 |
Vendors!
Improve your Probability of Getting on the "Short
List"
By James
A. Browning |
During
the past few years, midsize businesses (MSBs) have seen
a broad portfolio of IT product, service and solution
offerings hit the midmarket. While beneficial to them
from both a functionality and price perspective, this
abundance of options is also making it increasingly difficult
to make technology and vendor selections.
For
many IT executives, the strategic buying process
is challenging,
and in response, Gartner has developed
and recommends a three-phase approach when evaluating
and selecting critical technology and vendors. This
approach entails a needs assessment, an in-depth
vendor analysis,
and negotiation preparation.
Vendors
selling into the midmarket should utilize this process
to design
an effective sales strategy
that
meets MSBs needs and wants, and to gain leverage
in making
the "vendor shortlist" during the selection
process.
Phase 1: The Needs Assessment
This first step focuses on the internal needs and requirements
of the MSB, and at this point, the project team is
selected, selection methodologies are chosen, and
requirements are defined. The fundamental success
of the final decision is grounded in this phase one
and includes:
|
>
|
Needs
Identification: an internal assessment of
the current functional, technical, and service
and support requirements. |
|
>
|
Requirements
Definition: a framework that includes the
mandatory requirements, valued requirements, and
"nice to have" requirements of the product
or service. |
|
>
|
Long-list
Creation: an information gathering process to
identify suitable vendors for inclusion in the
request for proposal (RFP) stage.
|
|
>
|
RFP
Issuance: a 4-6 week process where the project
team drafts letters, paper and electronic versions
of the RFP and sends it to the "suitable
vendors" list. |
|
>
|
Bidder
Conference: this meeting via phone, in-person
or Web conferencing is to clarify the requirements
and responses requested from vendors. |
|
>
|
RFP
Addendum: includes any additional information
to accurately complete
the RFP process, and may result from the bidder's
conference. |
Phase
2: Vendor Analysis
The 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. Here MSBs are taking a close look at how to map the needs defined
in phase one to the capabilities of the vendors in the marketplace.
Vendor
evaluation is conducted from both a tactical and
strategic perspective with a focus on functionality
and cost, as well as vendor viability, service
and support capabilities. A sound assessment of vendors' viability and
vision will answer questions such as these:
|
>
|
Will
the vendor survive as the market evolves? |
|
>
|
Does
the vendor have the talent and organization to
be successful? |
|
>
|
How
committed is the vendor to the midmarket?
|
The vendor analysis will result in creation of a vendor
shortlist of the top two or three vendors that can best
serve their needs. In creating the "shortlist",
we recommend that MSBs consider these issues:
|
>
|
Has
the vendor been strategically servicing the midmarket
before 2001, prior to the economic downturn? |
|
>
|
What
is the vendor's track record with midsize businesses
in offering tested size- and vertical-specific
solutions? |
|
>
|
How
many midsize business customers does the vendor
have? How many did it add in the past 12 to
18 months?
|
|
>
|
Does
the vendor generate less than 25 percent of its
revenue from midsize businesses? |
|
>
|
What
is the quality (not just quantity) of the vendor's
business partners?
|
Finally,
the vendor analysis process includes a presentation
and demonstration of the vendor's solution
based on a planned and scripted scenario designed
by the MSB project team. The demonstration script
centers on the MSBs desired functions and features
and provides the project team with a visual of the
end-user experience where applicable.
This
analysis would take into consideration the quality
and responsiveness
of the vendor presentation, the
demonstrated functional and technical capabilities
in comparison to predefined needs, and the ability
to do business with the vendor
Phase
3: Negotiations & Final Selection
Vendor negotiations should implement an integrated team strategy that includes
representatives from purchasing, legal, IT, finance and end-user organizations.
At this point, each team member will have a solid understanding of the vendor's
market position and reputation and current market conditions. However, the vendor
is normally limited to a single point of contact within the organization.
It
is in this phase that the vendor is directly confronted regarding any deficiencies
in product capabilities and services in order to resolve them or for the MSB
to gain contract leverage. At this point, Gartner recommends that MSBs:
|
>
|
Keep
in mind that IT procurements are being made to
address business needs and problems. |
|
>
|
Purchase
nothing more and nothing less than what's required
by end users to perform their job functions. |
|
>
|
Make
the bidding process competitive.
|
|
>
|
Use
negotiation skills to save money, reduce risk,
and provide long-term contract protection. |
|
>
|
Establish
an "oversight
process" to provide insight into vendor
performance during the life of the contract. |
A detailed vendor analysis is key to ensuring successful
implementation of technology solutions for MSBs, and
long-term partnerships with strategic vendors. To succeed,
vendors selling IT solutions into the midmarket must
be prepared to address business requirements, deliver
value propositions that address their unique needs,
and demonstrate return-on-investment, while remaining
focused and flexible.
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 |
