Starting the Process
Technology choices are significant investments with multi-million-dollar price tags, lengthy implementations, and significant change. Most importantly, they pair an organization with a partner for years to come. With such high stakes, why wouldn’t an organization invest in a robust process to select a technology/vendor and ensure a good match?
So, let’s attend sizzling technology conferences, be dazzled, and collect a lot of business cards and swag? Tempting, we know, but not so fast. Do you really want a flashy yet generic demo to sway you about a vendor who knows nothing about your unique requirements? It’s a technology show (emphasis on show) to highlight a product’s best feature next to the equally impressive product one booth over. However, such sales demos do have their value, as you will see further below.
At LABUR, we believe Vendor Selection is part art, part science. And it’s all about being prepared.
Selecting the Right Technology Partner for the Right Reasons
1. Know Why and Make the Case
Most users have little trouble listing why a particular system no longer meets their needs or stopped doing so a long time ago: archaic, not user friendly, missing features replaced with many workarounds, not compliant, so heavily customized an upgrade is essentially impossible, unsupported. Moving on is not in question.
What to expect from a new solution is the critical starting point and we recommend that an organization spend time defining those objectives. As you begin the process, ask yourself the questions below.
- Does the new tool feature industry-specific functions and capabilities?
- Does it support compliance requirements such as PII or SOX?
- Will it scale to support strategic goals?
- Will it improve efficiency with native features that are now handled offline?
- Does it improve the customer experience?
- Can it improve reporting and supporting decision making at all levels of the organization?
Defining such objectives helps organizations align and make a business case for the initiative. They also identify the first broad criteria to determine potential technologies, or at least technology tier (e.g., is a tier 1 system needed, or would a mid-market tool be better aligned).
2. Understand the Technology Context
After business and functional goals, technological considerations are just as significant. Should the new system…
- Operate in the cloud and offload IT from maintaining an enterprise application?
- Offer state of the art technology to integrate with other systems and processes?
- Prioritize configuration over customization? Support multiple geographies, languages, currencies, time references, multiple companies?
- Provide native adapters to play well with other products in your eco system?
Each decision or preference likely has an impact on the existing ecosystem, technology teams, and skills. Technology requirements, training to upskill a team, integration scope, implementation scope, business case details, and organizational impact all factor into technology choices.
3. Leverage Expertise
Domain and Implementation Experience
Companies who have operated with a legacy system and processes for years may not have been exposed to modern systems, end-to-end integrated processes, and sophisticated solutions. If that’s the case, they likely also have a limited understanding of what’s possible, what vendors offer. Nor what to expect from such an implementation. We strongly recommend adding this experience to the initiative. A domain expert who has been there, done that, ideally multiple times, provides sound guidance and real-world knowledge; yet is not wed to one single system and offers objective input.
Just as important is an experienced guide with a robust vendor selection approach and toolkit who can guide an organization through the due diligence effort. Key here is to set expectations with the participating vendors, neutrally direct them, and coach the organization on what to expect, what to share, and what to listen for. More on that below.
When those skills don’t exist in the organization, we strongly recommend adding this expertise through consultants.
4. Identify & Dedicate the Selection Team
These experts join an internal team, consisting of representatives from all stakeholder groups. The team members must be dedicated, committed, and enabled to participate in this initiative.
Business Stakeholders, SMEs, Voice of the (Internal) Customer/User
Nobody knows the business needs better than those in the midst of the operation every day. They know what works, the pain points, and ideally are champions of a to be designed future state. Not surprisingly, ultimate buy-in and adoption are closely tied to representation and input.
The same is true for IT stakeholders. Technology considerations can’t be deferred to the vendor. In fact, IT policies or technology guidelines should be table stakes. In organizations with heavy technical debt or legacy systems that were homegrown, the importance of IT stakeholder buy-in is paramount. For some, job security may cause resistance to any solution or path that appears to pose a risk to their legacy platforms.
5. Prepare Business Requirements, Improvements, & Data Needs
Perhaps existing documentation exists on the legacy system’s requirements. Often it does not or is entirely outdated. Where should an organization start? Focus on “what” to solve or improve, not “how” to solve it.
Current users may believe they “only know what they know,” but they can certainly identify pain points. Here is where the Domain Expert can offer “what’s possible” with a modern solution. And here is where quick vendor demos and research or a YouTube video can offer wonderful inspiration to a user community that is hungry for “better.”
We feel that process workshops provide the most robust foundation of business requirements and are particularly important when the change from current to future state is significant. Thoroughly prepared and skillfully facilitated workshops produce the best results.
The outcome should be business requirements and improvements defined as must/should/nice to haves and success criteria that reflect aligned business objectives.
6. Confirm Readiness
Through the process so far, the potential future state, degree of change and investment are taking shape at a high level. This is a good place to pause and ask if the organization is actually ready for such an initiative. It’s all about timing, and if there are several other critical efforts on everyone’s radar or other events are planned, pausing makes sense. Depending on the length of the pause, earlier work may need to be revisited to determine if goals, alignment, and requirements are still valid. We recommend taking the pulse of the organization even earlier if business events might be on the horizon.
7. Establish Selection Criteria
In the previous sections, we have accumulated important input into the selection process.
- Technology Tier: what’s suitable for your organization should emerge by now.
- Industry Specialty: is such specialization a key criterion?
- License Cost & Scalability: license cost can serve as overall pricing indicator even before negotiation, and pricing tiers matter for organizations who anticipate to scale users; implementation cost is typically a significant part of the investment, and even a rough order estimate can be useful.
- Total Price Tag: Beyond the vendor’s quote for licensing and implementation, internal labor, data migration, ancillary supporting technology, managed services post go-live costs, training and OCM support costs make up the total investment.
- Reputation, Viability, & Roadmap: Domain and Selection Experts can provide input here, and market research will surface questions and concerns on potential vendors. Lackluster customer services, poor product performance, or difficult implementations make the news.
- Partnership Fit: what type of relationship do you envision having with your technology partner during your implementation and beyond, for years to come?
8. Prepare the Selection Toolkit & Team
Such thorough preparation and alignment on the goals and desired qualities result in comprehensive, documented selection criteria by which all vendors and solutions are evaluated. A comprehensive toolkit, a Request for Proposal (RFP) package includes a defined process, roles, timelines, expected collateral, and communications. We believe providing the same content and instructions to all participating vendors helps compare apples to apples and results in the best selection outcome, every time. The Selection Expert is best equipped to shepherd the process, coaching the selection team on the importance of the process, what to look for, and what to avoid (e.g., inadvertently steering a vendor). The team needs to be aligned on how to score the participants and their solutions.
We tend to find private RFPs to be more successful, vendors that become aware of how many or which other vendors are in the running can play off this information and use sales tactics to influence the prospective customer. Adhering to a structured, thorough RFP methodology will ensure that you get the best insight into what the vendor’s recommendation truly is without outside influence. This allows you to judge what the vendor recommends via their responses as well as to why they responded in that manner.
Where Do We Go from Here?
We believe it’s all in the preparation and following our guidance above will ensure you’re well-equipped and fully prepared for the next steps: finding vendors and choosing the right one.
Part 2 is now live on our blog! Learn more about selecting a pool of potential vendors and managing the selection process all the way through to contracting.