When it comes to vendor management, some financial institutions rely on a combination of spreadsheets, email, and shared drive files because they think it’s cheaper than vendor management software.
It’s a misperception that underestimates the costs of manual tracking.
The truth is that vendor management software more than pays for itself by making the vendor management process more efficient and accurate while reducing vendor risk and stress.
Related: Ncontracts Challenges the Gartner Vendor Management Magic Quadrant
Here are nine benefits of vendor management software:
- Centralized storage means never wondering if you’re using the most current version of a spreadsheet. Many people can be involved in vendor management. At FIs that use manual processes for vendor management, each person can maintain their own files, which may or may not be regularly updated. Even if one common spreadsheet is shared, it’s often downloaded and saved to individual hard drives, creating multiple copies with miscellaneous updates instead of one accurate master file.
Vendor management software ensures that everyone is working with the same information all the time by centralizing documents.
- It makes the due diligence process more diligent. What happens to all the vendor documentation your FI receives? At FIs with a manual approach to vendor management, it can be anyone’s guess. If you’re lucky, it ends up in a computer folder on a shared drive. More likely it stays in an email inbox, in a filing cabinet, or an untouched pile of papers.
Vendor management software simplifies due diligence documentation and other vendor reports by creating a place to store all documents related to specific vendors and remind the right person when they are missing or need to be updated.
- Reduces redundancy and inefficiency that waste money. Vendor management regulatory requirements overlap with other areas of the FI. For example, guidance on IT security breaches addresses vendor management in addition to cybersecurity, business continuity management, compliance, and enterprise risk management. If these areas don’t collaborate, they can easily duplicate each other’s work wasting time and resources. (Example: Each department tests the same control.)
Vendor management software makes everything related to vendors available in one place, giving other departments access to centralized information. It makes it easy to collaborate and find and report information and results—eliminating silos for an enterprise view of vendor risk.
- Reduces vendor risk with standardized assessments. What’s a critical vendor? It’s a simple question, but one that can have duplicate answers at FIs that rely on manual processes for vendor management. Without strong centralization, relationship owners often develop their own approach to assessing vendor criticality that might not align with the FI’s risk tolerance.
Vendor management software helps a FI define critical/significant/high-risk vendors and ensures everyone uses the same scale to evaluate vendors.
- Real-time visibility into tasks. When managers assign tasks to staff, they want to know when it gets done and that it’s done right. A spreadsheet can’t automatically inform a manager a task was done—but that functionality is built into vendor management software.
With vendor management software, managers don’t have to waste time tracking down employees and nagging them about whether or not they completed a task. Task management is a key component of vendor management software, making it easy to assign tasks to individuals and track the progress. It’s much harder for tasks to slip through the cracks.
- Stress-free board and management reporting. Reporting is a huge chore at FIs that rely on manual processes for vendor management. It can mean digging through countless spreadsheets, emails, and files to cobble together a clear picture—and then converting it into a pleasing graphic.
With everything in one place, vendor management software can easily generate rich reports to update the board and management.
- A clear view of the past with audit trails. It’s easy to see who last edited a spreadsheet on a shared drive. It’s not easy to see exactly what changes were made. There’s no log of who recorded what and when. It’s a tracking nightmare.
Vendor management software automatically tracks all activity by the user so it’s easy to create an audit trail showing who is responsible for each task and how far they are along in completing it. It connects all the pieces and every step of the process from risk assessments and due diligence to monitoring.
- Simplify exams and reduce prep time. FIs that rely on automated vendor management processes often have a huge task ahead of them at exam time. Gathering documentation to prove that everything was done correctly and justify vendor risk assessments can take hours and hours.
Vendor management software makes exam prep a breeze. With everything in one place, it’s easy to demonstrate compliance to examiners and show off an organized system.
- Fewer mistakes. A spreadsheet is a blank slate. Enter one wrong formula or field and it can be riddled with errors.
Vendor management software has built-in processes that ensure employees conduct assessments using approved methods and documentation. There’s no excuse for not knowing the right way to do it.
Want more strategies and best practices for mitigating the compliance risk of third-party vendors? Join us on Tuesday, June 23 at 2 p.m. CT for the webinar Vendor’s Keeper: How to Make Sure Your Third-Party Vendors Aren’t Creating a Compliance Nightmare.