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Selecting the Right Technology Vendor

Author: NPower Network
OVERVIEW
For many organizations the success or failure of IT initiatives is predicated on the selection of the appropriate
technology vendor. espite the critical nature of this process! many organizations underestimate the time and
effort it takes to make a well"informed decision. This document is meant to serve as a guide to help you
understand and think through the critical steps in the vendor selection process.
As you read this! please keep in mind that as an organization goes through the vendor selection process it
is not uncommon for other #usiness processes or organizational needs to #e revealed. It is important to
remem#er that technology pro$ects are often not $ust a#out the technology! #ut rather the health and
effective"ness of the entire organization. This article focuses on the process of selecting a vendor! and
assumes that other important organizational change management issues are #eing addressed in concert to
support this process.
SEVEN STEP MODEL
1
2
ASSESS FEASIBILIT % Is this via#le for my organization&
!AT"ER RE#$IREMENTS % 'hat does my organization need&
RESEAR%" & REFINE OPTIONS % 'hat solutions(vendors might fit my needs&
EVAL$ATE VENDORS % 'hat is the #est fit for my organization)s needs&
SELE%T & EN!A!E VENDOR % Is this a reasona#le price and contract&
MANA!E IMPLEMENTATION % *as the vendor delivered on its promises&
S$PPORT & MAINTENAN%E % *ow will we maintain the solution and support it&
This article was supported by a grant from the Edna McConnell Clark Foundation | 1
SELE%TIN! T"E RI!"T TE%"NOLO! VENDOR
TAS'
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!)ther
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Vendor(
Vendor
I/,le/ent)tion
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+o(No"+o(
,e-uirements
Targeted .ist of
/endor
Final /endor
0n Time 1 0n
2ta#le and efficient
O$T%OME
+o".ater
oc(,e-uest for
/endors(2olutions
Proposals(/endor
2elected 1
3udget elivery of
technology solution
ecision
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to Pursue
emos('eighted
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56pected 2olution
that empowers the
/endor 7atri6
organization
Putting technology know-how in the hands of on-Profits!
This article was supported #y a grant from the 5dna 7c4onnell 4lark Foundation
BREA'IN! DOWN T"E STEPS
STEP 11 ASSE SSIN! FEASIBILIT
Organizational Readiness - 4onsider important elements to pro$ect success such as getting #uy"in from staff and overcoming
technology fears and resistance to change.
Budgeting - 5nsure that you have the appropriate #udget level to successfully e6ecute on the pro$ect. 7ake sure that your #udget
can withstand reasona#le variances from original estimates. Technology pro$ects have varying degrees of financial risk #ased on the
comple6ity of the pro$ect. At a minimum! your pro$ect #udget should #e a#le to withstand a 89: variance.
Staff Availability - 7ost technology pro$ects re-uire a significant investment of time #y your organization)s staff. ;our staff will #e involved in
many stages of the process! such as re-uirements gathering! training! testing! and disruptions during deployment. ;ou will also need to
designate a pro$ect advocate from your staff to manage the vendor relationship and internal resources associated with the pro$ect. 3efore
em#arking on any large technology pro$ect! ensure that your organization can free up time from the appropriate staff mem#ers to make this
pro$ect successful.
Sustainability – 5nsure that you have the proper resources in place to sustain the technology at the conclusion of the pro$ect. This
could include #udgeting for ongoing support! hiring a technology manager! or giving ownership of maintenance to a staff mem#er.
Return on Investment (ROI) – Is the pro$ect worth the investment& 'ill it allow you to serve your constituents #etter or serve
more of them& 'ill it improve your operations and(or lower costs&
Arriving at a Decision – After careful review of the aforementioned factors! you are now ready to make a decision. 7ost
organizations will have a clear <go= or <no"go= decision. If the limiting factor is #udget or staff availa#ility you may decide to opt for a <go"
later= decision.
O$T%OME1 2!O34 2NO !O34 2!O LATER3 DE%ISION
STEP 21 !AT"ER RE#$IREMENTS
Revie Business Strategy – Identify the #usiness goals you hope to accomplish with this technology pro$ect.
!nsure Alignment – 7ake sure that the application of technology will #e an ena#ling factor and will not create a
disruptive influence on the organization.
"rocess #a$$ing – ocument critical #usiness processes that your organization performs. This understanding will #e critical for a
vendor to understand how its solution should #e implemented at your organization.
"rocess Re-engineering – Technology implementation often provides an opportunity to change the way certain #usiness tasks
are managed at your organization. 4onsider this element and make a determination if it would #e valu"a#le to include.
Re%uirements Analysis – Identify critical re-uirements >such as num#er of users! current technologies in use! need for remote
access! training! etc.? that you will need as a part of your technology solution.
"rioritization of re%uirements – Prioritize your list of re-uirements and determine which ones are essential and which ones are
<nice to have= #ut not re-uired for success.
!nvironmental assessment – If your pro$ect involves environmental or physical location factors! make sure a thor"ough
assessment is conducted and that all findings are well documented.
&ec'nical assessment – ocument your current technology and catalog all areas that may interface with your new solution.
O$T%OME1 RE#$IREMENTS DO%$MENT5 RE#$EST FOR PROPOSAL
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STEP 61 RE SEAR%" & REFINE OPTIONS
Buy(Blend(Build – 7ost technology solutions can #e categorized into one of three areas: 3uy an off"the"shelf solu"tion! 3uild a
custom solution! or 3lend a solution #y com#ining an off"the"shelf product with some customization.
!stablis' !valuation )riteria – evelop a set of criteria on which you would like to evaluate your prospective vendors. Appendi6
A has an e6ample of some common criteria used in evaluations.
)onduct Researc' – Ase the resources at your disposal to learn more a#out e6isting products or solutions that could meet your
needs. iscuss your pro$ect o#$ectives with related organizations! trusted advisors! and technology consultants.
Define &argeted *ist – 3ased on your re-uirements and your research into solutions! create a short list of vendors who may #e
a#le to meet your re-uirements. The size of your short list of vendors should correlate to varia#ility in proposed solutions and pro$ect
comple6ity. For instance! for a small defined pro$ect a short list of B vendors may #e appropriate. For large comple6 pro$ects with many
different approaches! you may consider a list as large as C vendors. 7ake sure that you keep your short list of vendors to a
managea#le scale.
Send R+" - 2end the vendors your re-uirements information and ask them to su#mit a proposal. Typically re-uire"ments are sent in
the form of a ,e-uest for Proposal >,FP? document.
O$T%OME1 TAR!ETED LIST OF VENDORS5SOL$TIONS TO P$RS$E
STEP 71 EVAL$ATE VEND OR S
!valuation #atri, – evelop an evaluation matri6 >see Appendi6 3? to help you o#$ectively evaluate each vendor)s proposal and
product demonstration.
"ro$osals – 5ach invited vendor should respond to your ,FP with a written proposal. 4arefully evaluate each pro"posal and encode
the proposal information into your evaluation matri6.
"roduct Demonstrations – 7any vendors will re-uest an in"person or we#"#ased opportunity >a <demo=? to show"case the
capa#ilities of your solution. emos are a valua#le way to get more information and also evaluate intangi#le aspects of a vendor.
Reference )'ec-s – on)t forget to check the vendor)s references as a part of your evaluation process. 4onsider site visits if you
are making a large investment.
O$T%OMES1 VENDOR PROPOSALS4 VENDOR DEMOS4 WEI!"TED VENDOR MATRI8
STEP 91 SELE%T & EN!A!E VEND OR
"rimary and Secondary O$tions – At the conclusion of your evaluation process! you will need to identify a pri"mary option >your
winner? and some secondary alternatives.
.egotiations – o not #urn the #ridges with secondary option vendors as they will serve as a valua#le resource in the negotiation
process. 'hile you are in the negotiation process! keep in mind your secondary options as they serve as your #est alternative if your
negotiation falls through. 7ake sure that the final deal you strike with your preferred vendor is at least as favora#le as your secondary
options.
)ontracting – Identify a clear set of o#$ectives! delivera#les! timeframes! and #udgets for your pro$ect with the ven"dor. 7ake sure
these are clearly written in the terms of the contract.
O$T%OME1 FINAL VENDOR SELE%TED & %ONTRA%TED
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STEP :1 MANA!E IMPLEMENTATION
Dedicate "ro/ect #anager – ;our organization should dedicate one or more staff to oversee the solution imple"mentation. These
staff should have regular checkpoints with the vendor to ensure that delivery matches e6pectations.
!nsure &imely Delivery – /endors often $uggle many clients at once and as such it is important for your organiza"tion to keep
track of delivera#le dates and ensure that the vendor is meeting them. 3e conscious of your deadlines and delivera#les to your vendor
so they can make their target delivery dates. Deep an eye out for contract terms that apply additional fees for late delivery of necessary
pro$ect materials from you to the vendor.
!nsure On-Budget Delivery – If your organization negotiates a Time 1 7aterials >T17? contract with vendor! then it will #ecome
imperative to track hours spent and #udgeted hours remaining on a pro$ect. 'ithout careful consideration of these elements! pro$ect
costs could spiral out of control.
#anage Sco$e – The greatest area of risk for most technology pro$ects is in controlling pro$ect scope. 0nce an organization #egins
to see the possi#ility of technology! they often attempt to do too much in the initial development and launch of the solution. If this is the
case! consider your pro$ect with the vendor a <Phase 8 deployment= and try to push #ack on new additions until a future phase. If a new
addition is essential to a pro$ect! then you should clearly define it in an addendum to the scope of work and negotiate the price with the
vendor.
#anage !,$ectations – 7anage the e6pectations of all parties involved in the implementation support. 3e sure to provide realistic
timeframes and advance warning of any variances in #udgets and timeframes.
O$T%OME1 ON TIME & ON B$D!ET DELIVER OF E8PE%TED SOL$TION
STEP ;1 S$PPORT & MAINTENAN%E
Resources0 5nsure that the appropriate resources are dedicated to support the technology on an ongoing #asis. ;our support and
maintenance plan could include some or all of the following:
2upport *ours(4ontract
*iring of tech resources to manage it
Assignment of staff mem#er to take ownership
Patches 1 7aintenance
0ngoing Training
1$grades0 If the technology solution #ecomes mission critical! plan an upgrade path for it. Technology tends to change dramatically
every B years and should never #e considered a one"time investment.
O$T%OME1 STABLE & EFFI%IENT TE%"NOLO! SOL$TION T"AT EMPOWERS
T"E OR!ANI<ATION
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%ONSIDER E8TERNAL FA%TOR S
The framework proposed in this paper assumes that your organization is operating in a completely neutral
framework and has great latitude in making a decision. 0ur e6perience of working through this process with
many clients indicates that this is often not the case. 7ost vendor selection efforts are often influenced #y
e6ternal factors such as foundation recommendations! group purchasing decisions! or donations(discounts
discovered through #oard contacts. 4onsider these e6ternal factors in your assessment phase. The pres"
ence of these e6ternal factors does not mean that you should forgo the vendor selection processE however!
it can mean considering your options in a different light.
These e6ternal factors can sometimes lead to significant #enefits such as discounts with vendors! financial
support! leveraging e6isting research on vendors! implementation e6perience! and technical support. The
e-uation you should take into consideration is whether the cumulative #enefits outweigh the costs of poten"
tially selecting a less optimal vendor.
Is your organization #eing asked to use a vendor that really doesn)t match your needs& If such a case does
arise! the vendor evaluation matri6 can #ecome a huge asset for your organization. 4onduct the evaluation
using the e6ternally recommended vendor as a #aseline and see where your options fall. ;ou can then
pres"ent the evaluation matri6 to your funders or #oard mem#ers to make an argument for or against a
specific course of action.
This article was authored #y the NPower Network. 2pecial thanks to Anand 2ethupathy and 7ark Topping of NPower N; for the information in this article.
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APPENDI8 A1 DIMENSIONS OF EVAL$ATION FOR VENDORS
The following list contains typical dimensions along which vendors can #e evaluated. 'hile comprehensive!
the list is not e6haustive and you should consider adding your own dimensions to the evaluation criteria.
FEAT$RES
Essential Features
Cool to "a#e Features
$%dd &e'uirements Criteria(
VENDOR STABILIT
)endor *i+e
)endor Financials
,ears in -usiness
umber of Clients
*i+e of Tech Team
&eferences
Future .irection / &oadmap
TE%"NOLO! ELEMENTS
0sability1Ease of 0se
0ser 2nterface1)isuals
Fle3ibility
E3tensible4 Customi+able4
Compatibility
*ecurity
-ackups
)irus Protection
!ENERAL IMPRESSIONS
Positi#es
&isks
Friendliness
&esponsi#eness
E3perience1*kill 5e#el
%ctual Pro6ect Team
PROD$%T STABILIT
Performance 5e#els
0ptime Percentage
5ast .owntime
.uration of .owntime
5oad1Capacity
TIMEFRAME FOR DEPLOMENT
Phase 1
Phase 7
%dditional phases $if any(
Pro6ect Completion
Training
%OSTS
8ne-Time $*etup9 Configuration9 .e#elopment(
8ngoing $Maintenance9 5icensing(
%dd-8ns
"ardware1*oftware
Training
*upport
.ata Migration
Fi3ed or )ariable
TC8 : Total Cost of 8wnership
TRAININ! & S$PPORT
*upport %#ailability
*upport Co#erage "ours
*upport &esponse Time
Training Plan
8nline "elp &esources
%#ailability of *upport Talent
.ocumentation
OT"ER %ONSIDERATIONS
"osted E3ternally1%*P
%dditional E'uipment
Platform Considerations
5ocked 2n to )endor *olution4
2mplementation Plan
.ata Migration
SE%$RIT & BA%'$PS
-ackup Policies
&eco#ery Procedures
)irus Protection
.ata *ecurity
%pplication *ecurity
"ardware *ecurity
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APPENDI8 B1 %REATIN! A WEI!"TED VENDOR
EVAL$ATION MATRI8
It is important to keep yourself o#$ective when going through the vendor evaluation process. It is easy to get
swayed #y an impressive product demonstration or an elo-uent sales representative. In order to avoid
falling into this trap! we often use a weighted matri6 to rank vendors. 3elow is an e6ample of how to
structure your own vendor evaluation matri6.
SAMPLE WEI!"TED MATRI81 >for a B vendor evaluation?
2endor A
2endor B
2endor )
,eferences
B out of B
F out of B
8 out of B
Asa#ility(5asy of Ase
F out of G
G out of G
G out of G
2upport *ours
8.9 out of H.9
H.9 out of H.9
B out of H.9
S1B-&O&A*S
G.9 out of 8B.9
3456 out of 3756
8I out of 8B.9
A spreadsheet program is a great tool for plotting your evaluation matri6. 'hen developing the matri6! you will need to make decisions
regarding the following:
8o im$ortant is eac' of t'e dimensions to your organization9 For instance! if support hours are critical! you may assign it
8I points instead of H.
8o do t'e scores relate to eac' ot'er9 For instance! if you are evaluating three vendors it is usually good to score using a B
point scale or a multiple of a B point scale. The vendor who performs #est in this category would get a B and the worst performer
would get a 8. If two vendors are e-ual on a given dimension! then give them the same score. If the dimension is a very
important one! you may make it worth 8F points with the top vendor getting 8F! the second getting C! and the last one getting H.
:'at is a substantive difference in scores9 If you are evaluating on a 8II point scale and you get a final list of three vendors
all within a score range of 98 to 9J! then there may not #e a su#stantive difference #etween them. Take a deeper look at the
relative strengths and weaknesses of each vendor #efore making a final decision.
o not add any elements to your weighted scores that are worth more than F9: of the total points on the matri6. These
dimensions should #e looked at side #y side with the weighted scores. The two most common elements we normally do not
include in our weighting are "RI)! and &I#!+RA#!. Including elements such as these in the matri6 would really skew the
results! so it works #etter to consider them independently.
O$R END RES$LT should #e something like the following:
2endor A
2endor B
2endor )
0verall 2core
G.9 out of 8B.9
8F.9 out of 8B.9
8I out of 8B.9
0verall Price >over B years?
KF9!9II
KL9!GII
KFG!CII
eployment Timeframe
B weeks
B months
8 month
B!S& +I&
;
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