Choosing the Right Software, Solution Provider, or Systems Integrator
Before initiating a Vendor Selection, you should begin with validating business and IT alignment. A great way to achieve this alignment is through IT Strategic Planning.
The Vendor Selection Process
Vendor Selection is the process in which an organization selects a software, solution provider, or systems integrator. This often includes a set of sub-processes that includes cross-functional coordination between Business, IT and Procurement organizations. Although organizations differ in their specific approach to Vendor Selection, some common sub-processes include:
- Eliciting, Analyzing, and Validating Requirements
- Conducting Market and Industry Research
- Identifying and Soliciting Potential Vendors
- Managing an RFI, RFP, or RFQ Process
- Reviewing and Evaluating Vendor Proposals
- Shortlisting Vendors
- Receiving Vendor Presentations and Demonstrations
- Negotiating Contracts
Read more: RFI, RFP, RFQ – Which Path is Best?
What are the Components to Selecting the Right Vendors?
What are the Challenges in the Vendor Selection Process?
Vendor Selection can be an extremely challenging and time-consuming process for any organization. Some of the more common challenges include:
- Vendor Bias. A member of the leadership team or a functional group enters the process with a clear preference or favorite. Maybe they have used a particular solution in a previous organization or have an existing relationship with an executive from a specific Vendor. These biases can easily skew organizational decision making.
- Steering. Some Vendors have strong Sales Representatives that can quickly take over the Selection process and steer your Vendor Selection toward their solution. Without a structured process and strong leadership, we’ve seen these vendors win not because they are the best solution, but because they have the best sales reps.
- No Differentiating Requirements. In today’s market, there is a convergence of capabilities between various vendors. Requirements gathering happens near the beginning of the selection process and a good consultant will help you build requirements that will differentiate between solutions. In the absence of differentiating requirements, it is easy to default to price instead of best fit.
- Failure to Categorize Requirements. Everyone has their wish list, but not all requirements are “must have” requirements. Often, decisions come down to just a few critical requirements. When gathering requirements, your selection team should go through a deliberate process where requirements are categorized using a system such as “Must Have”, “Should Have”, and “Nice to Have”.
- Bad Scoring Systems. When it comes to evaluating vendors against requirements, it is imperative that an organization employ a good scoring system. Not all requirements have equal value and some requirements needed to be weighted more heavily than others.
- Internal Politics. Vendor selection can often be politically charged and getting agreement between functional departments is often challenging. It is imperative to have a process that aligns stakeholders early.
- Logistical challenges. Vendor Selection can be a time consuming and is often started too late. Scheduling vendor demonstrations, coordinating time with stakeholders, organizing meetings, getting answers to vendor questions, etc can be a nightmare.
What are the Critical Success Factors in a Successful Vendor Selection?
With all the challenges associated with the Vendor Selection process, there are a number of things that you can do to set your organization up for success. At MSS Business Transformation Advisory, we have identified the top critical success factors in successful Vendor Selections. These top critical success factors are:
- Align on IT Strategy First. Jumping head-on into a Vendor Selection without taking time to fully align your IT organization with the Business goals and objections is a recipe for failure. Creating alignment up-front will help your organization choose the right solution.
- Providing Effective Transformation Oversight. Success will largely depend on your Vendor Selection partner’s ability to set up a good governance structure, implement transparent and focused decision- making processes, and hold people accountable in their roles and responsibilities. Collectively, we call these components LGA (Leadership, Governance, and Accountability).
- Developing Good Requirements. There is significant data and research that points to poor requirements gathering as the #1 predictor of failure for major technology initiatives. We strongly advise our clients not to skimp on this process as the downstream impacts can be devastating.
- Reducing and Eliminating Portfolio Overlap. Take time to understand the existing application portfolio and where the potential to eliminate overlap exists. Reducing the number of applications will lead to reduced support and integration requirements.
- Negotiating Good Contract Terms. Contract terms and conditions can be more important than initial price point. Have a good plan going into negotiation. Research and understand contract best practices before you negotiate. Lock in price increases during initial negotiations.
Considering a major technology initiative?
Before you start, download our Vendor Selection PDF to learn how MSSBTA can help.
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Why Should You Bring in a 3rd Party Vendor Selection Partner?
We strongly advise against you attempting to manage the Vendor Selection process yourself. Here are the top five reasons to employ a 3rd Party Vendor Selection Partner:
#1 Acquire expertise you do not have. By hiring a Vendor Selection Partner, you can bridge the internal gaps in knowledge, skill, and capacity. We are experts in Vendor Selection and Digital Transformation.
#2 Leverage selection accelerators. MSSBTA has a structured methodology/process, tools, and templates and you will not need to re-invent the wheel.
#3 Eliminate internal bias. We are not aligned with any specific solution or Vendor. We are apolitical and have your best interest at heart. We will help you choose the right solution for you.
#4 It is a huge decision. You want to get it right. The Vendor Selection process is not something most organizations can afford to skimp on. Hiring MSSBTA is kind of like buying a cheap insurance policy that you will be making the right decision.
#5. Avoid the never-ending sales calls. This might sound funny, but are you prepared for the onslaught of sales representatives knocking down the door? Hiring a 3rd Party to manage the process will allow you to focus on your organization’s core functions.
What other Digital Transformation Services does MSSBTA provide?
- IT Strategic Planning. Are your technology initiatives aligned with your business objectives? MSS Business Transformation Advisory can provide tailored assessments to ensure your technology initiatives are driving expected business outcomes. We help you define your technology roadmap using best practice approaches, frameworks, and tools. Learn more about IT Strategic Planning
- Transformation Oversight. What will your governance processes and vendor QA program look like? Transformation Oversight goes beyond what typically falls under the realm of Project Management. It involves developing good governance processes to provide visibility of project execution and enable quality decision making while simultaneously holding your vendor(s) accountable. Learn about Transformation Oversight
- ERP System Selection and Implementation. Have you selected the right Enterprise Resource Planning (ERP) System? What won’t your ERP Vendor do? Choosing an ERP System may seem like an overwhelming task for those who have never gone through the ERP System Selection process. It is a big decision your organization will be living with for the next ten or more years. MSS Business Transformation Advisory has unparalleled experience in ERP System Selection and Implementation. Read about ERP Selection and Implementation
- Enterprise Change Management. What is the impact of change on your people? Change is hard. A Digital Transformation is a huge change for any organization. We understand large technology initiatives do not typically fail for technical reasons; instead, they often fail because the “people side of change” is not managed well. MSS Business Transformation Advisory has unparalleled experience in Enterprise Change Management. Discover more on ECM
- Business Process Improvement. Are you automating good processes? A Digital Transformation is one of the best opportunities you will ever have to improve your processes and gain efficiencies by leveraging technology. MSS Business Transformation Advisory can help address any gaps in skill, knowledge, or capacity while simultaneously providing third-party perspective and insight to ensure you will design for success. Read more about BPI
Advisory@mssbta.com or 602-387-2100.