ITIL Vendor Management

Learn about how ITIL Vendor management facilitates and manages the vendor and organization relationship, along with its key roles in IT sectors. ITIL, or Information Technology Infrastructure Library, an acronym, was used for the first time by the British government‘s Central Computer and Telecommunications Agency (CCTA) during the 1980s. It was used to document best practices used in IT service management and then printed for distribution. However, now it’s a framework designed to standardize IT service’s overall lifecycle, including selection, planning, delivery, and maintenance. Organizations, including IT services, must buy their goods and services from external vendors. It is to ensure proper functioning is going on. Also, they have to sustain relationships too with the vendors. Here in our previous blog you get an understanding on what ITIL supplier management is and in this post you will get know how to get it right, here is what can help. 

The demand for ITIL-certified professionals is growing at a faster rate. ITIL 4 Foundation Course is a Foundation level course that introduces the ITIL 4 concepts, where you will learn IT service management through an end-to-end operating model for the creation, delivery, and continual improvement of tech-enabled products and services.

What Is ITIL Vendor Management? 

It’s crucial to know what ITIL vendor management is all about, And how it’s effective. 

The basic way to understand vendor management is that businesses don’t have all the resources for successfully executing their project or business objectives most of the time. Due to this, they have to choose resources from outside to get the needed supplies from suppliers or the vendors. 

The process requires finding and managing different suppliers. But not just that, it needs to find the right point of contact, rates, terms, and conditions of the contract. However, don’t confuse vendor management with supplier management. Although, here both primary focus is to ensure day to day running of the business is smooth and with ease. 

Vendor management focuses on price comparisons and negotiation in contracts, whereas supplier management is about the influence of suppliers on enterprises. But it’s crucial to get a complete overview of ITIL Supplier Management in order to manage the suppliers in the IT industry. With that, having an ITIL perspective to understand supplier management can help. 

Coming to vendor management this procedure might be complex, necessitating the usage of a vendor management system. However, this can help make the process valuable, help find the right supplies, and improve the relationship. 

Why Is Vendor Management Necessary In ITIL? 

To understand why vendor management jobs are serious in ITIL, it’s crucial to know their role. Also, it’s especially needed when the company requires to choose the vendors for special required supplies. It can help improve the relationship with vendors for the long term, ensuring quality and supply rates. With this help, it gives smoother and faster onboarding to those new vendors and the companies. 

Well, some of the major benefits that companies get from the vendor management process include: 

  • Helps in better selections of vendors for the organization and companies
  • Help in maintaining as well as managing the overall cost
  • Improves the speed of onboarding new vendors
  • Vendor management reduces the disruption risk in the supply chain
  • Helps in making the vendor relationship much better
  • Helps in improving the rate of supplies

Stages Of ITIL Vendor Management 

There are six basic distant states that you can find in most of the strategies in vendor management. These are for helping in better organizing as well as solidifying the relationship between buyers and supporters. 

These steps are from the basic framework within the management system. Here the trick is not just to find the suppliers who will be convenient but also to go with the lowest possible price. But find a way to work in harmony and ensure you both receive long-term business benefits with the lowest risk levels. For this, different IT sourcing and vendor management services can guide in maintaining and improving the relationship. 

To understand these stages in chronological order, here is what you need to know :

Establishing Goals 

The first and foremost important stage is to find the business goal. Before you enlist, finding the right vendor with a SMART goal can help improve the results. 

It becomes easier to know what you are looking for, not just for the business but for the prospect. 

Locating And Vendor Selection 

The next stage is to analyze every prospect to ensure they are offering all the resources, experiences, and everything else needed to achieve the goals. 

Risk Assessment 

Vendor management risk is an important aspect of ITIL. Also, you are required to ensure that your prospects are transparently related to their key metrics, including total annual spending, aggregate assessments of internal risk, on-time delivery rates, etc. 

Negotiation In Contract 

The next important stage is to reach the contract terms and agreements that benefit both parties. And once it’s done, it requires setting up to get approval from the vendor and company. 

Monitoring And Risk Mitigation 

The last stage included collecting data that is needed frequently, along with ongoing risk reporting. This ensures the whole process goes smoothly and there are no possible risks affecting the relationship between vendor and company. 

Types Of Vendor Risks In ITIL To Monitor 

Outsourcing operation to a third party is one of the most successful and popular states. This helps in saving time and money and boosting operational efficiency.

However, when the role of vendors expands, they have access to data and celestial systems. These are essential for the business to ensure there are no risks so that the potential threats can be controlled too. 

Here are the vendor risks in ITIL that needed to be monitored. 

Cybersecurity Risk 

These days, cyber threats are growing rapidly, and increasingly, it is much more crucial than ever for businesses to monitor when it comes to cybersecurity posture. 

Here you need to be aware of the organization’s risk that it holds. Once you define all acceptable risks to different levels, it can start with third-party security to make adjustments as needed. 

When you are evaluating the performance, here you need to focus on the compromised systems within your vendor network environment.  

Compliance Risk 

This risk happens when the business has to do something against laws, organizations, or its rules. Of course, the laws are applicable to each organization in a way that makes sense for their industry. But all industries have to follow the same rules, like PCI DSS and GDPR.

In the case of non-compliance, these can lead to substantial fines, which makes it much more crucial to check the cybersecurity compliance of your vendors. Also, see if tier efforts align with all the needed requirements. 

Financial Risk 

Third-party financial  risks arise when you choose vendors who cannot meet the fiscal performance requirements the organization needs. 

Here it includes two main forms such as high cost and lost revenue. If the essential costs are addressed properly, it can hinder the company’s growth and lead to debt. 

In case of not addressing the high cost, it can end up hindering the company’s growth. Not just that, it can increase the debt too. 

So you must limit the high cost for that period of audits required to conduct. 

This helps in making sure about the spending that vendors are doing and see if it’s outlined in the contract with the company. 

Reputational Risk 

Another crucial risk to monitor is reputational risk, which is concerned with the public perception of the company. When choosing your third-party vendor, it’s important to check as it might harm your organization’s reputation. 

It includes :

  • Not having constant interaction with standards that the company have
  • Loss or disclosing the information of the customer due to a data breach.
  • The volition of rules and regulations. 

Operational Risk 

It happens when the vendor process shuts down. For example, when a third party became active in the organization’s operations, they could not deliver on their promises.

So it impacts the organization’s daily activities and is unable to perform. To limit the operational risks, the business must create a business continuity plan, So that even if the vendor shuts down, it can help remain operational. 

Strategic Risk

This risk typically occurs when vendors make commercial decisions that are not in line with the company’s strategic objectives.

It can influence the reputational and compliance risk, which also determines the company’s overall worth. 

When you are establishing your KRIs or Key performance indicators, it helps in effectively monitoring the strategic risk in the organization. In addition, it provides insight valuable for the processes and processes of vendors. 

Successful Vendor Management Strategies Tips To Consider 

Vendors play an integral role in IT and their ecosystem. Also, it needed to nurture the relationship among partner networkers. 

Here are some tactics and recommendations to consider to improve vendor management.

Make Sure You Are Evaluating Vendor Landscape 

There is no doubt one size fits all approach is not going to work. So it would help if you were more sure about your vendor or supplier as it will depend on the business’s uniqueness. 

With this evaluating phase, you need to find and analyze the vendors depending on the range of their criteria. Look for what they offer, how they will fit your desired scale, technology integration, data security, and budgets. 

Outline Stay-In-House Functions 

The next important tip you need to focus on is taking a close look at which process is required to be within the house and which is needed to be outsourced. 

Also, see what your business can manage or where the help will be beneficial. It’s important not to overlook these analyses as they can help refine the resource limitation, commitment terms, and talent gaps. 

Keep the Negotiator Win-Win 

Strike to compel the balance between the company and vendor resources. Not just the business but vendors look for a mutually meaningful relationship. This is why keeping the win-win negotiations for both parties is important.  

Establish The Check-Ins On a Regular And Frequent Basis 

Your vendors need you to be aware of the engagement process. So it’s important to schedule a regular meeting that is agenda-driven to keep tabs on how it’s performing. 

It includes sharing the information and encouraging accountability too.


ITIL vendor management is a crucial part of the IT sector. It includes facilitating and managing relationships between the company and vendors. Also, negotiating contracts, creating standards, and finding the best available vendor option that aligns with business requirements is a major role. 

The requirement to find a trustworthy and effective third party in which business can thrive is getting more important daily. We are here to provide the needed help to find the right services. If you are looking to super change your career in ITSM, Invensis offers many IT Service Management courses, including:



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