Worthy Goal: A lot of discussions in the recent few weeks have been about vendor management, as regulatory requirements have forced every organization to get organized on vendor due diligence front.
Work Involved:Well, every client we have seen purchase our vendor management application talks about more than 100 vendors they currently use....I must admit that's a lot more than we assumed, at first blush. So now banks and credit unions have to organize all their due diligence documents (SAS 70, Financials, DR etc.) from every one of their main vendors and at least a couple documents from every less critical vendor.
A system is clearly needed for meeting this compliance need, but it's curious how smaller organizations will tackle the costs involved. I also wonder how this will ensures that unstable vendors will be weeded out efficiently. I say that because the enormity of the work involved in meeting these guidelines will take away from seriously analyzing these gigabytes of documents that small banks and credit unions will get from vendors.
Costs Involved: Some industry initiatives are suggesting that vendors should pay for this cost, and some suggest credit unions or banks should pay for it.
Truth be told, this may have to be a shared cost.
I know that bigger vendors are asking clients to pay a "services charge" of say $200 per year so they can share these documents. I have also seen initiatives where vendors have to pay thousands of dollars each year to make their due diligence documents available to customers from one central web portal. We are charging for a system for credit unions and banks to purchase a module that allows them to control all their due diligence requirements from their employee portals. All these solutions are not be equitable and will have to probably be reconsidered after this frenzy about Vendor management dies down.
Dare I Say: The regulatory bodies should probably be involved to certify the vendors and not leave it to the market to play tennis with this question of "who foots the bill?" and in the bargain never focus on the original intention to mitigate risk. There is also the question that currently banks and credit unions are the ones not paying vendors driving smaller vendors out of business so can we really pass on a bulk of this cost to either the credit union/ banks or to vendors.
Solution: The solution from a technology standpoint is a simple one, but unless everyone gets together -vendors and customers - an elegant solution will remain a pipe dream. Half-baked ideas will mean some of your vendors will do one thing and some other do a whole different and in the bargain the variance will remain in the system.
Are you interested in working jointly to solve this issue such that we all share a smaller cost in an equitable manner? Talk to us!
P.S: Our Vendor Management solution is really a good one..we are trying to encourage a discussion on how to alleviate the costs for everyone involved. That's it.