Vendor management tools are used to manage the relationship between an organization and its IT service providers. They help organizations manage their providers and vendors, track their performance, and ensure that they are meeting the needs of the business. Yet there is no one-size-fits-all solution for requirements placed on the tools because the functional focus of the tools used often varies. This article compares three tools, each with a different focus: ServiceNow, SAP Ariba and Kissflow Procurement, which can be used as Vendor management tools.
Functional requirements in Vendor management
In addition to general requirements for a vendor management tool such as
- Intuitive usability
- Quick familiarization for users
- Easy adaptation to the individual needs of a company
- scalability
- economic efficiency
- support of different roles
- data security and data integrity,
there are functional requirements that are important for Vendor Management activities. These functional requirements focus on supporting the business in the following Vendor Management task areas: Contract Management, Performance Management, Relationship Management, Risk Management, Change Management, Provider Assessment, Compliance Management, Continual Improvement, and Financial Management. Each task area is ideally supported by a functional area in the tool.
Vendor Management Tools – Functional Areas
| Functional area | Description |
Contract Management |
All contractual information of each service provider is managed here. This starts with the specification of the services to be provided by a provider and ends with the awarding of the service provision to a provider and the associated contractual documents.
In addition to service specifications, the framework contract regulations regarding tasks and obligations of the parties as well as the design of the cooperation are relevant here. “Managing” covers the entire contract life cycle: concluding, amending, and terminating contracts. The provision of current contract documents for Vendor management is important. |
Risk Management |
The Risk Management functional area includes all activities for identifying, assessing, and managing risks throughout the entire lifecycle of IT services. |
Relationship Management |
The focus of this area is the active maintenance of the relationship with the service provider. All information such as meeting minutes, appointments, actions, communication matrix, etc. must be managed and made accessible to those concerned. |
Performance Management |
This functional area manages compliance with the service levels agreed in the contract, i.e. the provider’s performance. For this purpose, key performance indicator values are determined and compared with the target values. |
Provider rating |
The service providers are periodically evaluated with regard to their overall performance in terms of service quality and their cooperation. Here, the assessments per provider are recorded, summarized and presented in a consolidated form. Trend analyses enable the assessment of the development per service provider. |
Compliance Management |
This functional area manages all activities to ensure that the service provider meets compliance requirements such as laws, policies, and guidelines. |
Continual Improvement |
The activities to improve the services and their delivery by the service providers are to be coordinated here. Furthermore, the continuous improvement of vendor management itself and innovation management are to be handled here. |
Financial Management |
Activities within the scope of budget planning and monitoring, controlling and cost calculation, auditing to ensure the effective use of financial resources are managed in this functional area. |
Tools that offer Vendor management functions
There are many different tools with vendor management capabilities on the market, each with its own unique features and benefits. In this section, we compare the three tools ServiceNow, SAP Ariba and Kissflow as examples. Due to their different content focus, they set different functional priorities.
ServiceNow
ServiceNow is a global provider of a cloud-based platform that makes it possible to automate business processes quickly and easily. ServiceNow is modular and consists of the IT, HR, Customer and Creator workflows. Each workflow includes multiple product areas that can be assembled based on the needs of the business. Each product area combines several products with different functions.
ServiceNow’s Vendor Management Workspace product, which provides essential vendor management functions, is part of the IT Service Management (ITSM) product area. The Vendor Management Workspace product integrates data from the Service Portfolio Management (SPM), Contract Management, Assets, SLA Contracts, Vendor Risk Management and Continual Improvement Management (CIM) products.
An integrated “Provider Performance Dashboard” provides the company with a clear picture of how well providers are performing. Other products such as Audit Management, Vendor Risk Management and Compliance Management, which are also relevant for Vendor management, are located in the Governance, Risk, and Compliance product area
.
SAP Ariba
SAP Ariba provides an online marketplace for business-to-business commerce that can be used to purchase goods and services from suppliers. It supports buyers in all their classic tasks and suppliers in their interaction with buyers. The service focus is the digitization and automation of purchasing processes and supply chains. There is no direct reference to IT service management, but it can be used to procure IT services and manage service providers. SAP Ariba has a wide range of product areas, which are further subdivided into products such as Supplier Risk, Contracts, Spend Analysis, Role-based Dashboards, Supplier Lifecycle and Performance and more. Almost all of these products support parts of the functional areas required for Vendor Management with their functions. Furthermore, SAP Ariba can be integrated with SAP HANA (for e.g. invoice verification and approval as well as budget monitoring).
Kissflow
Kissflow is a simple and customizable cloud-based workflow tool. It enables the development of applications for business processes with little or no code. It provides templates to help companies create personalized workflows that are tailored to the exact needs of the organization. It also provides products with common features. These features can be used to develop company-specific applications.
Among the products are pre-built applications such as Project Management and the Procurement App. The Procurement App functions can be used in performing vendor management tasks. For example, the Procurement App offers as functionality an automated onboarding process for providers, a purchase requisition process, and integrated provider performance management. It also integrates with other Kissflow products or third-party applications such as SAP, Google Apps, Office 365, and Zapier via the integrations interface feature. Thus, missing vendor management functions such as relationship management can be extended. Likewise, it integrates with other Kissflow products or third-party applications such as SAP, Google Apps, Office 365, and Zapier via the interface feature.
Comparison of Vendor Management Tools
All three tools meet the general requirements described above. The following table lists the products or the functions of the tools that address the functional requirements for vendor management listed above:
| Funktionsbereich: | ServiceNow | SAP Ariba | Kissflow |
Contract Management |
Contract Management | Contracts | Vendor Management
Purchase Requisitions |
Risk Management |
Vendor Risk Management | Supplier Risk | — |
Relationship Management |
Project Portfolio Management, Task Communications Management | Supplier Lifecycle and Performance | Vendor Management |
Performance Management |
Vendor Manager Workspace, Service Level Management | Supplier Lifecycle and Performance
Performance is measured via a survey in Supplier Performance Management Project. Current data such as service level KPIs can be imported |
Spend Analytics
Here, in addition to costs and budget Service Levels recorded and managed |
Provider Assessment |
Surveys and Assessments,
Benchmarks |
Supplier Lifecycle and Performance
The evaluation is also made via the “Supplier Performance Management Project” function (-> Survey)
|
—
|
Compliance Management |
Audit Management
Policy and Compliance Management |
Supplier Lifecycle and Performance
Conduct one survey per vendor using the Modular Questionnaire Project feature.
|
— |
Continual Improvement |
Continual Improvement Management | — | —
|
Financial Management |
Cost Management | Ariba Invoice Management
Spend Analysis
|
Purchase Orders
Purchase Requisitions Purchase Invoices
|
Conclusion
ServiceNow covers all vendor management functions through existing products.
SAP Ariba has functions for vendor management, but some of the functional requirements can only be covered in a roundabout way. For example, in performance management, the current IT service KPIs can only be imported via a survey function for subsequent analysis. However, the survey function is intended more for evaluating the service provider and not for reporting and analyzing the service levels.
Kissflow covers the least vendor management functions. However, it seems to be easy to develop applications in Kissflow to implement more functions.
Since all tools provide APIs for integrating other tools such as ERP, contract management or IT service management systems, the functions not covered can also be realized by implementing these interfaces. For example, financial data from ERP or contract data from existing contract management can be synchronized this way. It must then be decided whether to work with just one central tool and synchronized data or whether to use multiple tools to support vendor management.
