Date: June 10, 2009

Author: JT

Tags: , , , ,

2 Comments »

Selecting a Vendor – Things to Consider

Along the path I have followed, there are a few things I’ve discovered when selecting a vendor (or business partner). A few of the ‘popular’ ones I’ve discussed below. To help lend credence to my comments, you may appreciate my roles have included being a P&L head, product manager for a SaaS/BPO unit, global technical account manager, and doing joint-venture assessments involving some multi-$B concerns.

References
Requests for references create love/hate feelings, depending on whether you’re the one receiving the request. If you are making a major decision, such as outsourcing a key business process, you will be keenly interested in talking to others about their experiences with the given vendor. Any experienced vendor with an established service will almost certainly be able to provide you with 2 or 3 contacts you can talk to.

Not everyone ‘can’ give you the references you ask for. Many customers (particularly the very large) view their choice of vendor (or even the fact they outsource at all) as a strategic/competitive issue. In other situations, particularly with an oligopoly, the customer may not allow employees to serve as points of reference. They may fear unanticipated impacts on their reputation by acknowledging their relationships. And, in some industries (e.g. automotive), to endorse a particular vendor may be seen as an unintended mandate that their supply chains adopt that supplier’s tools as well.

In most cases though, references should be available within a day or two. They either have them, or they don’t. If references are not forthcoming you need to ask yourself (and the vendor) why. Is it a new service (e.g. < 1 year old) where references might not be realistically expected? Or, are you considering an established vendor/solution where a lack of referenceable customers is a legitimate concern?

Financial Strength
Do not be afraid, perhaps feeling you’re being ‘indelicate’, to ask your vendor (particularly a BPO provider) for a set of financial statements describing their financial health. While a very small number of customers might actually make such a request, for a vendor that may process hundreds of RFPs in a year, it is not an uncommon request regardless of what you may be told. If you are going to outsource a chunk of your business to another entity, you must be reasonably certain they can do two basic things: (1) Have the wherewithal to build, implement, and maintain the services you’ve contracted for; and, (2) the legs, the longevity, to be there for you as long as you plan to need them.

Training & Materials
This is right up there with the request for references. You need to decide what your training requirements will be. Do you want the vendor to train your key people, so they can conduct internal training? Or, do you want the vendor to do it all? What do their training materials look like? Is training part of the service or an extra cost (and specified in your MSA)? Do they do it by webinar, in-person, or a mix, and who covers expenses? Can they provide materials for you to review? Their answers should give you a warm, fuzzy feeling inside. If not, you need to ask why. You certainly do not wish to roll out a new solution for 5, 50., or 500 users to use on Monday, and end up requiring heroic efforts in order to survive the day.

Make Sure the SLA Is COMPLETED
No kidding. Sounds like common sense, you negotiate a Master Services Agreement (MSA), then (or in parallel) you work out a Service Level Agreement (SLA) both organizations will abide by. In simplest terms: We deliver ‘X’ to you by 7a, daily. You will do ‘Y’ & ‘Z’ same day. And, by the way, if either of us fails to do so, here are the allowances we agree to as a result…

But you would be amazed how often a simple little thing like actually ‘finalizing’ the SLA can be—everyone wants to rush off to get started, without knowing the end game. Do yourself a favor, do the work to know what is important to you; make sure it is included in the SLA; and, the parties on both sides sign on the line. Having ‘Draft 6’ of a document, with annotations turned on, in a file somewhere is not going to help you when debating why services aren’t being delivered as expected.

No one can do it all anymore. To be successful personally, as a business, or as a community, we have to rely on others to help us along the way. Outsourcing, purchasing products and services, and the like will increasingly be the norm. Don’t fight it, prepare for it, be smart about it, and enjoy the benefits.

A couple parting thoughts:

  -) If the references are not provided in a day or two, or you have to chase the vendor, it’s a clear sign they don’t have any in hand to give you.

  -) No one wants to explain to the CEO why their business is about to fail—because the vendor your selected failed. It happens—even if their marketing collateral looks all nice and shiny.

  -) Training is often given even less priority than a company’s Support organization. Quality and completeness of training materials can be a very good indicator of your overall experience with the vendor.

  -) The SLA, in relationship to your MSA, is like your homeowner’s policy in relation to your home and the mortgage. You’re far more likely to need to look at your insurance policy from time-to-time than you ever will your mortgage or title documents.

Comments are closed.

%d bloggers like this: