Managing vendors and contracts is important but is often overlooked by network operation managers. Most organizations consider it the responsibility of the purchaser/finance department and not as part of day-to-day network operations.
In reality, the vendor oversight and contract governance processes depend heavily upon accurate visibility to the network inventory.
With enterprise networks becoming more sophisticated and as organizations utilize an expanding variety of hardware vendors, software providers, cloud platform services, and managed-service providers.
There are now multiple associated vendor relationships, each containing contracts, licenses, support agreements, renewal dates, and compliance obligations.
In this article we will describe how developing a network inventory facilitates enhanced vendor and contract management, how it is important to senior leadership, and how enterprises can leverage inventory data as a competitive advantage.
What is the hidden cost of incomplete visibility of vendors?
Organizations often underestimate the amount of money that has been wasted and the risk that has been incurred due to incomplete or not having complete visibility into their networks.
When organizations have an inaccurate network inventory that is either or both outdated and fragmented, there is a struggle to answer the most basic questions.
- What vendors does the organization have across their network?
- How many devices are covered under active support contracts?
- What licensed assets are being used, and how many have expired?
Gartner estimates that enterprise organizations waste as much as 20% of the overall IT asset costs due to lack of visibility and poor asset management.
Most of these costs are hidden and will reappear as duplicate contracts, redundant licenses, or support for devices that are no longer working.
An accurate and up-to-date network inventory is a critical foundation to be able to establish vendor relationships and contracts.
Why is a network inventory important beyond operations?
Historically, it has only been viewed as an operational tool used by engineering teams to repair issues, provide upgrade planning, and manage hardware and software configurations.
However, the same information that is used by engineering teams is equally valuable for procurement, finance, risk management, compliance and other departments as per Slurp’it.
Centralized inventory connects the technical equipment and physical assets which are reported to accounting with commercial agreements. This enables the same reporting by asset information from devices, vendors, models, serial numbers, software version and support all through the vendor’s support contract.
Having an accurate and complete inventory enables leadership to manage vendor contracts proactively or other vendor relationships, rather than wait to react to missed renewal or support opportunities.
How does network inventory help in improving the accuracy and accountability of vendor contracts?
It provides many benefits, including contract accuracy.
- Many organizations have found during the process of processing audit requests or renewal that their contracts do not reflect the actual state of their asset inventory.
- Accurate inventory data can be used to provide accountability to the organization, as well as create and maintain accurate vendor contract coverage.
- By having an accurate inventory, there is now a single source of truth used by the vendor and the organization in managing coverage, licensing, and entitlement disputes that may arise.
- To reduce any financial surprises for senior leaders and increase governance of vendor relations and contracts, senior leadership must establish and monitor an accurate and complete network inventory.
How can risk and compliance be managed through network inventory?
Regulators and auditors increasingly require companies to have a clear understanding of which vendors are accessing their networks and the means by which they control the risks associated with third parties.
It is directly correlated with this understanding.
Through the identification of vendors associated with specific devices, software, and points of access, it will assist organizations in performing risk assessments and generating compliance reports as per Slurp’it.
By tracking vendor activity, organizations can answer questions related to supply chain risk exposures, unsupported technology, and end-of-life products.
When a security event occurs, it provides immediate information about the impacted assets and identifies the vendors responsible for them.
This information provides organizations with greater assurance regarding their vendor risk management processes and gives assurance to regulatory agencies.
How does automated inventory help in continuous up-to-date information?
Manual processes utilized for the inventory of devices will not support the growing complexity of enterprise networks.
Due to the volume and frequency of change associated with enterprise devices, manual processes will be unable to maintain updated inventory records.
Therefore, automation of the inventory process is critical.
Automation is accomplished through the use of modern tools. These tools employ discovery, integration, and monitoring tools to maintain current inventory data as per Slurp’it.
They automatically create inventory records when a change occurs. They also alert the appropriate teams when discrepancies occur.
What is the impact on the business of vendor management that is driven by inventory?
The benefits associated with maintaining a network inventory go beyond IT.
- Organizations are reporting decreased overspend associated with vendor relationships, improved outcomes from vendor contracts, and reduced response times to audit requests.
- They are also realizing greater levels of transparency and a more strategic approach to relationships with vendors.
- For executives, these benefits translate into improved cost controls, reduced risk, and improved negotiating leverage.
In addition to providing the aforementioned benefits, an organization’s ability to effectively manage vendors based on their inventory supports both operational excellence and financial discipline as per Slurp’it.
To conclude, it facilitates the accurate establishment of vendor contracts, enables an organization to conduct negotiations based on factual and accurate information, and allows an organization to more closely align technology-related initiatives with overall organizational objectives. For more information, contact us at Slurp’it!