Case Study: Financial Services Firm Uses Vendor Management To Reduce Costs

Reducing vendor costs requires a strong vendor management function. The problem in many firms is that vendor management is fragmented, resulting in little consistency in the selection and management of vendors. One global financial services company changed this in three ways. First, it moved vendor management out of IT and placed it under the CFO's command. Second, it broadened the scope to include all vendor relationships. Third, it required all those who manage vendors to conform to the policies of this central group. In doing these three things, the firm reduced costs by approximately $15 million in 2008. The current challenge is to expand the cost cutting into 2009 and beyond.