Why can it be beneficial to consider a multi-vendor relationship in 2024?

From time to time, almost all businesses deal with some vendor-related problems. Maybe they become too dependent on a vendor’s technology and expertise, or just start working on a project where having only one vendor is not enough. At these times, employers start thinking about diversifying their suppliers and add one or a few vendors to their current suppliers. So we offer you to have a look at the top benefits and risks of working with multiple vendors to help you decide whether this is something your business needs right now. Let’s roll!

  1. 1. Less dependency on one vendor. In a single-vendor relationship, your supplier can be more prone to increase the prices and make you feel dependent on its technology and demands. That is why inviting one more vendor can give your supplier more incentive to lower prices and make your vendor not take you for granted.
  1. 2. Better quality. If you work with one provider, it usually has less motivation to be competitive and show the highest quality of work. On the other side, when there is one more vendor, they can be more responsive and attentive to your needs and demands.

  1. 3. Greater competence. A single-vendor strategy limits your technology options. When working on a large-scale complicated project, it can be useful to have more than one vendor to get access to greater competence and a large talent pool to better satisfy your needs. A multiple-vendor strategy gives a wider range of options, consequently more opportunities to deploy the best solutions.
  1. 4. Better risks mitigation. If one of your vendors is out of your partnership or is acquired by another company, you still have one more to continue your cooperation with. Thus, you can be confident that you can continue working on the project even if one of the players is out of the game.


  1. 5. More flexibility. When working with more than one supplier, you have more flexibility to react to unexpected events that can put your capacity and the overall result of the project in danger. By collaboration, your vendors can fix some issues faster and more efficiently than by doing it on their own.



  1. 6. Best-of-breed. It’s very difficult to get the best-of-breed quality for every feature when working with a single vendor. One vendor is usually competent in a limited number of areas. So a complicated project you are planning to work on may require several vendors and larger expertise.


  1. 7. Product upgrades. When working with multiple vendors, you get smaller packages from each of your vendors. Thus, you can get upgrades faster and more often. This can affect the overall outcomes of your project.


  1. 8. Faster go-to-market. Each of your vendors is devoted to different parts of the project. Consequently, there are more chances that the work is done more efficiently. And you can get profit faster than by working with a single provider.


We’re not planning to show only the best side of the multi-vendor relationship. Because in order to make the right decision for your business, you should be aware of the other side of the coin. Among the top disadvantages of working with multi-vendor there are:


  • Price. It may be tempting to hire a cheap vendor for all the project tasks you are working on. But, inch by inch, life’s a cinch – so, probably, it is wiser to divide your project parts between your vendors’ competencies even if you have to pay a higher price. This will enable you to get the top results at the end of the project.


  • Negotiations effort. It’s more likely you are going to spend much more time and effort on signing contracts with a few providers than with a single one. Besides, not every contract is going to run for the same period of time and will be renewed on the same day. In this case, it can be helpful to look for an experienced provider who will provide you with ready-made documents to fasten the process.


  • Implementation. It is very likely that you are going to spend much time on the implementation of solutions made by different vendors. It can be difficult to put them into one place because you’ll have to work with the integration of potentially incompatible systems. On the other side, the solutions made by different vendors are more likely to be of higher quality because of your vendors’ expertise in particular areas.


  • Security issues. The more vendors you are working with, the higher are the chances of some security problems and important information leakage. However, you can be on the safe side by signing a Non-Disclosure Agreement and a Non-Compete clause. This way, you can reap all the benefits of working with multiple vendors and not worry about security risks.


Summing this all up, each of the approaches has its pros and cons. But by careful consideration and observation of all the strong sides and risks of a multi-vendor relationship, you can do your homework and be prepared for the approach that will better suit your business needs.

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Head of Client Relations & Customer Success