CXO

Three keys to selecting the right vendor for your next project

The process of selecting vendors is necessarily a long one if done correctly. Here are some challenges you will face and how to meet them.

In the organizations that are growing, the IT department is always stretched to — and sometimes beyond — capacity. Learning how to find the right help from the sea of vendors wanting to take your organization's money is a necessity. The challenge is in sorting out what things are and should be important and which ones are not. Here's some help.

Why finding the right vendor is important

The process of selecting vendors is necessarily a long one if done correctly. Finding the right vendor who will partner with you in your growth is something that simply has to take time so you can get to know them. The alternative, quickly choosing vendors and replacing them when they don't work out, has its own set of challenges.

The first challenge is that you're not promoting continuity, which means more frequent direction changes. These direction changes may be small but they can add up. You may find one vendor leading you down a IBM WebSphere/Java development strategy and a year later you may be led down a Windows/ASP.NET strategy. Constant churn of vendors also means more retraining as each vendor must learn your environment. It's only a handful of hours for each vendor but they add up.

The second challenge comes when you have exhausted the potential vendors. Organizations sometimes "burn through" all of the consulting companies in a town and are faced with the fact that it is difficult or impossible to get support for their needs because no consulting company in town has had a good experience with them. As a result, they refuse to work with the organization or they charge them premium rates.

The third challenge is the added risk that you take on by having so many people you don't know well working on your systems. They can potentially create security vulnerabilities, crash servers, steal corporate data, or destroy data. The risk of bringing people in is a healthy, necessary risk but one that should be managed. Changing vendors often can only exacerbate this risk.

Here are a few tips to helping to ensure that you select the right vendor the first time.

Seek critical mass

When selecting a vendor, look for one that has "critical mass" in the area you're seeking. Critical mass is the point at which there is enough of something that it becomes self-sustaining. If you're hiring a SharePoint consultant, make sure the guy that you're getting isn't their only SharePoint consultant.

Many times vendors will try to buy their way into the market. They try to gain market share or the ability to perform a kind of service to see if the market makes sense for them. While the initial price may be enticing, what are you going to do if they decide not to stay in the market? The costs of changing to a new vendor — and finding the right new vendor — may quickly outweigh any small cost advantage that you gained by working with someone buying their way in.

Get what you expect (pay for)

There are two ways that you can find yourself in a bind when it comes to getting what you expect. First, you'll find that the vendor replaces the people that they listed in the proposal with others. Sometimes this is innocent enough. The person they proposed was swallowed up into another deal before you could get all of your contractual steps out of the way. Other times they include resumes of folks who are never available for your project at all. They are folks who are already fully engaged other places. They do this to get your agreement that they have the right people for your project — which they may have. The question becomes whether you can get those right people to work on your projects or not.

Getting the right people on your project is a matter of insisting that you get agreed upon people through the negotiation stage and into the contract. If they're unexpectedly swallowed up on another project, you will have the right to approve the resumes of the people they intend to replace them with.

In addition to the challenges of last-minute changes to staffing plans it's always important to do informal background checks. Calling a company's references should go well. After all, these are the people that the potential vendor has recommended. However, sometimes it's better to find people who've worked with the company before who aren't on the reference list — particularly those whom you know or have a relationship with. They're the most likely to give you the balanced story of the strengths and weakness of the organization. In some cases you may even be able to do this with the people who are slated to be on the project. This will help you clearly understand what to expect and allows you to plan what that will mean to your project.

Select strategic

Because of the importance of selecting the right vendor and the potential costs and risks of the wrong decision, it's critical to find long-term fits. The vendor you select must be interested enough in your organization and the things you're doing to be willing to work with you as you learn and grow. That means that you should be large enough of a customer to them to command their attention. If you spread out your work with several vendors and don't really develop any repeatable pattern of work, they won't really become a partner in helping you reach your goals, because you're not helping them reach theirs. Conversely, it's risky for both of you to represent too much (say more than 50%) of the vendors income. It makes them too vulnerable to temporary project delays on your end.

Everyone talks about vendors as partners. However, there's no common understanding of what that means. Partnerships with vendors require that both you and they work together to create situations that are beneficial for both organizations. When many vendors say partnership they sometimes mean they'll be there to take your money when you are ready to give it to them. When many organizations say they want to partner with a consulting company it sometimes means that they want the consulting company to not make money so that they can look better in the short term.

Finding a partner is about finding a vendor who will be open with you and you can be open with. You can honestly discuss your needs and the vendor can try to find the best solutions for your needs.

The way that you can determine whether your vendor relationship is developing into a partnership is to ask yourself if you're holding anything back from the vendor? Are you holding back how much is in your budget? Are you holding back the other needs that you don't think they can fill? If you're holding these things back, then it's good evidence that you don't feel like you have a strong partnership yet.

Editor's Picks

Free Newsletters, In your Inbox