VENDOR SELECTION

A vendor has a product for sale that may require customization for you to utilize it. Vendors sell you the product and their professional technical services, as a package. It is imperative that the vendor selection process not be handicapped by internal political agendas, “gut feelings,” or the toss of a coin decision. Once it is known that you are “in the market” you will be deluged with specific vendor related solicitations. If not managed correctly, the vendor selection process can eat up time and resources and it can be quite costly, accounting for as much as 25-30% of the total vendor costs.

Some of the worst-case scenarios can be:

• Choosing a vendor without proper due diligence. For instance, the vendor might go out of business in the middle of your project resulting in you being forced to make an ill-timed decision in order to complete the project.
• Service and support problems.
• Differences in your visions that were not made clear.

Vendor Evaluation

Establish a vendor evaluation methodology that does not focus most of the attention on the functionality and cost issues. A vendor’s ability to execute a specific plan and its long-term vision is well worth the investment. The next step is to create a vendor’s RFP.

Elements of a vendor RFP:

Functionality: This is usually the primary focus of any vendor evaluation, but in actuality it should represent no more than 40% of the total decision-making process.

Storyboard: To ensure that you cover all of the capabilities you want from a specific vendor product, use a storyboard. Draw the storyboard using the same criteria as set out in Chapter 2. In other words, include:

• The design aspects.
• Ease of use features.
• Ability to integrate with other tools, both hardware and software.

You must also determine if the product provides:

• Tools that enable you to present content electronically.
• Configurators to easily target various vertical, and geographic markets.
• Scalability to incorporate new media formats.
• Ability to easily interface with other e-commerce applications.
• Ability to enhance rather than decrease the security risks.

Costs: Don’t put too much emphasis on the initial cost of the product in your decision-making process. Remember that the majority of the cost is hidden — such as product training, customization, and integration. Therefore, cost calculations should always include not only initial license costs for the product and any knowledge tools utilized, but also costs of installation and maintenance, help-desk gateway, ongoing education and training, and professional services such as customization and integration.

The Vision: What is the vendor’s stated and realized development plans for its product? Ask how the vendor plans to incorporate and utilize new technologies into its product’s architecture and how it plans to evolve its current product by adding to or enhancing the current functionality. Let’s not forget about service and support — how does the vendor plan to grow and change its general and professional services support. Remember to investigate (due diligence once again raises its ugly head) how the vendor treats its customer once the vendor has been paid.

A vendor’s vision is just as important as the vendor’s ability to produce a viable product and execute its successful implementation. For most businesses, this can be used as the key differentiator when making the final vendor selection.

Service and Support: A product’s functionality and cost provides, in many instances, the inducement for making a specific vendor selection. But it is just as important that you also consider the availability of quality service and support, for without them, the success of any product implementation is ultimately doomed.

Service and support needs to be broken down into two areas. The first is general support including installation of the product and continuing support. Also don’t forget to check out the quality of the vendor’s help desk services. The second area is professional services. This can be the weakest link in many vendor organizations and therefore due diligence must be stringent — i.e., evaluate the vendor’s strengths in project management, systems integration, and business consulting skills.

In spite of the critical service and support that vendor’s supply, most businesses don’t take the time to create a vendor RFP — let your business be the exception.

Due Diligence

While we have harped on performing proper due diligence throughout this section, it has proven to be the weakest area in most vendor selection processes. Given the maturity of the e-commerce arena and the fierce competition that exists, the author predicts that, in a few years, at least half of the current vendors will no longer exist. Have you taken this fact into consideration when making your vendor selection? If not, do so. What is the vendor’s financial viability? Answer this question by analyzing the vendor’s revenues, growth, margins, sales and marketing investment, quick ratio, etc. The next step is to measure the quality of personnel within the Vendor’s sales and development departments. Ask questions, such as if these departments are able to meet industry milestones; have historically been able to meet deadlines and delivered what they promised; have R&D capabilities comparable with other vendors; and is the vendor suffering a high turnover among its most talented people.

Finalizing the Selection Process

Once you have put in place your selection criteria and structure, use your storyboard to guide you through each step in the selection process. This will help to point out your website’s needs. But you must also research, so as to pinpoint the exact requirements you expect a vendor’s products to provide. Then, write the RFP, and send it out to a select group of vendors. That’s straight-forward, right?

The next step is to whittle down your vendor selection list. This can get a bit hairy — use RFP validation, comparisons, scripts (the storyboard) and vendor presentations to help in this process. In the end, hold a no-holds barred in-house meeting and review everything, you should wind up with a short list of no more than three vendors that fits all the criteria.

You can now take the final step — negotiation and selection. Here you develop and sharpen your negotiating strategy. How? Decide what’s critical to the project and put it all down in a contract (use your legal team for this part). Call in the short list vendors and the race is on. Once you have selected a vendor willing to work within the negotiated terms and conditions, you can begin the final documentation, presentation to management, and getting those signatures on the dotted line.

Following the advice in this section should usher your web-based business into many successful vendor partnerships.