Terminator 4: How to Fire Suppliers

Computerworld - Most organizations recognize the importance of having a rigorous supplier selection process and focus a lot of attention on supplier acquisitions. However, many underestimate the importance of having a supplier termination process. Since the IT supplier portfolio must match a dynamic business strategy and ever-changing IT architecture, an untrimmed portfolio will continue to expand. It's essential that your supplier portfolio be reviewed and pruned regularly to remove suppliers or products that are no longer needed. Careful pruning will reduce costs and infrastructure complexity.
But in most organizations, getting rid of an IT product, service or vendor is an unusual event, and there's no clear process to follow. One client with a rigorous selection process described his company's approach to supplier management this way: "We greet our suppliers at the door with a two-by-four to the head. Afterwards, those who are still standing are invited in and never asked to leave." He's not alone. My company's studies show that the average supplier portfolio is at least 50% larger than our clients estimate. In other words, most companies don't know just how many vendors they really use! An audit of one client's portfolio revealed 3,000 suppliers, after the client estimated 300.
When your supplier portfolio mushrooms out of control, it often indicates that you've also lost control of your procurement process and your architecture. And supplier management costs skyrocket. A well-trimmed portfolio can be managed for less than 5% of total external spending, but the cost of managing an overly large portfolio can amount to 20% of total external spending. Support costs will also be higher than necessary.
Review your supplier portfolio, searching for suppliers who are underperforming or whose products no longer meet your architectural specifications. Target unnecessary products, even if you can't eliminate the supplier entirely. Then take steps to terminate them, using these guidelines:
1. Check contracts to make sure there are no penalties, givebacks or other repercussions for termination.
2. Create a migration plan. If you have a portfolio baseline, it will identify all the systems, projects and people who rely on the product or service being jettisoned. Determine how those affected will be supported, before termination begins.
3. Use your vendor management group to manage the termination process. A good vendor management group will assure that the process is consistent and fair for all parties.
4. Explain the decision and the rationale to the supplier directly. No one deserves to learn of his own dismissal around the water cooler or, worse, from an industry publication.
5. Assess