Best Practice Technology Vendor Selection for True Multi-Nationals Reprise Part IV: Open the Doors for a Truly Successful RFX

This is a reprise of a series that first ran in 2012. It’s as relevant, and important, today as it was then.

In the first three parts (I, II, and III) of this series we discussed the proper RFX process to follow when attempting to select a technology(-based) solution provider (for e-Procurement, e-Sourcing, and Supply Management solutions in particular) as a true multi-national. We noted that while most companies more-or-less understand the high level process, most get the implementation wrong, focussing too heavy on feature-function checklists (that are usually put together by vendors, even if they are obtained from third parties) and too little on a vendor’s global implementation and support capabilities.

If your organization follows the advice presented, starts with the customer references, and only spends time and energy conducting a detailed review of those vendors with a track record that suggests that the vendor could meet your global implementation and support needs, then your organization is off to a great start. But this isn’t the only best practice that your organization should be following in the selection of a vendor for your global technology needs. In this post we’ll cover five more.

The Core Solution Litmus Test

Once the vendor has passed the customer litmus test, the next litmus test is the core solution requirement litmus test. After dividing all of the stakeholder problems into must solves, should solves, and nice-to-solves, make sure that the vendor has solutions (technology, services, or a combination thereof) that address each of the must-solve problems and most of the nice-to-solve problems. The vendor is not right for you unless it is a global, cultural fit that brings the right solutions. (There’s no checking of feature/function boxes at this step.)

Third-Party Claim Verification

Most vendors will make big claims in terms of their platform capabilities. Just like a vendor’s ability to serve your organization globally should be challenged and verified with customer references, so should its ability to fill your technology gaps. Not only should you talk to their partners, but talk to analysts, bloggers, and other third-parties they have interacted with and whom have seen (part of) their solution.

Open Book Negotiations

In addition to third-party claim verification, don’t be afraid to force a vendor to prove every claim, statement, and assumption. This should not stop at current, successful, customer references. The vendor should let you speak to analysts it has relationships with, consultants who have implemented their solutions, auditors to verify their financial stability, and even ex-customers if asked.

End-To-End Total Cost of Ownership Elucidation

What is the true cost of the solution to your organization AND your supply chain? This goes beyond the end-to-end platform cost, as discussed in this classic post on Cost Model Calculations in SI’s Enterprise Software Buying Guide series, but also includes any costs that will be borne by your supply base. It’s often the case with e-Sourcing/e-Procurement/Supply Management solutions with Supplier Information Management, Supplier Portal, or Supplier Network functionality that a vendor will charge your suppliers an access fee, which can sometimes be hefty. An access fee that is just going to hit your organization with interest in a year when your suppliers raise their prices to cover the fees you caused them to incur. In Procurement, a penny saved today at your supplier’s expense often translates into a dime spent tomorrow. (And if you don’t believe me, then you need to work on understanding the cost of capital throughout your supply chain. Remember that sound, conventional financial management is NOT good for supply chains.)

Open Finals*

Typically, the final negotiations in this space are more secret than what goes on beyond closed doors at Area 51, scientology headquarters, and the back room of the club where Wall Street mega deals really happen. This is dumb. Blind auctions may be okay when buying commodities, but it’s the last thing an organization should do when buying a critical piece of functionality where a failed implementation will cost (tens of) millions of dollars or more in overspend and opportunity costs. Not only should each vendor be aware of whom it is up against, but vendors should be asked to promote their strengths and counter their opponents weaknesses. They should be instructed to tell the truth, even when asked tough questions (about customer retention and defection to a competitor), and penalized for false answers. Remember, good vendors are honest, especially about the occasional (big) mistake that they made, learned from, and put measures in place to prevent ever repeating it. And the best vendors will get up and walk away as soon as they realize they are not the solution for you (because they thought you needed primarily e-Sourcing functionality and they are mainly e-Procurement for example) and that it would take to long or cost to much to tailor it to your needs. (And these are the first vendors you should go back to as soon as you have needs that they can fulfill.)

If your organization implements the best practices covered in this series, then chances are, it will have no choice but to prepare for success!

* Nothing to do with tennis, folks!