Wednesday, February 20, 2008

On Vendor Relationship Management (VRM)

Over the last week I’ve been diving into the concept of Vendor Relationship Management, which is being developed by CRM experts around the world and lead by a Harvard project group. Vendor relationship management is being defined as reciprocal to CRM. Vendor Relationship Management places the consumer in control of the relationship it has with several companies that sell the consumer certain products or services. The key is to not confuse this concept with Partner or Supplier Relationship Management which has existed for some quite some time in the Business 2 Business arena. VRM is a CRM for you and me as consumers and is fueled by the innovations and rise of the use of Social Media and Social Networks.

The concept
The project VRM pages do not offer a readymade definition of VRM, as the concept is still being worked on. The goal of VRM is clearly stated however.

“The goal of VRM is to improve the relationship between Demand and Supply by
providing new and better ways for the former to relate to the latter. In a
larger sense, VRM immodestly intends to improve markets and their mechanisms by equipping customers to be independent leaders and not just captive followers in
their relationships with vendors and other parties on the supply side of the
Another definition is offered by one of the individuals participating in Project VRM, Alec Muffet.

“Technical outline: the feeds-based VRM concept is for you to be able to manage,
manipulate and share information - e.g. hotels you have visited, flights you
have taken, wines you have enjoyed - using a pluggable web-based software
platform similar to Wordpress or Movable Type; however unlike those tools
which deal with free-form blog posts, instead your data is be stored as
objects (encoded in pertinent open-standards formats) which are then
“shared” via secure, self-referential, closed and authenticated ATOM or RSS
feeds that can be read, aggregated or further processed by “subscribers”
whom you authorize via your “friends list”.
The effect is: your data is held in one place and is authoritative.
Your subscribers can see it. When you change it, your subscribers will see the changes. No longer will you need to tell people when you change your address. They’ll already know.”(


Applications of VRM
VRM is an interesting concept because it is intended to make your live easier and provide you with more control over your relationship with vendors. It would be a great improvement if you would have a single environment where you can control the information you share with vendors and inform them of changes in your desires and contact details. In my view several solvable issues exist in further refining the concept of VRM and providing technology that can be used to manage your vendor relationships:

1. Trust, who do you allow to receive your information and updates? What kind of information are you willing to share with all kinds of vendors, and what information do you want to only provide to a small number of providers (such as bank and/or credit card details). I feel it would be necessary to define several trust levels and assign vendors a certain trust level (high, medium, low), that allows you to control who receives what kind of update, without the need to perform an elaborate setup of attributes for each vendor.

2. Technology providers, Alec Muffett mentions the re-use of existing technology such as MovableType and Wordpress. Doc Searls, who is heading up Project VRM at Harvard also outlines the re-use of existing technology as one of the key points in further refining VRM. The issue I see here is that the technology selected must have a certain, and possibly very high, level of security, you do not want your updates to be readily available to wrong doers. I foresee an opportunity for companies that you already trust with your information and that provide a high level of security, such as PayPal or your Bank’s Internet banking application, to become key players in the VRM space.

3. Acceptance by vendors, user adoption is an issue with all kinds of applications and this also goes for VRM. Key Vendors, such as companies you interact with frequently (your cable company, cellphone provider, internet service provider etc.) should subscribe to your personal feed, if the concept is to become widely accepted. This means that your VRM feed needs to be based on widely accepted, open standards (XML / Web services), allowing companies to quickly adapt their systems to subscribe to your VRM system. Each platform that provides VRM functionality should also adhere to these open standards and not try to create lock-in by developing proprietary VRM feeds.

VRM Technology now
Within the Dutch Market there are already two interesting concepts that are VRM avant-la-lettre, such as the
Rabo notabox (Dutch) and TNT Post’s Privver (Dutch) (Now de Digitale Brievenbus, or Digital Mailbox). Both services provide a way to digitally receive invoices, provide payments and send updates to a limited number of companies through a secure environment, in which you control which company you allow to send you a digital invoice.
When it comes to providing address and other updates to the outside world,
Plaxo Pulse is perhaps one of the best examples of how a feed based system could work.

More information
A whitepaper was recently made available on
Google Docs which provides more insight into VRM and possible applications. It would be interesting to see whether the VRM project is able to crowdsource a viable VRM solution with the help of industry experts around the world.

No comments: