With a chunk of next year’s budget and the company’s revenue projections on the line, how should a CIO prepare for make-or-break decisions between competing vendors? First and foremost, you need to identify the true key benefits and risks of the project before sales reps and internal business interests muddy the waters with pet causes and secondary issues.
"It's important to figure out what your decision drivers are and weigh these things before you have to make that decision," said TechRepublic's director of planning and analysis, Carmen Barrett. "You just want to insulate yourself before you hear the sales pitch so you can view it more objectively."
To help you synch vendor strengths and weaknesses with your project’s priorities, we've created a simple spreadsheet that you can use to weigh your decision drivers. You can get your own copy of this spreadsheet by downloading our Vendor Rating Form.
Using drop-down boxes, you can select the importance of particular criteria, such as the vendor’s reputation and financial stability, and then rate each vendor based on those issues. The spreadsheet then calculates a rating for each vendor based on a point system. Of course, you can always change the weight you assign to decision drivers or vendors in the spreadsheet. "You can change those priorities, but you will have to defend these changes—if to no one but yourself—and that forces a more rational approach," Barrett said.
The exercise may seem a bit simplistic, but that’s by design; our ratings should serve only as a helpful tool in making what are often complex decisions. Personal preferences can't be ruled out completely, either. "If the scores are close, instinct and experience may outweigh the [numeric] results," Barrett said.
Using the form
When comparing vendors, you may need to change the criteria we've provided to mirror your organization's decision drivers. You can also insert the company names of the vendors you're rating in place of Vendor A, etc. (see Figure A).
|Our spreadsheet rates vendors based not only on their independent strengths but also on how important each of those attributes is to your project.|
If you wish to add more criteria, copy and paste the entire row with all the formulae included.
Once you have listed all of your criteria, click next to a desired criterion in the Importance column. A drop-down list will let you assign an importance to the criterion, from Very High to Very Low. A number representing the level of importance you have chosen will appear in the next column. Use the same method to rate vendors on each criterion.
Two columns of numbers will appear to the right of the criterion rating under each vendor's name. The first of the columns will include the rating value, and the second column will display that rating multiplied by the number associated with the importance of that criterion.
The Vendor Rating at the bottom of each vendor column is the sum of the adjusted values of the criteria used to rate that vendor. Thus, the higher the rating, the better the vendor.
The two tables at the bottom of the spreadsheet populate the Rating and Importance drop-down lists. In our example, we’ve weighted these value scales to skew down as the rankings reach extremes in either direction—it’s the basic principle of diminishing return. In other words, a vendor's rating gets a substantial boost if they are rated Good rather than OK on a criterion; however, the additional rating boost for moving from Good to Excellent is only half as much. You can modify these tables to suit your own value judgments.
Download our Vendor Rating Form now!
Get our Vendor Rating Form and then tell us what you think of it. Can it help you choose between vendors for your next project? Tell us in the discussion below.