Cisco IT Improves Strategic Vendor Management With more than 35,000 employees and hundreds of

Question: Cisco IT Improves Strategic Vendor Management With more than 35,000 employees and hundreds of locations , cach Cisco office has many complex requirements . Although Cisco uses its own products whenever possible , it still has an annual spend of $ 500 million for IT products and services from other companies . The Problem Working with local suppliers , CiscoCisco IT Improves Strategic Vendor Management With more than 35,000 employees and hundreds of locations , cach Cisco office has many complex requirements . Although Cisco uses its own products whenever possible , it still has an annual spend of $ 500 million for IT products and services from other companies . The Problem Working with local suppliers , Cisco encountered a number of issues . It was difficult to get formal contracts , support wasn’t always there when needed , and there were often disagreements over prices and warranties . Their somewhat haphazard way of soliciting bids resulted in little or no emphasis on aligning with corporate strategy . Cisco needed to unify its vendor management process to gain greater control and reduce costs . The Solution Cisco created the Cisco Vendor Management Organization ( VMO ) a new global IT group within Cisco – to manage strategic vendors to supply hardware infrastructure , software , storage , telecom services , and outsourced services . The VMO was also tasked with providing expertise in process and business development , asset management , and vendor engagement in keeping with Cisco’s corporate strategy . The Outcome With standard contracts in place worldwide , Cisco could now manage existing contracts and negotiate new ones more easily . Thanks to the efforts of the VMO , Cisco saved $ 33 million through the first three quarters after its inception and $ 64 million over the life of the contracts put in place during that time ! Cisco has also reduced its number of vendors and has consolidated contracts with small number of strategic vendors to give them more business and reduce Cisco’s paperwork . Cisco also works with its strategic vendors to help them develop skills and relationships to increase their value and position in the market , and Cisco is receiving the same type of support from its strategic vendors . By centralizing its outsourcing contracts , Cisco saves $ 11 million per quarter . Lesson Learned When it comes to vendors , less is more : working with a few number of strategic vendors that help a company fulfill its business strategy . This , in turn , creates a tighter connection between the business and IT and results in closer alignment between the two strategies , saving time and money . please answer the questions 1. How much did Cisco save initially by implementing the VMO ? 2. How has a strategie vendor relationship strategy benefited Cisco ? 3. How much is Cisco saving by centralizing its outsourcing contracts ?