Monday, June 23, 2014

How to select a vendor

That was a big debate as debates go though not as big and passionate as the Business IT alignment or for that matter on the changing role of the CIO or the shortest trigger which is the CIO reporting to the CFO. Conflicting and alternative views were aired by those present; by the time the group broke up there was no consensus and everyone agreed to disagree in defining or classifying a “best practice”. The innocuous subject of discussion was how should the IT team and/or the CIO select a package or solutions vendor !

For business as usual application support, break-fix maintenance services, system or database administration, network management, data center and then the servers, storage or network devices, vendors are largely selected and managed by the IT team. In many cases the CIO is happy to let go and have his/her team manage these relationships, service levels and depending on the governance model, the negotiations. These all comprise operational IT which is essential to run the business and is only noticed when something breaks.

Enterprise projects or new initiatives represent a different set of dynamics; the heads of function(s) impacted their CXOs and their operating staff which will feel the change, most of them have a view on the right or the best or the cheapest solution. Industry benchmarks based on global industry and local market view and competitor information provide a starting point. Then there are favorites based on past experience or use in previous company that skews the selection process depending on the seniority of the person pushing it.

Most initiatives start with an internal discussion with internal stakeholders on solving a business problem or tapping an opportunity which culminate into documented requirements and outcomes. This is when business likes to handover the reigns to IT to find the most appropriate solution, negotiate, implement and deliver the outcomes. Technology CIOs love this though this hands-off approach “I know the business and you know the technology” has had its share of challenges with iterative development and delayed timelines.

The more formal process expects a Project Initiation Document or some kind of document prepared by Business and IT, which is then circulated and signed off to formally start the search. RFIs and RFPs follow resulting in colossal volumes of paper which no one reads; subjective and objective scoring of responses create a vendor shortlist who are invited to present to the group that sees diminishing participation over time. Final set of vendors are grilled and the winner is announced; such a process requires high level of maturity to sustain itself.

Research companies and third party assistance for independent assessment based on formally defined parameters was touted as the way to drive a decision transparently. This was accepted as the best and irrefutable methodology in the past though not too many had used it due to the cost of conducting such an exercise and the discovery of secret alliances such companies had created with vendors.  Then a junior CIO murmured about a research company changing the parameters to put forward a vendor based on his boss’ choice and directive.

The view of many in the group was that users don’t know enough about the landscape and choices available; they should stick to defining the problem or articulating the opportunity; partake in the requirement gathering and participate in the testing, training and deployment. The counterview expected business collaboration through the project with equal ownership from concept to execution. Both camps spoke of their experiences – successes and challenges – which were in ample quantity to pick from.

As I see it there is no right or wrong way to select a vendor; in many cases the choices are not really choices with dominant vendor position for the process, function or industry. IT maturity, governance and credibility play a strong role in whether a unilateral or collaborative approach is best. Internal strife if any is best managed within; in either case, it is critical to not lose focus of the expected outcomes and project a unified view to potential vendors and partners. For CIOs to stay relevant as business partners they need to be adaptable.

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