CXO

Do you use preferred vendor lists?

Increasingly, IT executives are managing contracts with outside vendors. One tool being used is the preferred vendor list. We'd like to hear your war stories about this tactic.


As more businesses outsource IT roles, technology executives are finding themselves thrown into the process of managing contracts and acting as in-house consultants.

“IT in general has not made the leap to more of a business-oriented, consultative role, but I really think that’s where it should be,” said Chris Pickering, a senior consultant with Cutter Consortium. “IT should have expertise in outsourcing.”

Pickering believes IT is often more of an in-house bully that dictates solutions. Instead, IT should be guiding the business units to find the best solution to fit their needs, whether they’re choosing an ASP or buying a boxed solution.

“IT needs to be versed in all these options and then needs to help bring in the best solution possible regardless of whether IT ultimately controls it or not,” he said.

One way to manage such contracts is through a preferred vendor list, where IT sets the technical and legal standards for contracts by restricting the vendors that can be selected by business units.

A preferred vendor list can be an effective way of ensuring quality and consistency throughout the organization while still giving business units flexibility to meet their needs.

But that, too, can backfire, Pickering said.

“The error that IT has made most frequently, historically, is to try to control various things too closely through standards, with the result being that IT becomes inflexible and non-responsive and that’s what frustrates business more than anything else,” he said.

Do you use a preferred vendor list? If so, do the business units view it as a help or a hindrance?

Share your experience with preferred vendor lists as an outsourcing management tool by e-mailing us or posting your comments.

CIO Republic will be examining this issue further, so be sure to provide your feedback on this topic.

Editor's Picks

Free Newsletters, In your Inbox