The idea of Vendor Management Office (VMO)

* Vendor management office (VMO) is a group within an enterprise IT department that manages vendor relationship. It is responsible for both front end activities such as contract negotiations and overseeing RFPs as well as maintaining invoices and assessing performance. In a nutshell, VMO works to get the best deals out of existing and new IT vendors. VMO makes vendor aware of their competitors, their offerings and pricings, making them improve their bids.

* IT management experience coupled with legal and financial expertise are the key skills required for a VMO manager.

* Establishment of a VMO may fundamentally alter existing work flow for execution of new projects. IT managers may have to create project briefs and submit them to the VMO, which in turn finds the best deal in terms of price, quality and vendor commitment and expertise. Project briefs consist of project description, explaining business needs and technology sought. VMO crafts their own purchase agreements instead of relying on vendor-drafted contracts.

* Chief advantage of VMO is cost optimization. It can help to cut costs in the long term by getting latest prices from vendors, identifying poor vendors and restructuring existing overtly costly deals. It accomplishes all these and more by tracking spending.

* VMO can also have its pitfalls. It may not be relevant for smaller companies dealing with one or two vendors or extremely large businesses with de-centralized management of their global presence. VMO can also take out business owners from the purchasing decisions so they need to be effectively communicated and involved.