This is a reprise of a series that first ran in 2012. It’s as relevant, and important, today as it was then.
Today we continue our series on best-practice vendor selection for your enterprise e-Procurement, e-Sourcing, or Supplier Relationship / Third Party management solution. As per yesterday’s post, this series specifically relates to the selection of technology(-based) vendors for your enterprise software needs, and Supply Management solutions in particular.
In yesterday’s post we reviewed the traditional RFX process outlined at a high-level in the e-RFx for Total Value Management wiki-paper over seven years ago, which is still more-or-less correct, and then reviewed how this process is typically interpreted, which is where the problems begin, especially where multi-nationals are concerned. We noted that there are three big problems with the standard interpretation of the process, which occur in the first part of the RFI process. In particular, we noted that most supply management project managers ask for the wrong information when they:
- ask stakeholders for product/service requirements
- ask stakeholders for preferred vendor recommendations
- ask vendors for capability information and self-assessment
This last request in particular is especially futile as the last thing a vendor who wants your business is going to do is say that they can’t meet your request, even if their chances of success are dismal. You need to start by verifying that the vendor has the potential to serve you, independent of the vendor’s response or self-assessment. To do this, you need to start the process where an average organization ends it. In particular,
Start with the Reference Interviews
Too many organizations do this:
- Collateral-Driven Vendor Identification
- Request for intent to bid
- Request for proposal and quote
- Final List
- Reference Interviews
By the time a typical large organization gets to the reference interviews, it’s too late. Months have been spent on the project, which needs to be wrapped up shortly. As a result, the buyer gets stuck with one of the finalists, even if none of the finalists end up being good solutions for the organization.
If you’re a multi-national organization, you have to start with the reference interviews. If you’re a small company, only do business in one or two countries, and only conduct official business in English (and all your international suppliers are Chinese with english-speaking reps), then it doesn’t matter because just about every vendor can serve you. But if you’re a multi-national that:
- has offices in over twenty countries,
- conducts official business in seven languages (English, French, Spanish, Italian, German, Russian, Portuguese, for e.g.),
- has suppliers that speak six more languages (Mandarin, Cantonese, Vietnamese, Thai, Korean, and Japanese, for e.g.),
- and has to support customers in over forty countries
then not every vendor in the supply management technology solution space is going to be able to support you. In fact, despite the plethora of companies in this space even after the last two rounds of M&A frenzy, the number of pure-play best-of-breed companies that will be able to support your global e-Procurement, e-Sourcing, or Supplier Relationship / Third Party management initiative is likely countable on your fingers, thumbs optional.
And the only way you can have any assurance that a vendor is going to be able to support such an initiative is to start with reference interviews with customers who are similar in size, scope, and needs. (Note that this does not mean they have to be in the same vertical as you. As long as they are about the same size, do business in about the same number of countries, require multi-language support, need a cross-section of similar direct and indirect category support, etc., that’s good enough to start. If the company you are looking at is you’re direct competitor’s best kept secret, they are certainly not going to tell you that.)
While this doesn’t mean that the vendor has to have offices in each country that you are in, support every language that you need supported, and have a success story for each of the forty countries you are selling into, it does mean that the vendor needs to have a global presence, should support at least a dozen languages (that meet a majority of your language requirements) with a track record of being able to add new languages quickly, and should be in dozens of countries with a history of successful roll-out initiatives to new countries.
In other words, unless you have been convinced beyond a reasonable doubt that the vendor can support your organizational needs, they shouldn’t even get a detailed RFI. Because it’s not about who can survive the funnel, it’s about who deserves to even be in the funnel. And that’s a very simple determination, as we’ll discuss in the next post.