I recently completed a lengthy vendor market analysis for what will turn out to be a very large enterprise-wide software implementation. In fact, it will end up being the largest of it’s kind in its specific industry. So let’s look at this. 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.

Whether it’s a software application that is going to be implemented on this project or it’s finding the 3rd party company to actually perform the implementation or do some significant work on it, it’s important to analyze the available options and make the right choice. Let’s examine at least one possible process to get that done.

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. Everything I’ve written up to this point in my other articles assumes that we are delivery and they are the customer. For this article…for a market analysis…the tables are turned. We are the customer and they are the vendor. You’re still the Project Manager running the show, but now you’re the customer and the vendor or vendors have to show they can meet what you need.

Therefore, 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 – or just you depending on the size of the undertaking – 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.

Phase 3 – Beginning the Dog and Pony Show

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 l 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

As mentioned in Phase 3, let’s assume you’re looking at 8-10 vendors and those are the ones you’re inviting to the party. If your project is pretty large – and we’re assuming it is – then you should have no trouble getting them interested and willing to participate.

Remember, you can’t run the whole market analysis with that many 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. For Round 1, I’d recommend trimming it by 3-4 vendors down to a maximum of 4-6 offerings.

Initially, I suggest sending out a high-level questionnaire identifying some of the qualifying show-stoppers and asking for vendor responses on how they meet each qualification. For example, if you need the software solution to run on Windows Vista or they can’t be considered, then that needs to be asked as part of the initial screening questionnaire. If you need a vendor that has a particular expertise…for example has experience with large-scale government installations or is certified for ‘x’ or ‘y’ then you that needs to be included in the initial screening. If you need a vendor’s software to run with SQL or else you can’t include them, then that needs to be asked as one of the intial screening questions.

Identifying 10-20 critical must-have items on the vendor questionnaire will enable you or your team to weed out those vendors that can’t even meet the minimal requirements of the undertaking. It’s sort of like looking at the system requirements of a piece of software before you buy it. If it doesn’t match your OS or your computer doesn’t meet it’s minimal requirements, then you’re not going to buy it.

Let’s assume that this initial screening removes 3-4 vendors and now you’re down to 4-6 vendors for the 2nd round. At this point you send emails – and follow-up with phone calls, if necessary - to each of the 3-4 vendors that are being eliminated. Thank them for their participation and explain that they do not meet some critical requirements for the engagement will not be considered further.

Phase 5 – More Detailed Vendor Research – Round 2

Now you’ve eliminated a few and you’re down to 4-6 vendors to move on to Round 2. Contact those vendors via email and phone to invite them to continue with the market analysis and explain what is intended for Round 2.

My suggestion for Round 2 is a high-level demo performed by each vendor outlining their software capabilities and particular expertise in relation to your needs for the project. To allow each Round 2 participant to adequately prepare for their presentation I would suggest preparing a high-level version of your project requirements. It’s still too soon to provide too much detail – we’ll save that for the next round and a more detailed demo from each finalist. At this point we still want to keep it more high-level so as not to waste too much time and effort on vendors that aren’t going to make it to the finals.

Prepare the high-level requirements – you’re past the must-haves but you can identify another 20-40 critical needs of the system (or more or less depending on the number of requirements and the size of the project, I’m just picking a number here). Send those to each of the vendors and give them 1-2 weeks to prepare for a webex demo of their software and expertise. I’m suggesting webex for this round because face-to-face is not really necessary yet – save that for the next round and save the extra time and save the vendors the cost of travel. A good idea would be to ask each vendor to record the webex and send it to you afterwards so that you’ll have it available for analysis should there be confusion over how well a vendor meets a requirement.

More Detail on Phase 5

By Phase 5 we had narrowed the field down to 4-6 vendors in our hypothetical scenario. In Phase 5, we’ve contacted those vendors and invited them to move on to a more detailed analysis of their product offering. In Phase 5 we do the following:

  • Provide vendors with high-level requirements to prepare against (20-40 or more depending on your needs – remember, you’re already past the ‘must haves’ that were the weed-out requirements from Phase 4 – Round 1)
  • Schedule recordable webex demos with each vendor for them to demonstrate their offering against those high-level requirements

Post-Demo Reviews

At the end of each vendor demo gather with your team to discuss, in detail, the pluses and minuses of each vendor’s presentation. Prepare follow-up questions and get them out to each vendor quickly so that they can clarify any points that were missed or confusing. Just because you didn’t fully comprehend something during the demo doesn’t mean the vendor can’t meet that requirement. There may have been miscommunication or misinterpretation – you’re far enough in that you want to give the vendor a chance to clarify. After all, in the end you want the best vendor…you’d hate to realize later on that you weeded them out early on a technicality.

Final Team Review for Round 2

Following all of the vendors’ demos, gather again as a team. At this point you’ve noted how each vendor performed against the requirements during the demo sessions. If necessary or possible, you’ve likely assigned some sort of scoring to how each vendor met each requirement. Now, as a team you must remove 2-3 vendors from the field so that you have a remaining, manageable set of 2-3 vendors to do a best and final analysis on for final selection.

Contacting the Vendors

To close out Phase 5, contact the 2-3 vendors that are being removed from contention and explain the process you’ve gone through and why they are being removed from further consideration. Be prepared for additional conversations depending on the size of the engagement – remember, we’re assuming this is a contract that they want badly. Also contact the 2-3 vendors that are moving on to the final round of consideration. We’ll discuss that in further detail in Phase 6, which encompasses the third and final round of vendor research.

Phase 6 – Final Vendor Demos

At the conclusion of Phase 5, we narrowed the vendor field from 4-6 vendors down to a final list of 2-3 vendors. During Phase 5 you most likely laid out the remainder of the process of the 4-6 vendors you were still considering, but we’ll detail that here at the beginning of Phase 6.

In this phase, we will:

  • Provide the vendors with a lengthy list of detailed requirements
  • Setup detailed face-to-face vendor demos either onsite at the customer location (that’s us) or at a centralized location (really only necessary if the customer has a dispersed team)
  • Meet as a team following each detailed vendor demo to perform scoring, compare notes, make preliminary decisions about the vendor

Detailed Requirements

If you haven’t already done so, now is the time to share a very detailed list of requirements with each of the remaining vendors. What you’re looking for in this phase is to witness a demo tailored to your final solution in as much detail as possible to help you and your team make the best and final choice of a vendor solution. This can really only be accomplished by giving them everything you can in the way of information about what you need your 'to-be' solution and processes to look like.

Try to stay away from giving them too much direction about what you want to see. After all, the winning vendor is going to be expected to fully understand your requirements, notice where they are week and ask for more info, and configure their solution to your needs. If you have to do the work for them along the way then they’re not the right vendor.

Face-to-Face Detailed Demos

Now is the time to meet the vendors face-to-face. You’ve given them every detailed piece of information about what you need and you’ve given them a period of time (probably 2 weeks or more) to put together a detailed presentation and demo that will be tailored – at least in terms of discussion – toward how they can meet your requirements.

If your undertaking is large enough and warrants the drooling that would go along with it, then it may call for asking the vendors to put together a working prototype of what they would implement in your environment. This could only be asked of the largest of undertakings where winning this contract could make or break the vendor. No vendor is going to go to this time or effort for a normal implementation – the costs would be far too high. And if you need to go down this route, understand that you will need to give the vendors months, not weeks, to prepare for these detailed demos.

My recommendation is to stay away from working prototypes if at all possible and ask the vendors to perform very detailed deep dives into their offerings while addressing your specific requirements along the way.

Post Demos Reviews

As a team, conduct post demos reviews, compare notes and do some preliminary scoring of the vendor’s ability to meet your specific requirements. Because your requirements list is very long at this point, this process will take a considerable amount of time and needs to be done immediately following each demo so the information is fresh in everyone’s mind. It’s a good idea to do this separately as individuals and then come back together to discuss and agree on final scorings for each vendor on each requirement or groups of similar requirements or come up with an ‘average’ score for each requirement or group of requirements for each vendor. This will be critical when doing the final comparison, scoring and decision-making in Phase 7.

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.

Final Team Review

Once all vendor reviews from Phase 6 have been completed and all after-the-demo meetings following each vendor demo have been completed and notes have been documented, then it’s time for the team to finalize scoring or ranking of each vendor in detail against the requirements or against groups of requirements.

Preferrably, and if time allows, give the team 3-5 working days from the last demo to do their own scoring before coming back together as a team.

Joint Scoring

Prior to holding a joint meeting, share all team scoring with each other and designate one individual to be the compiler/consolidator of all scoring info. If the number of requirements is too great, score the vendors on logical groups of requirements. At this point we’re only looking at 2-3 vendors so it shouldn’t be an overwhelming tasks.

During a joint session, perform final scoring of the vendors and discuss any concerns or contradictions. The goal is to come out of this session with a clear and agreed-upon winner. Anything less can lead to more lengthy discussions and working sessions.

Notifications

Once all discussions are over, clarifications and contradictions have been cleared up and a clear winner has been identified, it’s time for notifications. Now that this process is anywhere from 2-6 months old, the losers are going to need some detailed communication and debriefing. After all, they’ve put considerable time, effort and money into trying to win this work with you and your company, so it’s in your best interest to give them some details. Keep in mind, not all projects go well and if the winner performs poorly, then you may need to call on one of these runner-up vendors to step in…so part company amicably, if at all possible.

Notification of the winner should be much easier. However, there is one thing I left out that should be a part of Phase 6 unless the it’s already known or obvious – and that’s cost. As part of the Phase 6 detailed demos and presentation, the vendors should also submit project cost estimates which would include software costs, maintenance agreements, and implementation estimates. These must become part of the scoring and evaluation performed on the final 2-3 vendors because, as we know, cost is always a factor.

However, because you’ve been going through a very detailed and lengthy process to find the most qualified vendor, cost should not be inserted as a factor until you are down to your final selections. By this time, any of the 2-3 vendors could likely provide a suitable solution, so it’s appropriate to base your final decision, at least in part, on cost. To consider cost earlier in the process while some of the vendors still in the running may not be suitable, could be detrimental to the final outcome.

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.