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Improving
the IT Vendor Selection Process
Phase Two: Vendor Analysis
By James
A. Browning |
Last
month we focused on the importance of clearly defining
the internal needs and requirements of your organization
as the first step to evaluating and selecting critical
technology and vendors. This month we take a look
at how to map those needs to the capabilities of
vendors in the marketplace.
This
vendor analysis process has two main goals: to evaluate
the actual
capabilities of a given vendor,
and to establish a level of comfort to do business
with a specific vendor. Midsize businesses should
allocate a minimum of three to four weeks for this
process in
order to analyze vendor responses and follow up with
questions.
Vendor
evaluation should be conducted from both a tactical
and strategic perspective. Many
businesses
focus too
much on the tactical criteria such as functionality
and cost, while overlooking strategic evaluation
criteria, such as vendor viability, service and
support capabilities.
According
to Gartner, by 2004, 60 percent of the vendors currently
targeting small-to-midsize
businesses
will
exit in failure, be acquired, or just abandon
the market (0.8 probability). Given today's poor
economic climate and the rapid rate of technological
change,
a sound assessment of the vendor's viability
and vision may be the most likely predictor of
long-term success of the selection process.
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Will
the vendor survive as the market evolves? |
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Does
the vendor have the talent and organization
to be successful? |
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How
committed is the vendor to the midmarket? |
The
vendor analysis will result in creation of a vendor
shortlist, and should
include the top two or
three vendors that can best serve your needs. Often, the tendency is to include
too many vendors resulting in a prolonged evaluation process that can tie up
scarce project team resources.
In creating the "shortlist", consider these issues:
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Has
the vendor been strategically servicing the
midmarket before 2001, prior to the economic
downturn? |
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What
is the vendor's track record with midsize businesses
in offering tested size- and vertical-specific
solutions? |
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How
many midsize business customers does the
vendor have? How many did it add in the past
12 to 18 months?
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Does
the vendor generate less than 25 percent of its
revenue from midsize businesses? |
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What
is the quality (not just quantity) of the vendor's
business partners? |
Finally,
the vendor analysis process should include a presentation
and demonstration of the vendor's
solution based on a planned and scripted scenario
designed by your project team. The demonstration
script should
center on the business' desired functions and
features and provide the project team with a visual
of the end-user experience where applicable.
Once
the demonstration is complete, the project team
should
perform another round of vendor analysis. This
analysis should take into consideration the quality
and responsiveness of the vendor presentation,
the demonstrated functional and technical capabilities
in comparison to your predefined needs and the
ability
to do business with the vendor. A vendor's
lack of attention to details may indicate a lack
of ability
to deliver, or a greater interest in financial success
than in the business relationship.
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How
well does the vendor understand the unique
needs of your business? |
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What
is the quality and responsiveness of customer
support and service? |
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Is
the vendor prepared to handle your company's
growth and change in needs? |
A
detailed vendor analysis is key to ensuring successful
implementation of technology solutions, and long-term
partnerships with strategic vendors.
Vendor
analysis is the second step in a structured approach
to improve
the vendor selection process. Watch
for Phase 3: Negotiations in the next edition of
The Midmarket Report. If you missed last month's
perspective on developing the initial needs assessment,
click
here now.
James A. Browning is Vice President and Research Director
in Gartner Research, where he is part of the Small
and Midsize Business Research organization at Gartner,
Inc. Discuss your perspective with Mr. Browning one-on-one
at Midsize
Enterprise Summit this fall.
References
Webinar
Midsize Business Road Map for Selecting IT Vendors
Broadcast: July 28, 2003
Authors: Kenneth Chin and James A. Browning
Article Top View
An SMB Road Map for Selecting IT Vendors
Publication Date: May 13, 2003
Authors: Kenneth Chin and James A. Browning
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