The process of vendor selection has the potential to make or break a business as it builds the foundation for its operations. Info-Tech Research Group (ITRG) recommends a seven-phase approach to Vendor Selection.
MSS Business Transformation Advisory (MSSBTA) finds that once companies have brought us in to assist with Vendor Selection, some steps of the ITRG approach will have already been completed, while others will require extra emphasis. Accordingly, the ITRG approach has been adapted to a five-phase process that maximizes the value added to our clients. The five phases of vendor selection are:
Project Initiation
Requirements Definition
RFI/RFP Development
Solution Evaluation
Contract Negotiation Support
Phase 1: Project Initiation
The Project Initiation phase is where you establish a foundation for successful Vendor Selection. MSSBTA recommends using three pillars of excellence when managing any project: leadership, governance, and accountability—beginning with a project initiation phase which ensures the practice of the same excellence throughout Vendor Selection execution.
Some key accomplishments of this initial phase include a detailed project schedule, defined workstreams for process flows and requirements gathering, and identified roles and core team members.
Phase 2: Requirements Definition
Next is the Requirements Definition phase, where the client establishes and prioritizes what needs vendors will be asked to satisfy in the RFP. After conducting work sessions to understand processes and requirements, MSSBTA finds that documenting current state process flows adds tremendous value to this phase. It allows us to identify gaps and opportunities in the existing processes and gives the client a visual representation of how their business operates day to day.
Leadership teams can often be surprised by certain aspects of the current state process flow as most of their attention is focused on bigger-picture issues rather than daily operations. This opens the door for valuable conversations with the client that can significantly impact the perception of current vendors and the prioritization of specific requirements.
Some other key accomplishments of this phase are identifying technical, functional, and non-functional requirements, inventory of KPIs, and baseline metrics. The outcome of gathering this information is a list of vendors to be considered.
Phase 3: RFI/RFP Development
In the third phase, RFI/RFP Development, the first step is a decision if RFIs will be necessary. RFIs allow us to collect information from vendors about their companies/products/services. This can be a useful tool to benchmark the marketplace, but it is not always necessary. MSSBTA can often lean on our experience to understand the vendor landscape for many industries. Clients also need this done first so they can establish budget ranges and can use that to build a business case to be approved before embarking on the RFP process.
Once a decision has been made about RFIs, you can shift focus to developing the RFP to which the vendors will reply.
MSSBTA works with our clients to create a vendor scorecard and evaluation criteria that align with the RFP. You will see immense value in using a vendor scorecard for evaluation because it allows the client to remove bias in the evaluation process. It takes the qualitative information vendors to provide and allows the client to score the responses quantitatively.
Phase 4: Solution Evaluation
The Solution Evaluation phase is something MSSBTA added because there is a need to stress the importance of these activities rather than combine them with the activities within RFI/RFP development.
In this phase of vendor selection, you evaluate vendor RFP responses, coordinate all necessary vendor demonstrations, and facilitate scoring those demonstrations. The fourth phase culminates with the key deliverable every client is eager to receive from the beginning, MSSBTA’s executive presentation. This presentation summarizes the four completed phases, presents the findings and recommendations of MSSBTA.
Phase 5: Contract Negotiation Support
It is not always necessary to continue to the fifth phase; however, our approach to contract negotiation begins with a list of vendor finalists, from which negotiations will commence, and finally, vendors will be selected. The most significant value brought in this phase is to help the client ensure the vendor is held to the items committed to in the proposal. It also identifies any missing items crucial for a successful implementation.
MSSBTA assists the client in finalizing staffing plans, vendor timelines, deliverables, and KPIs before the contract is signed. To conclude the Vendor Selection process, MSSBTA will work with you to develop an overall project implementation plan.
This five-phase vendor selection process is a comprehensive approach to finding the best possible vendor for your needs. By gathering all the necessary information, you can be sure that you are making the best decision for your company.
FREE PDF Download: 5 Phases of Vendor Selection