Why Vendor Management is Important

Your business is becoming increasingly dependent on specialized technological services and therefore, on external vendors. The level of risk in the marketplace increases as vendor services increase.

It is critical, now more than ever, to be able to rely on your product and service providers, and to focus efforts on where you can get the largest return for your investment in third-party products and services.

Successful vendor management teams regularly assess vendor contracts, hold vendors accountable over time, and maintain relationships with their vendors.

Vendor management is the answer to understanding who your vendors are, mastering your vendor contracts, and controlling your technology spending. 

How Outsourcing Vendor Management Saves You Money

With each inefficient process, unreliable vendor, or uninformed department, your company is losing money. 

Making sure you have the right vendor for the job and that your relationship with each vendor is maintained requires you to have the right team in place. 

In many situations, this means outsourcing your vendor management needs, which will ultimately save you money.

Here are just a few of the money-saving benefits you will gain by outsourcing your vendor management needs:

  • More cost-effective than hiring a full-time employee for the task
  • Cost control through negotiations with vendors
  • Support and cost-saving strategy suggestions for your finance officer
  • Avoid duplicate technologies among vendors
  • Clear tracking of subscriptions, auto renewals, and free trials
  • Streamlined processes that reduce waste
  • Access to specialized tools and technologies for monitoring, tracking, and analyzing
  • More time to focus on core business activities
  • Avoid costly disruptions caused by contract and compliance issues

Your business will save money and resources by outsourcing this function to a team that does this every day, thereby avoiding the costs related to hiring and maintaining an employee for this responsibility.

With an effective vendor management team, you have a network of dependable people whose job it is to know who the top vendors in the marketplace are at all times and how to leverage those vendors for maximum ROI. Vendor management services give you the information and data you need to make organizational and financial decisions.

How to Know if You Need Help with Vendor Management

The chances are that at a minimum, you could use some help with improving your vendor management system, but you don’t have the data or the team you need to get started. At a maximum, you are sinking with the weight of unmitigated risk. Either way, outsourcing vendor management can help!

Are you facing any of the following challenges?

  • Trouble managing current vendors
  • Lack of in-house vendor management expertise
  • Scaling company, resulting in expanding tech needs
  • Concern about risk management
  • Struggling to keep up with technological advancements

Now let’s dig deeper! Can you answer these questions about your vendors and contracts?

  • Do we know what we are getting from our vendors and is it worth it?
  • How do we quantify data regarding our vendors and their performance?
  • Are there better alternate options to our existing technologies and vendors?
  • Do we know that we are not duplicating spending?
  • Are all of our vendor contracts documented, organized, and searchable?
  • Are all critical vendor contract data known, documented, and tracked?
  • Expiration dates?
  • Early termination penalties?
  • Out clauses?
  • Are vendor terms & conditions based on best practices?
  • When there’s an issue, do we know who to contact…and are escalation paths known, documented, and accessible?
  • Do our vendor partnerships support our strategic business direction?

Vendor Management Case Study

Blue Tree was recently able to help a San Francisco Bay Area-based organization specializing in a range of social services. 

Our client’s small team of IT engineers struggled to manage a complex network connecting over 40 remote sites with limited resources, limited time, and no formal processes.  The demanding requirements from various counties in California necessitated frequent and rapid site additions. Lack of resources and formal processes caused application performance issues, system downtime, delays in site migrations, and high operational and vendor service fees.

Blue Tree’s Vendor Management practice provided expertise to support the executive team, corporate IT team, and various business units with vendor and site operational management. We documented technology vendor relationships and services, organized and assessed service contracts, and created formal processes for managing existing vendors and procuring new services. We moved our customer from an underperforming data center provider to a high-performing provider. Additionally, we established procedures for site moves, adds, and changes, negotiated new and existing contracts to meet best practice standards, and provided continuous oversight of technology vendors and services. 

This comprehensive management not only addressed their immediate challenges but also laid the foundation for streamlined operations, cost savings, and enhanced vendor relationships. Read more here.

Next Steps

At Blue Tree, we have developed a robust life cycle approach to helping organizations think about how they are deploying technology, making buying decisions, and managing technology. 

We have also created a proprietary Vendor Management system and have a formal process for making sure that plans are sustainable and scalable. 

If you’re looking for a team of experts to implement a Vendor Management program within your organization, please reach out. We’re ready to help! A comprehensive Vendor Management program is essential for growing and protecting your business, especially for long-term success.