In a time where the world is experiencing significant economic challenges, there is a growing importance of vendor consolidation, claims Diligent.
As we sail towards potentially stormy economic seas, echoes of past recessions from 1991, 2001 and 2007-09 reverberate in our collective consciousness, the firm outlined. The signals are familiar: inflation, layoffs, escalating debt ceilings, global tensions, tightened credit, dwindling consumer cash reserves, and regional banking uncertainties. These elements form a compelling case for businesses to brace for lean times.
The question arises, how have organisations successfully navigated these challenging conditions in the past? According to Diligent, the common denominator is their ability to cut costs without compromising quality, productivity, or risk exposure. A potent strategy to strike this delicate balance is through vendor consolidation. This refers to decreasing the number of suppliers while increasing the overall value received and simplifying vendor management.
During periods of rapid growth, it’s common to see teams expand rapidly, purchasing resources and hiring personnel to meet the demands, often with little scrutiny on redundancy. With the advancements in technology and the simplicity of deploying web- and cloud-based tools, vendor proliferation has been amplified over the past half-decade.
However, Diligent claims, this unchecked growth leads to inefficiencies as various business units ink deals with multiple software providers. The resulting effects are duplication and wasted spending, integration difficulties, security gaps, and general strategic misalignment across the enterprise.
These challenges become starkly visible when the business cycle signals a downturn or a recession. In response, companies are seeking to streamline operations by reducing the number of vendors, particularly in the digital domain, where singular software and point solutions tend to pile up.
Vendor consolidation has traditionally centred around areas like engineering and product development. However, a promising avenue for high-value consolidation is within governance, risk, and compliance (GRC), a realm increasingly demanding data-driven reporting and insights. This demand has led to a proliferation of point solutions and redundant systems.
In GRC technology, vendor consolidation can yield immediate, broad-ranging benefits. From reducing procurement costs by cutting redundant services to gaining “valued customer” treatment, it improves risk management and increases control over procurement processes. Moreover, it allows companies to be more agile and adaptable to shifts in customer demand, supply chain disruptions, and evolving workflows.
Another crucial yet often overlooked benefit of consolidation is the potential to plug security gaps. As cybercriminals continually advance their tools to exploit vulnerabilities in digital ecosystems, consolidating to a single GRC software platform can help companies better manage these risks. It also provides a single source of truth, enabling confident, centralized visibility.
Forward-thinking business leaders are already strategising to streamline their operations in preparation for potential economic headwinds, the GRC SaaS firm claimed. As we progress towards these turbulent times, Diligent said that there’s a clear case for businesses to evaluate their vendor consolidation opportunities. The next article in our series will delve into the five essential steps needed for successful vendor consolidation.
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