How do you choose a technology provider?
There are so many technology products and services, expertly marketed with the promise of solving your business problems in a unique and innovative way giving you that competitive advantage. With so many stars, how do you choose a technology provider?
When it comes to selecting your star many businesses use some form of vendor management process and the leading Governance and Management framework from ISACA defines this process as:
A vendor is a third party that supplies products or services to an enterprise. These products or services may be outsourcing, hardware, software, services, commodities, etc. Vendor management is a strategic process that is dedicated to the sourcing and management of vendor relationships so that value creation is maximised and risk to the enterprise is minimised. This process requires a dedicated effort from the enterprise and the vendor. The approach and level of effort vary based on the vendor relationship and the scope of services and products. Each type of relationship may require a different set of steps and documents, depending on the relationship and the enterprise strategy. Enterprises should focus their vendor management efforts on third-party relationships that:
Play a vital role in the enterprise’s daily operations.
Have a critical impact on the success of the enterprise’s strategic projects.
Require long-term contracts.
Have the potential for significant financial implications.
Are difficult to change overnight.
Require frequent interaction and collaboration for disputes or have complex problem-resolution mechanisms.
Access or manage substantial critical or sensitive data.
There are three options for obtaining the information you need to make this long-term financial decision:
Request for Information (RFI) - Used to gather information when product, services or requirements are not fully understood.
Request for Quotation (RFQ) - Used when customer understands products, service, requirements and market conditions.
Request for Proposal (RFP) - Used when customer understands products or services and has well-defined requirements.
A few points which are worth considering whatever process you are intending to run.
Suppliers
Do not underestimate how similar you sound to your competitors particularly if we are talking about commodity technology. You all tend to describe your respective service wraps as unique and innovative and therefore this does not differentiate you.
Avoid investing time and response documentation providing details about your company unless specifically asked. If you are being asked to participate in the process the customer already has all the information they need about your organisation for this stage of the process.
To differentiate the solution, focus 100% on concisely explaining how it will solve the customer's problem. If you want to ‘add value’ how does it solve the problem the customer has not thought of yet, described from the customer point of view.
Customer
Do not assume that a supplier wants your business.
Always remember you are asking a supplier to invest resources, both time and money with no guarantee of return. Provide time for questions and accommodate loss reviews.
Be transparent and share all information about your challenge, strategy and what you hope to achieve through the procurement process.
Provide all information in an editable format to make it easier for suppliers to use and share internally.
This post introduces and summarises a complex topic. If you are looking for a comprehensive view of procurement you could try http://www.business.govt.nz/procurement. It is a free and publicly accessible resource that includes many templates and examples.