Third-party risk management (TPRM) software is essential for any organization that utilizes third-party providers. If not monitored and managed, third-party vendors pose significant risks to the companies they work with, including cybersecurity, operational, financial, and legal/regulatory/compliance risks. TPRM software works seamlessly to help reduce this risk and provides your organization with ongoing monitoring to address vulnerabilities before they become significant security incidents.
Investing in third-party risk management software is a big decision, and depending on the size of your organization and available resources, you may need to convince leadership and stakeholders of the value of this investment. In this blog, we’ll cover five steps to building a business case for TPRM software, providing a comprehensive overview of why this cybersecurity tool is an invaluable asset to your organization’s overall security posture.
5 Steps to Build a Business Case for TPRM Software
Building a business case for third-party risk management software requires a comprehensive overview of how it will benefit your organization—currently and in the future. Stakeholders and leadership will want to see how this software will solve pain points and provide valuable benefits, along with how intensive cost and implementation will be.
The following five steps provide the foundation for a compelling argument to invest in TPRM software:
- Analyze the Benefits of TPRM Software
- Identify Organizational Pain Points TPRM Software Solves
- Conduct a Cost-Benefit Analysis to Determine ROI
- Review Implementation Details and Ongoing Support
- Compare TPRM Solutions on the Market
1. Analyze the Benefits of TPRM Software
The first step in building a business case for investing in TPRM software is to analyze the benefits of this software tool. By listing the overall benefits of TPRM software, you create a compelling argument of how this type of software will add value to your company.
Depending on the type of third-party vendors used and the existing relationship with those vendors, you may want to focus on different benefits above others. For example, if you are most concerned with reducing third-party risk, focus on the enhanced risk visibility and real-time monitoring and alerts TPRM programs provide. If your organization wants to track vendor onboarding and due diligence, focus on enhanced decision-making and vendor performance metrics.
Different third-party risk management programs will offer different features, but the majority provide the following benefits:
- Enhanced Risk Visibility: A comprehensive view of all third-party risks, allowing businesses to identify, assess, and monitor risks effectively
- Real-Time Monitoring and Alerts: Real-time monitoring of third-party performance and risk, including alerts for changes or information security issues that need immediate attention
- Better Compliance Management: Reduces the risk of fines and reputational damage by ensuring compliance with various regulatory requirements and industry certifications, including GRC, GDPR, and ESG standards
- Centralized Data Management: Centralizes all third-party information, eliminating data silos and facilitates easier access and management of vendor data
- Improved Efficiency: Streamlines processes through automation of manual tasks in third-party relationships
- Scalability: Scales alongside your business, handling increases in third-party relationships and vendor data
- Enhanced Decision Making: Comprehensive data and analytics support better-informed decision-making regarding third-party relationships
- Improved Vendor Performance: Enables more effective management and tracking of vendor performance, ensuring third parties meet SLAs and performance standards
- Increased Flexibility and Adaptability: Allows businesses to quickly adapt to changes in the risk landscape or regulatory environment, ensuring ongoing resilience in their third-party relationships
How UpGuard Helps
Vendor Risk is our all-in-one TPRM platform that allows you to streamline your organization’s Vendor Risk Management processes. Vendor Risk allows you to automate your third-party risk assessment workflows and get real-time notifications about your vendors’ security in one centralized dashboard. Additional Vendor Risk features include:
- Security Questionnaires: Automate security questionnaires with workflows to get deeper insights into your vendors’ security and utilize templates and custom questionnaires for your specific needs
- Security Ratings: Instantly understand your vendors' security posture with our data-driven, objective, and dynamic security ratings
- Risk Assessments: Let us guide you each step of the way, from gathering evidence, risk-based assessments, and remediation
- Monitoring Vendor Risk: Monitor your vendors daily and view the details to understand what risks are impacting a vendor’s security posture
- Reporting and Insights: UpGuard’s Reports Library makes it easier and faster for you to access tailor-made reports for different stakeholders
- Managed Third-Party Risks: Let our expert analysts manage your third-party risk management program and allocate your security resources
2. Identify Organizational Pain Points the TPRM Software Can Solve
It is vital to go beyond the general benefits of TPRM software and showcase what specific organizational pain points the software will solve. Understanding specific pain points allows you to tailor your argument and demonstrate how enterprise risk management software offers solutions directly aligned with those issues, providing a strong justification for the investment.
Selecting a management platform that addresses as many pain points as possible is important to create a compelling argument for a third-party risk management solution. While every organization differs, below are some common pain points that an effective third-party risk management solution will solve:
- Manual and Time-Consuming Processes: Organizations can automate the management of third-party relationships using TPRM software, reducing time and effort for tasks such as data collection, risk assessments, and compliance checks.
- Lack of Centralized Information: Centralized TPRM software provides a single source of truth, consolidating data and improving visibility and management of third-party risks.
- Difficulty in Risk Assessment and Monitoring: TPRM software helps assess and monitor risks from third-party vendors, even with many of them. It provides tools for systematic risk assessment and continuous monitoring, ensuring prompt risk identification and management.
- Compliance Requirements and Regulatory Challenges: Organizations should prioritize regulatory compliance with industry standards—TPRM streamlines this process by tracking regulations and ensuring third-party practices align.
- Inadequate Reporting and Analytics: Organizations often struggle to gain insights due to inadequate reporting capabilities. TPRM software provides robust reporting and analytics tools, offering detailed insights into third-party relationships and risk exposures.
- Lack of Real-Time Insights: In a fast-paced business environment, having real-time insights into third-party activities is crucial. TPRM software offers real-time monitoring and alerts, helping organizations respond quickly to emerging risks or issues like supply chain attacks or data breaches.
How UpGuard Helps
UpGuard Vendor Risk’s robust list of benefits also includes features that directly address common organizational pain points, including:
- Spend less time monitoring and assessing your vendor’s security posture: Remove the inefficiencies and manual work when monitoring your vendors—save time and take control by automating your vendor risk assessment process.
- Get real-time updates on your vendor security posture: Instantly assess your vendors' security, get real-time notifications of their risks, and be the first to know when you’re exposed to vendor risk to assess and remediate risk exposures proactively.
- Streamline vendor lifecycle management: Manage your vendors securely and easily in one central location from procurement to offboarding. Customize and conduct risk assessments based on a vendor’s risk exposure to your business using UpGuard’s centralized dashboard.
3. Conduct a Cost-Benefit Analysis to Determine ROI
One of the most persuasive steps in building the business case for TPRM software is conducting a cost-benefit analysis to showcase why investing will financially benefit your organization over time. Specifically, suppose you can prove the investment in TPRM software will yield a high return on investment (ROI). In that case, stakeholders may be more keen to sign off on a new purchase for your cybersecurity ecosystem.
A cost-benefit analysis occurs in three stages:
- First, identify and quantify the costs, including purchase price or licensing fees for TPRM software or operational costs like license renewal and maintenance fees.
- Next, identify and quantify the benefits of the TPRM software. This includes benefits like risk mitigation, efficiency gains, improved data privacy, enhanced decision-making, and scalability.
- Finally, calculate net present value (NPV) and return on investment (ROI). Calculate NPV by discounting future benefits and costs to present value terms. Calculate ROI by dividing your net benefits (total benefits minus total costs) by the total costs. A positive NPV and positive ROI indicate a profitable investment.
While emphasizing software's benefits seems more persuasive, sometimes, these conversations come down to the dollar-for-dollar benefit. TPRM software may require significant company resources, so identifying how it will financially benefit your company solidifies your argument for a TPRM initiative.
How UpGuard Helps
At UpGuard, we proudly offer a transparent pricing model that allows potential clients to calculate their ROI easily. We understand the importance of selecting the best software for your organization and have compared other market options on our website. Our Vendor Risk and Breach Sight pricing model is openly available, giving you the confidence to make informed decisions.
4. Review Implementation Details and Ongoing Support
Any TPRM software solution requires an implementation process, and many also offer ongoing support while you utilize the software. These features are important when building a business case to invest in TPRM software.
The implementation process of TPRM software can vary depending on the type of software used. It is important to understand this process to determine whether integrating the software into your organization's existing systems and workflows is feasible. Knowing the implementation process can help plan timeframes, resource allocation, and potential disruptions that may arise during the transition. This planning is crucial to ensure a smooth and successful implementation.
Continuous support and maintenance are essential for ensuring that the TPRM software remains effective, up-to-date, and aligned with evolving business needs and risk landscapes. Without proper support and maintenance, the software may become obsolete, vulnerable to new risks, and unable to keep up with the changing regulatory requirements.
Therefore, it is crucial to understand the level and quality of ongoing support the vendor provides to ensure that the TPRM software is always functioning at its best. This includes regular updates, bug fixes, security patches, and technical assistance. Additionally, the vendor's ability to provide timely and effective support can impact the users' overall satisfaction and the software implementation's success.
How UpGuard Helps
UpGuard Vendor Risk has extensive implementation and ongoing support for our product and users. Our extensive Help Library includes hundreds of articles to assist with implementation, like “Getting Started in Vendor Risk,” which covers our platform's main capabilities and features. Additionally, UpGuard integrates with various tools your organization may already use, making it seamlessly fit into your business ecosystem.
UpGuard has adopted DevOps principles internally to continuously develop, test, and release software, ensuring fast, consistent, and safe releases. UpGuard also focuses on community support with UpGuard Summit, available live or on-demand via webinar, which brings together a community of security leaders from leading companies, explores the future of security, and helps businesses stay secure.
5. Compare TPRM Solutions on the Market
Your last step in building a business case for TPRM software is to compare available options. There are various types of TPRM software to choose from, which focus on different benefits and capabilities. Depending on your organization's focus, one option may be a better fit than another.
Your comparison should focus on several key factors, including:
- Features and Capabilities
- Compatibility with Existing Systems
- Risk Intelligence
Along with these key factors, research the reputation and reliability of TPRM service providers, their customer service record, and feedback from existing users. By conducting a comprehensive comparison, businesses can ensure they choose a TPRM solution that best fits their specific requirements and budget, ultimately leading to a more successful implementation and better risk management outcomes.
How UpGuard Helps
UpGuard understands there are a lot of vendor risk management solutions out there, and choosing the right one for your organization can be overwhelming. We want you to choose the best platform for you, even if it’s not us.
With that in mind, we provide detailed comparisons of UpGuard against other service providers on our website across various features like usability and learning curve, pricing and support, G2 ratings, predictive capabilities, and security ratings. You can also view examples of current customers and read stories to hear firsthand how UpGuard has benefited their organization.
UpGuard: Voted the #1 Third Party & Supplier Risk Management Software
UpGuard is proud to be named the #1 Third-Party & Supplier Risk Management Software in Winter 2024, according to G2, the world’s most trusted peer review site for business software. UpGuard was also named a Market Leader in the category across the Americas, APAC, and EMEA regions for the sixth consecutive quarter, reflecting the customers' trust and confidence in the platform.
G2 evaluates products in the Third Party & Supplier Risk Management category based on customer satisfaction (as per user reviews) and market presence (considering market share, seller size, and social impact). UpGuard has been identified as a Leader owing to its high scores in customer satisfaction ratings and significant market presence.
If your organization is ready to enhance its security posture and third-party risk management, consider investing in UpGuard Vendor Risk.