Selecting a technology vendor is probably one of the most important tasks that an IT leader will undertake. It can be a complicated and emotional process if the organization lacks the right team of people who have the knowledge and expertise to undergo a successful selection process.
Below are 7 steps to successful vendor selection:
Step 1: Define and Analyze Business Requirements
What is the organization asking a third party to provide? A good start would be to assemble an evaluation team that is knowledgeable in the vendor selection process and has a clear understanding of what the business is all about. The evaluation team should be able to:
- Define the product, material or service that is needed;
- Define the Technical and Business Requirements;
- Define the Vendor Requirements (i.e. the features the organization is looking for in a vendor), and
- Publish a Requirements Document.
The evaluation team should also try to collect as much information as possible, identify and interview stakeholders and users, review existing internal materials such as reports, and statistics as well as gather technical information including standards and descriptions of the current technical environment.
Step 2: Identify Third Party Vendor Candidates
After the evaluation team has published a requirements document it must now compile a list of possible vendors. The team should send each one a Request for Information (RFI) and conduct a team evaluation process. A short list of vendors is then created.
Step 3: Develop Evaluation Criteria (with weighting)
In this third step, the team would construct an evaluation model that weighs a requirement against its value and priority. For example, if the vendor meets a requirement with a score of 7 (on a scale of 1 to 10) and the priority of that requirement is 5 (on a scale of 1 to 5), then the response can be scored by 35. This helps to amplify the differences among vendors.
Step 4: Conduct Vendor Briefings
Once the team has developed evaluation criteria with weighting and further narrowed down possible vendor candidates, it’s time to set up an initial meeting with each potential vendor to discuss stated requirements and ensure a common understanding.
Step 5: Evaluate Vendors and Schedule Demos
After completion of vendor briefings, the team should be better equipped to evaluate potential vendors. Selected vendors should provide a solution overview to the organization’s current business and technological requirements, fees, benefits derived from using a particular vendor, etc. In addition, vendors are requested to provide a “demo” to showcase the capabilities of their solution. Demos are a valuable way to get more information and also evaluate intangible aspects of a vendor. It is critical to check the vendor’s references as a part of the evaluation process (site visits are also strongly recommended).
Step 6: Complete Vendor Selection
Primary and Secondary Options:
At the conclusion of the evaluation process, the team will identify a primary option (the winner) and a secondary alternative.
Step 7: Complete Contracting with Vendor
This step includes identifying a clear set of objectives, deliverables, timeframes, and budgets for the project with the vendor. These should be clearly written in the terms of the contract. One of the most important factors in the vendor selection process is to develop a contract negotiation strategy. A successful contract negotiation simply means that both parties will search for positives that will benefit the two parties in every aspect while they achieve a fair and equitable deal.
It is important to be clear about all the important prerequisites, terms and conditions of the contract and to provide precise information on what goods and/or services the vendor should provide. Vendor’s compensation should be clearly stated; the total cost, the schedule for payment and financing terms. There should also be acknowledgement of the following: Effective dates/Renewal dates/Completion dates/Termination dates.
The Litcom Approach
Litcom provides independent advice and assistance. We have helped our clients in evaluating and selecting enterprise wide business systems, as well as solutions for specific industry verticals, best of breed software applications and the hardware and network infrastructure required to support their business. We start by defining our clients’ unique business and technical requirements. In gathering requirements we not only look at the way you do business at present but also help you see possibilities of process improvement with the assistance of our experienced professionals. To see how Litcom can assist you with your organization’s vendor selection process, please contact us at: email@example.com.