Report Provides Updated Framework for Conducting Vendor Due Diligence

The process of vendor due diligence (VDD) is becoming more complex. The Yankee Group report "The New Rules of Vendor Due Diligence" assesses many of the drivers behind the increased specialization of services, including:

• The emergence of vertically focused offerings such as applications outsourcing and business process outsourcing;

• The increasing complexity of service delivery (i.e., offshore and remote service delivery);

• Industry instability (i.e., consolidation, M&A activity, deregulation);

• The increasing number of vendors and offerings to choose from.

"Traditionally, due diligence has focused on evaluating the vendor; that is, assessing the vendor's ability to meet the expectations and needs of the enterprise in the near term," says Carrie Lewis, Yankee Group technology management strategies senior analyst.

"Today, however, as the process of due diligence grows more complex in response to the increasing specialization of services, it is no longer as simple and straightforward. In addition to the central requirements for due diligence, vertically focused offerings, new service delivery options, industry instability, and increasing vendor choice mean that enterprises need to update their due-diligence process."

Achieving the best possible return on a vendor relationship and mitigating risks are the twin objectives of VDD. As services such as AO and BPO become more specialized, the opportunities and risks of working with a vendor naturally change, which means that enterprises must adjust their due-diligence process.

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