Critical actions to optimize vendor partner evaluation and selection decisions include:

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  Use an RFP-based approach only when required by statute (for public sector organizations) and for crucial, high-risk decisions.
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  Research solution and vendor market and identify three viable contenders.
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  Manage intermediaries, such as procurement, and engage in direct dialogue with vendors. Engage procurement, legal, and finance for necessary support.
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  Focus on vital needs.
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  Employ a mindset that you're acquiring a business process and accepting/configuring that process to avoid software customization.
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  Adopt a vendor partnering mindset and attitude to optimize your return on investment.
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  Avoid venturing too far from a vendor solution's standard use cases.
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  Design your vendor questions carefully using a combination of open-ended and yes-no questions.
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  Align on evaluation and scoring processes and methods before engaging vendors.
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  Watch and mitigate biases that may marginalize the decision process.
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  Don't rely on the software vendor's project management. Manage the effort using your project manager. Do rely on the vendor's solution/product architecture and configuration expertise.

Overview

Selecting software is more than just about the software and hardware. A vendor's service depth and breadth to support and enhance your needs long-term are just as important. 

While two guys in a garage may be helpful when innovating to create a new industry or product, they are not the right choice when selecting critical software to run your business.

Vendor stability, capabilities, and market positioning are vital when choosing a software solution.

Decide on a vendor solution that includes:

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  Software
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  Services
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  Security
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  Education
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  Know-how
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  Commitments
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  Culture fit
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  Financial viability
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  Pending litigation
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  Research & development

Establish Goals and Avoid These Gaffes

Consider buying, rather than custom developing, software for the following reasons:

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  Optimize the value of your investment by avoiding costly, timely, and high-risk custom software development.
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  Accelerate your implementation timeframe and benefit realization by acquiring a proven software asset that meets your needs. 
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  Reduce long-term costs by shifting software support, upgrades, and new development to your vendor.
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  Remain current in technology and software innovation by leveraging your vendor's new software versions and upgrades.
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  Avoid the challenges and costs associated with recruiting, developing, and retaining scarce specialized skills to enhance and support your software.
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  Leverage vendors who provide end-to-end, enterprise-caliber solutions that integrate and streamline your business processes out of the box.

Gaffes to Avoid
Don't get lulled into a false sense of security. Buying software isn't a panacea, and it isn't for every organization and application.

Apply discretion when deciding what capabilities to enable using commercially available software.

Differentiating Capabilities -- Capabilities that differentiate your organization in the marketplace -- may require custom software.

Here are some additional gaffes to avoid:

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  Miscommunications
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  Overpaying
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  Comflexity™ -- Too much software configuration flexibility may create complexity
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  Lack of business process awareness
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  Transactional thinking
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  Venturing too far from a vendor solution's standard use case
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  Bias

Think Twice Before Creating a Request for Proposal

RFPs run the risk of creating misinformation.

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  Organizations publishing RFPs aren't knowledgeable of potential vendors and their solutions.
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  Potential vendors aren't knowledgeable of the requesting organization's needs, to the extent they should be, in preparing an accurate proposal response.

Organizations with overly bureaucratic procurement policies that restrict any form of interactive discussion, communication, and discovery between users and vendors during the RFP process further constrain the flow of knowledge.

So, considering the time and effort most RFPs require, where's the value? It's expensive, time-consuming, and results in less-than-optimal decisions.

Initiate Work

Evaluate and select a vendor solution in five major steps:

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  Initiate
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  Align on Evaluation Process
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  Do Your Due Diligence
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  Publish RFP (for RFP approaches)
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  Evaluate and Select Vendor Solution

Incorporate leading practices and unconventional thinking into your Vendor RFP and Evaluation process.

Take these four steps to initiate work:

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  Confirm funding
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  Organize & engage constituents
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  Establish an approach & plan
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  Draft evaluation process

Research Your Problem and Solution Space

Increase your insight into historical project experiences and the importance of engaging your System and embracing your mission.

Begin every project with insight into history and research, including peer experiences with similar projects, vendors, and solutions. Doing so creates capability insight, engagement, and influence.

Researching your potential vendor/solution market provides numerous benefits:

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  Develop insight
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  Learn leading practices
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  Identify and learn from peer organizations
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  Confirm viable vendors
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  Understand emerging innovation

Avoid:

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  Reinventing solutions
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  Mistakes others have made
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  Reinventing knowledge

Research sources, methods and techniques include:

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  Internet
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  Research analysts
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  Industry studies
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  Industry associations
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  Public sector -- there is excellent public domain knowledge available
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  Media and news

Network with Peers

Networking creates cooperative knowledge. It's a form of benchmarking.

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  Conduct visits with customers of leading vendors early in your project process—factor resulting insights into your RFP, such as requirements, leading practices, and experiences.

Focus on Vital Needs

Many organizations overly focus on functional application requirements.

Your application solution is much more than just functional application requirements/needs.

Ensure your team provides equal emphasis on other requirement topics/areas.

Increase the likelihood of a successful software acquisition outcome by understanding:

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  The anatomy, or structure, of your required solution and its components -- Visualize your business solution and outcome.
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  Nomenclature -- an application solutions domain-specific terminology and glossary
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  Industry-leading practices for the capability and application(s) within your project scope
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  SPRONTO™ (elements of execution) of your business solution requirements -- Strategy, Process, Requirement, Organization, Network, Technology, and Operations
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  Business priorities -- Prioritize your needs

Establish Guiding Principles

Establish vendor selection guiding principles. Share these with the internal team.

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  Partnering mindset
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  Vendor minimum requirements
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  Vendor winnowing
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  Consistency
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  Vendor interaction
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  Team, e.g., select the right team members
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  Due diligence
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  Scoring
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  Minimizing bias

Align on Scoring Methods

Align on a comprehensive, unbiased scoring method before creating and publishing your RFP.

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  Create a scoring team
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  Establish strategic themes
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  Align on evaluation stages to score
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  Assign weights
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  Define point scale for questions
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  Create score sheets for each phase
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  Score each stage
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  Aggregate scores from stages

Quantify your vendor partner decision to the extent possible by scoring each interaction with partners and their customers and suppliers.

Finalize Evaluation Process

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  Align on minimum requirements
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  Evaluate vendor RFP solicitation response
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  Evaluate vendor interviews and software demonstration
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  Engage with vendor customer references
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  Conduct vendor software sandbox demonstration
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  Evaluate vendor site visits

Create RFP

Begin with your organization's standard procurement template for soliciting technology-related vendor solutions.

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  Engage procurement and legal teams early in your process.
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  Include application requirements, vendor, and cost-related questionnaires in an appendix to separate them from the procurement terms and conditions.
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  Design clear and straightforward questionnaires that enable efficiencies -- vendor response and scoring.
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  Use open-ended in addition to yes/no question formats to promote higher quality vendor responses.
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  Use leading practices in the requirement definition described in the Embrace Mission™ topic.

Assess Vendor Proposals

Assess vendor proposals that meet minimum requirements:

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  Assess minimum requirements -- Winnow vendor candidates using a minimum requirements assessment
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  Read proposals
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  Evaluate proposals
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  Assign preliminary scores
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  Review preliminary scores as a team
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  Finalize scores
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  Winnow vendors -- Select vendors who will be invited for interviews and software demos

Conduct Interviews and Software Demos

Interview and guided software demonstration agendas should have been prepared earlier when establishing the evaluation process.

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  Review and refine those agendas as appropriate based on learnings to date and vendor feedback.
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  Prepare software demonstration scripts for the vendor to demonstrate critical functions and features.
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  Distribute agendas and scripts at least two weeks before interviews and software demos to allow vendor feedback, adequate preparation, and scheduling the right roles for engagement.
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  Facilitate team discussions immediately after interview/demo sessions, when vendor personnel vacates the room, to exchange feedback between scorers and contributors.
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  Scorers should complete and submit their scores before engaging in site visits.

Conduct Vendor References

Another critical part of the vendor evaluation process is to talk with current and past vendor customers. Conduct customer references in parallel with planning vendor site visits.

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  Vendors provide a list of customers for reference.
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  Prepare a list of standard questions for each customer regarding the vendor's services, products, and performance.
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  Visit in person if the customer's location is near your office. Otherwise, conduct a virtual discussion using a video conference call.

Also, contact known past and current customers the vendor didn't provide as a referenceable account. You can gain some fascinating insight that otherwise may be lost.

Engage in Sandbox Software Experience

Evaluating hosted/cloud-based solutions may allow vendors to establish a demonstration environment dedicated to your organization.

Such an environment is sometimes referred to as a sandbox, allowing your team to engage with and explore a vendor's proposed application hands-on.

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  Prepare critical scenarios that the vendor should configure in the sandbox.
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  Request the vendor to configure requisite functionality and roles to enable the scenarios.
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  Have the vendor draft a sandbox experience guide that articulates each scenario and related software navigation steps.

Score sandbox demos if your evaluation process detailed specific scenarios/scripts that enable objective and quantifiable scoring. Otherwise, factor the experience into the overall evaluation, e.g., using one or more unpublished questions to score the sandbox experience.

Conduct Vendor Site Visits

Prepare site visit agendas as part of defining the evaluation process activity.

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  Review and refine those agendas based on what has been learned and vendor feedback.
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  Site visits should be to a vendor's headquarters and primary data center for hosting/cloud-based solutions.
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  A subset of the scoring team may visit on-site to minimize travel expenses.
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  The site visit scoring team should debrief other team members after the site visit.

Recommend Vendor

Quantify your vendor decision to the extent possible.

Conduct requisite follow-up with the final vendors.

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  Share final vendor statement of works (SOWs) and agreements with constituents.
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  Gather remaining feedback from constituents.
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  Facilitate dialogue with constituents to prepare final scoring and qualitative input.

Prepare a brief recap of vendor evaluation results using critical scoring, and qualitative criteria agreed to earlier as a basis for final vendor ranking.

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  Senior leaders appreciate brevity and visual presentation formats. Keep your recap to a page or two.
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  Use a format like Harvey Balls that provides a simple visual presentation.

Engage in Dialogue

RFPs have been used for decades to select software and vendors.

It's time to change. Technology enables new, more efficient, and effective ways to evaluate and select vendors.

RFPs historically were used to gather information from a vendor. Decades ago, the Internet didn't exist, and vendors closely guarded their customer lists. There weren't any other options for gathering vendor information to make an informed decision.

The Internet provides extensive information on vendor marketplaces and products. The decisionmaker's dilemma has shifted from no information source, except the vendor, to information overload and clutter.

Partnering-to-decide software and vendor decisions require:

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  Leveraging the Internet to filter and source the critical information required to optimize vendor decisions. This includes identifying the most viable vendors and validating peer organization experiences with those vendors.
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  Engaging in dialogue directly with vendors onsite at your organization and sharing the most vital decision-related information with them.

The previous content explained an RFP-based approach for selecting software and vendors. This topic describes a partner-based approach, which leverages many of the same techniques as the RFP-based approach but does so using dialogue, not paper.

The critical differences in the Partner-based approach, as compared to publishing an RFP, include:

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  Don't create and publish an RFP.
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  Confirm the top three viable vendors using research and benchmarking techniques, aka Network with Peers.
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  Partner interaction is collapsed into two to three intensive days.
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  Dialogue on contract matters begins immediately and runs parallel with assessing vendor options.
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  Promote an agile mindset and collaborative process to achieve a more timely and optimized decision.

When using this Partner-to-Decide agile approach, use the best tools and techniques presented in the RFP Process-to-Decide RFP topic, minus the RFP.

Turbocharge and optimize your vendor software selection decision using agile methods and techniques.

Critical Takeaways and Reference

Important points to remember about evaluation and selecting software include:

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  Set up your project for success by engaging your System and embracing your mission.
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  Consider the long-term impacts of your software vendor selection decision.
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  Time is the only real constraint. Focus on time, and scope and budget will adapt.
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  Save money and time by leveraging your organization's standards.
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  Consider the social aspects of project work: build relationships, communicate clearly and crisply, minimize knowledge transitions, and surface and resolve conflicts rapidly.
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  Insist on written deliverables, at a minimum light process, and formal sign-offs on deliverables.
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  A primary project rule: commitments and needs not in writing likely will not be delivered to meet your expectations.