At times, it can prove quite challenging to justify outsourcing vendor management when the program in place gets the job done. Have you found yourself in this situation before? It’s human nature to react with the old adage, “why fix what isn’t broken?”
There have been talks of regulatory reform, but vendor management isn’t going away. In fact, it’s only becoming more scrutinized. Examiners are expecting more, too. In fact, according to Venminder’s State of Third Party Risk Management Survey, 73% of respondents believe third party risk management is getting more scrutiny by the regulators. So, ask yourself. Are there reasons you feel you should outsource vendor management even though your program is technically getting the job done?
5 Reasons to Outsource Vendor Management
Here are five reasons that outsourcing vendor management may help you:
1. You can allocate time and resources to other areas.
Even with a solid homegrown program, you’re likely overloaded and wearing many hats to ensure day-to-day operations stay on track. We often hear how time-consuming analyses of SOC reports, financials and business continuity/disaster recovery plans can be. By simply outsourcing your most time-consuming tasks, you’re putting time back into your day to focus on other priorities that may be getting bumped.
2. You reap the benefit of working with industry experts.
Most third party vendor management service providers employ subject matter experts to assist you with due diligence reviews and to answer any questions that you have about your program. Usually, on staff, they’ll have certified public accountants (CPAs), Certified Information Systems Security Professionals (CISSPs), paralegals and other qualified experts who have worked in the industry for many years. You receive a fount of knowledge from a collective group of resources who work in the industry every single day. They’ll be able to help determine the next steps that are best for maturing your program.
3. It can save you money.
Most feel outsourcing isn’t in the budget as it’s going to cost more than keeping the program fully in-house. However, sometimes outsourcing can save your organization money. Here are some ways:
- Automation can lead to fewer missed significant dates in the contract, such as a notice of non-renewal or price increase, which can save many dollars right there
- It can help you quickly discover risks that could really be a volcano ready to explode which may lead to things like customer complaints, a data breach, missed service levels all of which can be costly
- The cost of outsourcing sometimes can end up being cheaper than a position’s salary if your organization is located in an area with a high cost of living – qualified people needed to do reviews can be costly (e.g., labor in Orange County, CA will likely be much more costly than labor in Elizabethtown, KY).
4. You will increase efficiency.
Sure, have a program that you feel is pretty solid. I get it. However, spreadsheets aren’t the most efficient way to track vendor management tasks. And, that’s likely what you’re using. It can sometimes be a harsh reality to accept, but it’s true. They’re just not. When you make a change to your policy that impacts information in the spreadsheet, you often have to spend hours making that change to hundreds of spreadsheet pages. If you make a policy change and you’re using a software, you usually can implement the change with a click of a button and spend just a few minutes on the task.
5. There will be ease of reporting.
Pulling reports just became easy… and maybe even fun! Most who you outsource to will give you access to customizable reports that are board ready. The robust reports give insight into information you may not even realize you’ve been missing. In turn, this leads to “knowing your vendors” at all times.
A solid in-house program is great, but there may be ways it can be improved upon to equal even more return for your organization. It’s important to periodically step back and weigh the pros and cons and see if outsourcing is the best next step for your organization at this time.
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