This is basically a “Quick Guide” version of the 5 part piece I wrote on “Performing a Market Analysis for your Sotware Project Solution.” In this scenario, we assume your company needs a project handled and it’s going to require that an outside company has a hand in it and it’s important that you get the best because it’s going to be long and it’s going to be costly. It’s important to analyze the available options and make the right choice.

I’ve broken down the detailed market analysis into the 7 separate phases detailed below.

For the full detail, start with our article covering the 7 phases in greater detail.

Phase 1 – Document the Requirements

It’s critical that you and your organization have detailed knowledge of your requirements and business processes going into a market analysis like this.

You need to know what your requirements are, what your ‘as-is’ business processes are and what you want your ‘to-be’ business processes…um…well, to be. If you don’t know that, then you’re not ready for this and you’re certainly not ready to move on to Phase 2.

Phase 2 – Identify the Potential Sources

Initially, you and your team need to identify who the main players are. Know which vendors you need to initially consider for this undertaking. Make the field too small and you won’t get a good cross-section of the offerings and capabilities. Make the field too large and you will spend too much time and money just narrowing the group down to the size it should have been in the first place.

Document the Requirements

Phase 3 – Vendor Initiation

Let’s assume you start with 8-10 vendors who are offering a software package or implementation that, at least on paper, comes close to what you visualize your end solution to be. In your gut you know that 3-4 of them probably won’t cut it, but they’re worth a closer look. Include those 3-4 ‘on-the-bubble’ vendors and let them play themselves out of consideration because one could surprise you and offer a reasonable solution at the best price.

To start things off, contact each of the vendors via email with the following information:


  • An introduction of yourself including your contact information
  • A summary of your project or software need
  • An invitation to participate in the market analysis
  • A proposed date/time for a one-on-one kickoff call

Phase 4 – Vendor Research – Round 1

You can’t run the whole market analysis with 8-10 potential vendors. Well, you can, but it will be too lengthy and expensive. It makes more sense to break it into 2-3 rounds and eliminate some vendors along the way. At the conclusion of Round 1, I’d recommend trimming it by 3-4 vendors down to a maximum of 4-6 offerings.

For Phase 4:


  • Send out a high-level questionnaire with some qualifying show-stopper questions (10-20 must-haves) on how the vendor meets the qualification
  • Review/score the questionnaires as a team
  • Remove 3-4 vendors from consideration based on the scoring
  • Notify vendors being removed from the process and invite the remaining vendors to continue with the market research

Phase 5 – More Detailed Vendor Research – Round 2

For Phase 5:


  • Contact the remaining 4-6 vendors via email and/or phone to invite them to continue with the market analysis and explain what is intended for this phase
  • Provide a more detailed list of 20-40 requirements for the vendors to use in the round 2 demos – give them 1-2 weeks to prepare a demo that discusses their capabilities against those requirements (set these demos up as remote webex demos – face-to-face meetings are not necessary yet
  • Following each demo gather as a team and discuss their pros and cons and conduct some sort of scoring for each vendor against your list of requirements
  • Contact the 2-3 vendors that are being removed from contention
  • Contact the 2-3 vendors that are moving on to the final round of consideration

Vendor Initiation

Phase 6 – Final Vendor Demos

In Phase 6, you will need to perform the following:


  • Provide the vendors with a lengthy list of even more detailed requirements
  • Setup detailed face-to-face vendor demos either onsite at the customer location (that’s you) or at a centralized location (really only necessary if you have a dispersed team)
  • Request and receive project cost estimates from each vendor covering software costs, maintenance agreements and implementation costs (these are not expected to be final, binding cost estimates…just ballparks for scoring consideration)
  • Meet as a team following each detailed vendor demo to perform scoring, compare notes, make preliminary decisions about the vendor

Phase 7 – Final Scoring and Selection

This phase will involve a final team review of the materials, demo notes and preliminary scoring, performance of joint scoring, determination of the finalist, and notification to the losers and the winner.

Be considerate with the notification to the runner-ups because they could be called in to fix a failed implementation should the chosen vendor not be able to perform. Remember, they’ve gone through a lengthy and costly process to get this far.

Now it is time to sit down with the chosen vendor and do the following:


  • Negotiate a final price
  • Provide an official Statement of Work
  • Provide final requirements
  • Define a draft project schedule
  • Identify key milestones and deliverables
  • Establish project team roles and members on both sides of the project
  • Schedule a project kickoff

Summary

You’ve successfully completed a lengthy process to identify the best and final solution to your software need. Monitor the process closely early on so a switch in vendors can be made, if necessary, with minimal impact – both cost and timeline – to your company. However, move forward with confidence because at this point a considerable amount of effort has been expended by your SMEs to identify the best solution and you’ve found it.