Every year, companies engage more third parties—suppliers, vendors, contract manufacturers, resellers, service companies, brokers, agents, distributors, contractors, franchisees, affiliates, subsidiaries, joint ventures, captives and other entities, both foreign and domestic.
Hiperos CEO Greg Dickinson explains that the movement of business processes to third parties has caused a dangerous management gap.
The complexity of these relationships, engagements and contracts continues to increase. While third parties deliver the majority (60% or more) of revenue, they also account for the majority of company spend. Companies continue to worry about the time and cost even though third parties:
- Offer potential cost savings
- Accelerate time to market
- Allow your business to scale more efficiently
- Enhance your product differentiation
- Give you access to new markets
Third party relationships pose risks: supply chain disruption, environmental or social accountability issues, regulatory compliance problems, security breaches, information leaks, even risk of fraud or bribery. A third party’s actions or failure can be devastating to a company, resulting in reputational impact, regulatory exposure and revenue loss. Ultimately, a company is responsible for managing activities conducted through third party relationships; engaging a third party does not absolve a company from new and more stringent regulatory obligations.
Many companies have tried – and failed – to manage their third parties and third party relationships using existing tools and systems:
- Spreadsheets and manual processes that lack scalability, consistency and objectivity
- Procurement systems designed to process transactional data
- GRC tools that take months to implement, are too rigid to handle the constant change of the third party environment, and only address part of the problem
- Homegrown systems that cannot keep up with the pace of change and drain available resources
Successful third party management must address the dynamic nature of these relationships to protect a company’s brand and revenues, give employees the controls to implement, enforce and dynamically change third party processes and respond to changes in their third party environment, leverage technology and automation to optimize processes and available resources and drive down costs.
A Comprehensive Solution
A comprehensive third party management solution needs to:
- Dynamically adapt to regulatory changes as they happen. Regulatory changes are inevitable.
- Satisfy the breadth of your regulatory obligations. Not all regulators view third party risk the same way.
- Demonstrate and provide proof of consistent execution. Policy and process is only half of the battle.
- Scale to accommodate increasing depth and breadth of review.
- Offer easy to use, intuitive interfaces and functionality for maximum user adoption.
- Provide simple, flexible configurations that can be completed by your business users, versus a team of IT programmers.
- Be fully auditable, transparent and comprehensive.
Only Hiperos 3PM, the Hiperos flagship product, is purpose-built and proven to address the complex third party management requirements of the Global 2000.
Third Party Management with 3PM