Vendor Ratings in the Post-Analyst Apocalypse

(Part 1)

Wouldn’t it be great to have access to a vendor rating solution that tells you how a given technology provider performs – something that would even eliminate the need to read analyst reports from Spend Matters? A tool like this could show what is it really like to work with Ariba, SAP, Oracle, IBM/Emptoris and others, let alone evaluate the broader spectrum of vendors of all the goods and services you need.

This service would allow you to avoid a few of those pesky RFIs and other time-consuming vendor vetting approaches and early-stage reference and analyst calls (for those of you really doing your homework). Ideally, it would take the form of taking a peek into other buyers’ Supplier Performance Management (SPM) solutions.

Well, that might not happen anytime soon, but here is a story about Vendorstack – a new firm that tries to cut that knot. It’s a first step in this direction and provides a way for companies to rate other companies – technology providers in particular.

(Part 2)

The first installment of this series drove home the many ways crowd sourcing of vendor performance assessments can be (perhaps intractably so) fraught with systematic errors. Now, let’s take a look at a more narrow area: vendor risk management. The question we ask today is can crowd sourcing through surveys improve this analysis and outcomes.

After speaking with an insider who has spent years looking at ways to assess vendor risk – and sharing Part 1 of this post – here are his thoughts around how it can be done better. Some will be repetition from Part 1, but that’s how we learn!

First, we need two different approaches, one for larger, public companies, and one for small vendors. We know there is more risk with small vendors. Large companies rarely shut down overnight, but “ACME Widgets Inc.” might. The financial history, credit rating, etc. all the information typically used for rating large companies is not readily available for small companies; or if available, is of questionable accuracy. We all know this already of course – if you don’t, you need to read up on our research!

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