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| Photo by Krzysztof Poltorak |
As organizations look to technology vendors for products and
services to drive revenue and cut costs to compete in a global hyper-competitive
marketplace, the selection of an enterprise software vendor is a critical component
to companies’ long term success. Chose
the right vendor and reap tremendous economic value-add. Chose poorly and suffer the financial,
motivational, and individual career repercussions.
As a consultant I’ve helped over 50 clients with their ICM /
SPM software vendor selection projects and on the software vendor side at beqom (www.beqom.com) I’ve
seen a dozen or so in the past few months, but I don’t currently do this type
of project and there is a very small list of firms who I would recommend to lead
an ICM / SPM vendor selection. In general, there is a lack of overall
industry knowledge, strong system integrator bias, and a rise in vendor resistance
to third-parties helping clients out with the vendor selection process. (which
I shared some thoughts about years ago – would you allow the buyer to pressure you into a real estate sale without a
Realtor? How is software any different?).
But companies still have a need for help (I know as I continue
to field emails and phone calls on the subject). In response I’ve decided to put some thoughts
to paper based on my experience. I want
to share best practices, insider tips, and a few tools to help you make the
best decision possible for your organization and limit the downside risk to you
and your company. The RIGHT way methodology
will work for any category of software purchase but the specific information I’m
going to share pertain to the Incentive Compensation Management (ICM) and Sales
Performance Management (SPM) space. Anyone
who chooses to follow the RIGHT way methodology is going to get the latest and
greatest approach to vendor selection as the market had changed somewhat and my
opinion and perspective towards selection has changed dramatically since the
last time I managed a vendor selection process.
Future posts will cover the details for each step of the process as well as
the classic mistakes that companies who don’t know the RIGHT way will make. The most common mistake is following the
traditional way of looking at a software selection and to focus on features and
functionality. This mistake will lead
to all of the top vendors in the space looking exactly the same. Organizations will then add unnecessary steps
to the selection process forcing the vendors to go through hoop after hoop and
more likely than not will make a final selection based on cost. The mistake of focusing on features and
functionality leads to a selection that is not much better than throwing a dart
at a wall filled with vendor handouts. So what do you need to focus on to get the
best solution for your company?
The RIGHT way selection methodology
- Capabilities Assessment – This step is crucial to determine if you need to acquire technology or focus on building new processes or perhaps spend time on your data sources. Technology isn’t a silver bullet – technology allows for process and decision enablement and where appropriate process automation.
- Vendor Landscape & Shortlist – If you find a technology shortcoming or aspirational opportunity from the assessment, determine what offerings might make sense and then narrow the choices to request and assess offers. I’ll offer up thoughts on best practices to get to a short list, why your short list might be different from the next, and the value of analysts covering the space.
- Business Case for Change and Project Framework – How to build an internal business case, a stakeholder team and structure the overall internal project.
- RFx – RFI, RFQ, RFP, Optional (surprising? Many companies find little value from RFx responses in the decision making process)- Somewhat self-explanatory but I’ll offer up some ideas on how to best construct a RFx to try and create differentiation and perhaps a better way to find a vendor that is business partner you are looking for.
- Vendor Interviews: This is a new step that I haven’t recommended in the past, but to make the right decision you need to spend time with the potential vendors to determine cultural fit and commitment and to build rapport and trust.
- Demonstration – Have the vendors show their wares in the context of your organization. At one point in time I was a big advocate of the “Custom Demonstration” but my opinion has changed and I’ll tell you how I recommend to do it now. The common approach to selection uses the RFx and the Custom Demonstration to create an "apples to apples" comparison where you might not know that you want and need an orange or maybe even a banana!
- References, Optional (surprising? Not many software organizations are going to schedule a reference that isn’t going to speak about them in a glowing fashion). If you chose to do the traditional reference call I’ll cover how to use the time wisely.
- Negotiations and Contracting – How to get a win/win deal. The traditional model and the SaaS model of pricing is outdated and not to your advantage. I’ll cover a new way to guarantee Success is included in the pricing.
As a final piece of advice, keep the selection process as simple as possible and at each step take the time to validate that the solution and the more importantly the vendor is meeting the original need(s) and aspiration goals found in the assessment and outlined in your business case. Please contact me with any questions at jlane98@yahoo.com, follow me on twitter @SPMconsulting.
