Vendor management is an internal IT function that often has room for improvement. A maturity model is a helpful tool for evaluating the state of any given vendor relationship, and determining the overall balance of your organization\u2019s dependency on vendors.\u00a0\n5 vendor relationship stages\nRelationships with vendors span these stages of maturity:\n\nAd-hoc vendor\nOperational support\nProcess improvement\nCompetitive advantage\nStrategic partnership\n\nEach relationship stage is more \u201cmature\u201d than the previous one, with a higher degree of accountability, interdependency, complexity, and management approach.\nDiversify vendors by maturity stage\nMaturity models tend to imply that a progression from immature to mature is appropriate or correct.\u00a0However, not all vendor relationships need to move to higher and higher stages. Some, in fact, may need to regress.\nFor example, I have a very healthy, ad-hoc relationship with my local supermarket checkout clerk. She and I do not need to evolve our relationship beyond what our business transaction needs. In fact, if it did, that would be strange. I don\u2019t need to nurture all my relationships to become more and more intimate. I already have a wife and am quite happy with the maturity of that particular strategic partnership.\nLikewise, IT will distribute its spend across a range of vendors, each at various stages of relationship maturity. For most organizations, it will look like a bell curve.\nMost vendors would love to advance relationships with customers up a level or two. But as the customer, you want to allocate your vendor spend across the stages in a fashion that is most appropriate for your objectives, management resources, and risk appetite.\nDon\u2019t get me wrong. Vendor relationships\u00a0do\u00a0need to be managed, and might need improvement, but they do\u00a0not\u00a0need to increase in depth or sophistication.\nAvoid a mismatched distribution of relationships\nThere are exceptions. Startups tend to be highly dependent on suppliers. You treat them as business partners, even if, in some cases, they don\u2019t reciprocate.\nBut mature organizations should support a diverse portfolio of vendors across the maturity model. As a rule, it\u2019s wise to reduce the number of ad-hoc vendors. By the same token, realistically, you shouldn\u2019t have too many strategic partners. (We will cover strategic partnerships in more detail in a separate post.)\nMake adjustments to vendor relationships\nAs you conduct a periodic review of your vendor relationships, you might find that some vendor relationships are in the wrong category. As a result, you will want to intensify some of the relationships (increase the maturity) and commoditize others (decrease the maturity).\nHere are a few suggestions for making adjustments to various facets of the vendor dynamic:\u00a0\nPerformance management\nHow to commoditize:\u00a0Simplify performance management to QA or a short list of SLAs.\u00a0\nHow to intensify:\u00a0Measure outcomes on both the vendor's and client's sides, and take swift action based on the readings.\nTime Allocation\nHow to commoditize:\u00a0Decrease time spent on communication, status reporting, and management.\nHow to\u00a0intensify:\u00a0Increase cadence of communications, and time spent on management and goal setting.\nCost\nHow to commoditize:\u00a0Look for opportunities to lower the cost and extend payment terms. \u00a0\nHow to\u00a0intensify:\u00a0Implement an outcomes-based compensation model where both partners win or lose together.\nPaperwork\nHow to commoditize: Standardize the agreements. Use your templates as opposed to the vendor's.\u00a0\nHow to\u00a0intensify: Collectively create outcome-based engagement mechanisms.\nRelationship\nHow to commoditize:\u00a0Keep it professional and at arm\u2019s length.\nHow to\u00a0intensify:\u00a0Learn about the vendor's objectives to find greater synergies.\nIt is important to recognize your organization\u2019s vendor relationship pattern and periodically re-adjust how you work with each supplier. Understanding the various stages of this vendor relationship maturity model is the first step.