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 you don’t have the right team of people who have the knowledge and expertise to undergo a successful selection process.
Below are Litcom’s 7 steps to successful vendor selection.
Step 1: Define and analyze your business requirements
What is your organization asking a third party to provide? 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 you are looking for in a vendor), and
- Publish a Requirements Document
Tip: Collect as much information as possible. Identify and interview stakeholders and users, review existing internal materials such as reports, and statistics. 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. Taking into account the number of vendors that you’ve found, you should send each one a Request for Information (RFI) and conduct a team evaluation process. A short list of vendors is then created.
Tip: For suggestions, check with analysts like Gartner and Forrester or consult trade groups in in your industry.
Step 3: Develop evaluation criteria (with weighting)
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 your 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, your team should be better equipped to evaluate potential vendors. Selected vendors should provide a solution overview to your 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.
Tip: Reference Checks – It is critical to check the vendor’s references as a part of your evaluation process. Site visits are also strongly recommended.
Step 6: Complete vendor selection
Primary and Secondary Options – At the conclusion of your evaluation process, your team will identify a primary option (your winner) and a secondary alternative.
Tip: While you are in the negotiation process, keep in mind your secondary options as they serve as your best alternative if your negotiation falls through.
Step 7: Complete contracting with vendor
Contracting – Identify a clear set of objectives, deliverables, timeframes, and budgets for your project with the vendor. Make sure these are 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.
Tips: Be clear about all the important prerequisites, terms and conditions of the contract. Don’t forget to provide precise information on what goods and/or services you want the vendor to 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.
Litcom’s commitment
For clients making new hardware and software decisions, Litcom provides independent advice and assistance. We have assisted 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. To see how Litcom can assist you with your organization’s vendor selection process, please check out http://www.litcom.ca/vendor-selection/ or contact us at: [email protected] .
