One of the main issues for businesses is to find the right vendor partner. Vendor Selection involves looking deeper than surface-level and taking the step to finding the right vendor is proven to be difficult for many businesses. In fact, the Global Outsourcing and Insourcing survey, conducted by Deloitte found that 48% of people had difficulties with finding vendors who have good service quality.
“Sheer number of available technology vendors, solutions, tools for any and every function and business task is both daunting and paralyzing”
Boris Ziegler, Digital Decisions:Choosing The Right Technology Tools
Technology is ever changing and making updates to technology tools can help benefit a business. Regardless of the position of a business, getting the correct digital tools is essential in ensuring the success of a company. With thousands of solutions and tools being created, feeling lost is inevitable.
What are technology tools and why are they important?
Something all organizations need is money and time. There are a plethora of technology tools that can help increase efficiency and in turn save money for your business. A digital tool also helps support companies in the post-pandemic world where human interactions have significantly decreased. Many also feature customizations allowing companies to purchase the tools they need and save money by removing tools that might not necessarily benefit an organization.
An example of a problem a digital tool can solve is website monitoring. For many small businesses, websites are the front door to their business and often takes up a significant amount of money and time. Website monitoring tools, such as Google Analytics, can give you insights and data that can help improve your website and increase the number of returning customers.
What is a Vendor?
A vendor is an organization that makes goods or sells its services to other businesses. In the supply chain, there are four different types of vendors: manufacturer, retailer, service provider and wholesaler. A manufacturer makes a product out of raw goods and directly sells that, in large quantities, to a customer, usually a larger establishment. A retailer buys products from other vendors and resells them to consumers. A service provider offers a service. Finally, a wholesaler vendor is a middleman and handles the procurement of products.
A vendor is essential to a company as they are skilled and knowledgeable in a specific area or skill set and have greater cost-efficiency when performing their tasks.
Creating RFPs (Request for Proposal)
A request for proposal is a document that is created by a business that announces and describes a project resulting in a set of requirements outlined for the particular project. This process allows you to solicit help from vendors and can help them identify which one to choose for the company’s particular need. A well done RFP can help you find vendors that match your needs and also help better assess the background of vendor options.
How does the RFP process work?
- Set the Criteria : start by writing out the criterias of this project such as vendor’s cost estimate, skill set etc. This helps narrow the focus of proposals and prevent vendors that don’t meet the criteria.
- Create RFP: Crafting the RFP can be difficult but is essential to a business and its projects background, focus and experience. It is suggested to start by identifying the needs of the project including the scope, deadline and requirements.
- Edit RFP : after setting out all the essential groundwork editing is the next step. By editing and ensuring all information is clear, it can prevent confusion on the vendor’s end.
→ link to further information regarding rfp’s
5 Tips/Criteria’s on selecting a vendor or a tool for your organization
Now that we have understood the process of selecting a vendor, what a vendor is and what a technological tool is we can move onto some tips about selecting a vendor or tool for your organization. Vendor and tool selection is a stressful process and picking the correct vendor is essential to the success of a company’s future.
1. Price
Although price is not the only factor to consider, it is an essential aspect and can heavily sway a decision regarding selecting a vendor. When looking at price it is essential to consider value for price. Extremely low offers should raise skepticism due to lack of value or skill. In these cases reviewing each case carefully and keeping clear communication with vendors will ensure in making the right financial decision. A mutually beneficial price allows both the vendor and business to remain profitable.
Prices are an extremely important factor it should never be the one driving force. To pick the right vendor there must be a balance between price, quality, service and reliability. Constant negotiation with costs can result in negative relations with vendors which could negatively affect your business.
2. Reference Checking
In the interviewing process, it is common for companies to conduct a background check on any potential candidates for a job offer. It is crucial that this process is replicated in the vendor selection process. Asking the right questions plays a vital role in gaining a better understanding of whether a vendor is the right pick for you. Before further discussing references, you can obtain references from a vendor by asking them to have a couple of references that you personally contact.
Below are some questions you could ask the references provided by your vendors
- Did you get all the functionality you expected, or were unplanned projects proposed to complete work you thought was already included?
- Did they complete the project within the original timeline and cost? If not, why not?
- Were you happy with performance during the project? Why or why not?
- Do you still work with this vendor? Did you find alternative vendors that are able to do what you need?
Referencing and asking good questions allows to build some credibility on the vendor’s words. It allows you to save yourself the gamble of trusting words over the credibility of references.
3. Security of the solution
Although engaging in vendor selection is not a new concept, security and risks involved have become increasingly more complex. It is often referred to as vendor risk management and focuses on managing and monitoring the risks that can occur due to selecting vendors, especially if it is an IT vendor. Risks of cyber attacks or data breaches must be accounted for and can result in massive problems for the business.
“If your vendor lacks strong security controls can put your organization can be put in financial and reputational risk”
Abi Tyas Tunggal, UpGuard: What is Vendor Risk Management
Having a good vendor risk management program will not only ensure that risk is reduced, but will also ensure quality isn’t compromised and all operational efficiencies are secure.
To help combat this it is recommended to create a checklist called the “Vendor Risk Management Checklist” that includes verification and background checks to ensure liable insurance and determine if the vendor has the technological means to help protect sensitive information your organization deals with.
Some practices that can help with this process
- Taking inventory of vendors organization is involved with
- Asses and categorize vendors by risk and section low from high risks
- Establish a plan for the chance that a breach(suspected or actual) occurs
4. Adoption Rate
Although this applies more for IT vendors and selection of technological tools, it is a vital aspect that must be considered. The organization has to look at a tool and honestly analyze and judge the likelihood of the software/tool being adopted. Here having a clear idea of what project/tasks needs to be accomplished and having the details of it outlined is critical. Planning and preparation allows one to build a clear image resulting in the likelihood of being sidetracked.
Make sure to keep with the original goals and stick with what is needed. Although new changes (that aren’t necessary) may seem interesting, it is in one’s best interest to stay with the originally decided goals and not get swayed by other things that might significantly hike up costs.
Any doubt regarding adoption rate should be thoroughly discussed and reviewed to ensure an organization is not stuck in a contract with a vendor that will not genuinely make a positive difference.
5. Culture Match
Any vendor, regardless of their job, should match the culture and morals of the organization. A vendor’s company culture can heavily influence those of your organization especially regarding focus and effectiveness. Having a positive cultural match will result in easier conflict resolution, reduce conflicts, and create an environment that encourages great contribution and quality service to the project.
Now that we have established the importance of cultural match, it is time we discuss how to ensure that. Verifying this can be done through a multitude of ways
- Pay close attention to previous matches (focus on their conflict resolution and overall employee productivity for this particular aspect)
- Study communication between you and the vendor
- How vendor addresses budget and discussions regarding importance of sticking to a budget
- How vendor addresses timelines and productivity
By the end of this verification, the organization should be able to identify the process the vendor uses to accomplish their tasks. After this, the organization can compare that process with their own and determine whether or not a cultural match has been achieved!
Finding technologically-sound solutions
Selecting a vendor is a huge investment and not getting a return on investment can cause the organization to lose a lot of money. Through this article we have discussed tips and tricks to help determine which vendor best suits your organization’s needs.
However, this process can be simplified through the use of companies that provide vendor selection consulting services. They can focus on providing unbiased advice and information in technology and vendor selection to ensure the optimal chances of getting a noticeable return on your investment.
What is a CTO and how can a CTO help you with this Process?
Vendor selection is always a complicated process and a fractional CTO (Chief Technology Officer) can help with this confusing process. A CTO, generally seen in companies with large budgets, focuses on making technology decisions that can help an organization grow significantly. A fractional CTO provides the same services without committing to a full time employee and providing help in putting together a technology roadmap.
Data Up
At Data Up, we work with you to understand the current needs of your business as well as your goals for the future. Together we’ll design – or redesign – a technology strategy customized to your specific needs. We’ll help you realize the full potential of your business, and provide ongoing advice so that all parts of the business are aligned.
Data Up can help provide you with unbiased information in selecting the right tool and vendor for you. Data Up can also help with Google Analytics consulting. Many business leaders don’t have the time to analyze their Google Analytics (GA) data, let alone create useful dashboards and reports. GA is a great tool but if the information isn’t used correctly, business can’t excel. Below is how Data Up can help your organization via Google Analytics Consulting.
1. Audit
We inspect the current state of your Google Analytics setup & analyze your online business.
You get a clear understanding on what’s working well with your online business and we map out a step-by-step strategy for improving what’s not working.
2. Implement
We ensure Google Analytics is set up properly, using our defined strategy and best practices, such as proper tagging, bounce rate correction, goal setting, and more.
You will have information that is relevant and accurate.
3. Optimize
We analyze your users’ behavior on your website and improve marketing campaigns & keywords.
You can serve your online customers better, and your marketing dollars will go farther through optimal keyword selection and better persona & geography targeting.
4. Educate
We help you and your teams understand how our curated Google Analytics dashboards can be used on a daily basis.
You can see how your online business is running in real time, cut out the bad and do more of the good.
References
Ziegler , Boris. “Digital Decisions : Choosing the Right Technology Tools.” SO DIGITAL: Helping Global Brands Rationalize Go-to-Market Operations, SO Digital , 5 Nov. 2019, https://so.digital/article/Digital-Decisions-Choosing-The-Right-Technology-Tools.
Egeland, Brad. “Choosing a Vendor: Six Steps to Find the Best Supplier.” ZenBusiness Inc., ZenBuisness, 20 July 2022, https://www.zenbusiness.com/blog/choose-right-vendor/.
Tunggal, Abi Tyas. “What Is Vendor Risk Management: The Definitive Guide to VRM: Upguard.” RSS, UpGuard , 17 June 2022, https://www.upguard.com/blog/vendor-risk-management.
Nicely written and well demonstrated. Must read.