Be as diligent as you can when selecting vendors and minimize risk by following these key exercises.
Whether you are looking to invest in a shiny new app to handle your company finances or trying to assess what your company needs to scale to that next tier, choosing a vendor can seem daunting. However, even with thousands of vendors at your disposal, selecting the right one – with a bit of guidance – can be pretty enjoyable.
When procuring new vendors, there are several essential exercises you should work through to ensure your business lands with the best vendor possible. In-depth vendor evaluations should be an integral part of procurement. They will minimize risk and potentially save you the costly endeavor of engaging the wrong vendor for the task. It seems every company has its way of going about vendor evaluations; the following, however, is a tried-and-true approach used by companies both big and small. We recommend the following:
Understand the vendor landscape.
Gather insight from independent third parties and attain reviews, reports, or analyses about the technology vendors in question. Assemble as much agnostic data about the vendors as possible. Suppose you anticipate your investment will be significant. In that case, you will want to go deeper into understanding the vendor’s financial standing, customer experiences, or acquisitions.
Conduct a vendor RFI (Request for Information) with several vendors.
An RFI should be a comprehensive set of questions that encompasses a full spectrum of essential details you want the vendor to provide while pitching their services to you. Be sure to ask how they manage technology investment, upgrades, support, customer service, security concerns, and third-party best practices. Be as thorough as possible to gain an accurate picture of how the vendor positions themselves in the marketplace.
Conduct a POC (Proof of Concept) exercise.
Conducting a POC is optional, but we encourage POCs when more complex technologies or engagements are at stake. A POC asks the top three vendors who proceed through the RFI process to participate in a real-world demonstration of their approach to solving customer challenges using their technology. A POC is not simply a demo of the solution but, instead, a real-world execution of the technology while limited in scope.
Conduct a closed RFP (Request for Proposal).
Engage the three top vendors and ask for a financial proposal, references, security and risk assessments, and an executive summary. Then, have them focus on demonstrating their ability to solve the challenges at hand. Be Sure there are restrictions in place where the vendors are not aware of each other.
Conduct a Vendor Capability Matrix.
This exercise is a must for complex technologies of heavy investments. Still, it can also be used for lighter tools if done right. A Vendor Capability Matrix considers the business requirements, priorities, technical functionality, and how each vendor aligns with business needs. Read our other post all about Vendor Capability Matrixes.
Select the best vendor.
Consider how each vendor performs in the Vendor Scorecard, considering all of the elements conducted above.
Having a thorough vendor evaluation methodology can be time-consuming, but it’s essential if you want to be sure you have the right team for the right job. If you are having a hard time getting started, let us help you. We have over twenty years of experience helping businesses, both large and small, with vendor evaluation and managing sourcing processes. Our tools and IT sourcing expertise can meticulously vet future endeavors with vendors for our customers. In addition, StrataNorth is an IT Advisory Consultancy. We help businesses of all sizes adopt the right technology to help them grow, work smarter and deliver the best customer experience. We are cost-competitive and fiercely independent in our analysis which means you get the best advice for your business.