In IT governance, what is the purpose of vendor management and which activities are typical?

• A. To optimize internal resource allocation by eliminating external suppliers.
• B. To set internal software development standards only.
• C. To manage only hardware inventory and warranty renewals.
• D. To ensure value, risk, and performance from suppliers; activities include vendor selection, contract management, performance monitoring, and risk assessment.

Answer: (D)

Vendor management in IT governance is about getting value from external suppliers while controlling risk and ensuring they perform as expected. The activities described—vendor selection, contract management, performance monitoring, and risk assessment—cover the full relationship with suppliers. Selecting the right vendors ensures capabilities and cost fit business needs. Contract management translates those needs into formal obligations, SLAs, and renewal terms. Performance monitoring tracks whether the supplier delivers on service levels and quality, and risk assessment identifies and mitigates threats such as security, compliance, dependency, and financial stability. Together, these activities align supplier efforts with business objectives, protect value, and maintain continuity.

Choosing an approach that focuses only on internal resource allocation, or solely on internal standards, or just hardware inventory and warranties misses the broader purpose. It overlooks how external partnerships contribute to value, risk, and performance in IT services.