Factors to Consider before Introducing a New Vendor
Author: Swapna Savant, Engineering Manager
It is always challenging to add new vendors to an organization. In the software world, vendors are those who market and sell software. Many technology companies rely on these vendors ( both software and hardware ) to provide critical infrastructure and services for them.
It sounds simple: choose a vendor that will provide the necessary service in a cost effective manner to your organization. In technology, it is very important to provide scalable, cost-effective, reliable, secure, and easy-to-use platforms to support and serve our customers and partners. A poor choice of vendors or tools may result in frustration and inadequate or insufficient support across the software’s lifecycle.
Often companies take a reactive approach where they begin their research during a crisis. This approach often leads to urgency in making decisions exposing the vulnerability and giving the vendors an unsaid competitive advantage. The urgency to choose a vendor might then take priority over the due diligence they ought to do before signing any deal.
It is always wise to have a strategic approach that considers many factors and emphasizes building a relationship with vendors even before signing an agreement. Instead of monitoring your present architecture, the key is to foresee the potential growth. This will give you the ability to involve necessary vendors, strengthen the relationship and plan ahead. This perspective will help strategize purchase along with operations.
Preparation for vendor evaluation
Having a long-lasting relationship with dedicated vendors is the key to success. To get most out of the time that is allocated for this initiative, it is important to be prepared.
Make sure you have a requirement document ready to give your vendors a fair idea of what you expect from them for the entire engagement as well as for the proof of concept.
Typically the requirement document will contain following:
- a brief overview of the functional area where the vendor tool fits in
- the specific functionality expected from the vendor tool in detail
- any dashboards, logs, metrics expected from vendor tool
- integration of vendor tools in existing alerting and monitoring schemes.
- requirements and SLAs regarding ongoing support
The internal evaluation team should know the shortcomings of the current ecosystem, what the vendor offers, and the scope of your proof of concept. Choose a team that is a combination of decision makers, executors and consumers of the vendor tool.
Lastly, have measurable success and failure criteria for the proof of concept.
Here are few factors to consider when evaluating software vendors
- Integration with your existing ecosystem
Make sure you inform vendors about processes, releases, and the entire ecosystem of your organization. It is essential for the new software tool to fit seamlessly and complement the existing infrastructure. A few things to consider:
- Loose coupling
- Framework support
- Ease of maintenance
- Easy to read logs
- Single Sign On
It is critical to gain comprehensive visibility into privacy risk by focusing on core privacy principles and policies your company might follow. This may include governance, control, identification & the protection of privacy data (HIPAA/HITRUST/ PCI)
Service and support consists primarily of answering questions about how to use the system, troubleshooting any errors detected, making software enhancements to improve the product, and providing timely updates when changes are made. It is important that the vendors have SLA’s around their customer support like the time they take to respond.
Understand the service agreement and watch out for vendors who have “hidden” support costs. Vendors should be a partner to the companies they serve and loyal to the software they provide. Training, dynamic updates and responding to feedback should be part of the service they provide.
Alignment with company goals
It is essential for the vendor tool to align with your company goals. It is helpful to answer these question to clarify the priorities :
- Does this new tool add significant value to your customer satisfaction?
- Will this tool help in optimal and efficient use of your customers’ time?
- Does this tool add reliability to your entire ecosystem by complimenting it?
- Will this tool help in boosting the confidence that your customers have?
The goal should always be to get the best value-add for the price. Always focus on the requirements that you have when negotiating. Understanding payment schedules, SLA terms, penalty and walkout terms is critical to align with your company policies. Make sure the vendor explains the product cost, maintenance fees, and administrative fees in detail. This will help you understand the hidden costs wherever applicable. Before agreeing, it might be advisable to get the contract vetted from your company’s legal team to avoid any last minute blockers.
Tactical data helps understand the health of your system. It also gives confidence in your in-all ability to perform and manage your entire ecosystem. Dashboards that provide real-time updates on the tool’s performance help give a strategic overview to all the stakeholders of the organization.
References and Case studies
It is important to check vendor partners. Before making any decision contact one of their existing partners and ask them the following questions:
- How are they using the vendor or tool? This tells us how relevant their use-case is with yours.
- Why did they select this vendor? This will give you an insight on their evaluation about this as well as other vendors they considered.
- Did the vendor meet the expectation? Did they realise any gotchas after they got into contract?
- It is very important to know whether the partners consider themselves as “partners” to this vendor? This actually tells you whether they like their name to be associated with this vendor or not, especially if their name has a brand associated with it.
Begin by gathering a holistic view of what the vendor brings to the table. This includes identifying current gaps, getting demos of new tools, requesting proof of concept, and comparing with the rest of the competitors. It is always advisable to perform:
- Monthly operational review to measure against your SLA’s
- Quarterly vendor review to understand the strategic value of this investment
- Annual risk review for business continuity and security compliance.
Make sure you leverage these factors to provide a quarterly update on the vendor, to the vendor and to the organization. Consider it as a vendor report card. An analysis of the most relevant and strategic measures is a critical component of the decision-making process. This helps organizations take decisions regarding which vendor to partner with, and also puts them in a good place to provide recommendations for improvements to existing vendors.
Common Mistakes when choosing vendors
Remember you are adding someone into your family!
Be very cautious and diligent about your task. Not providing a requirements document is a battle half lost. It is important to document what is being asked for.
Going after brand names is one way of looking into a situation. It is definitely well proven in the market and has significant reviews. But is it providing a solution for your needs?
Introducing something to your ecosystem should be an organization decision. Not having enough participation might lead to frustration later due to some missed opportunities and requirements.
Reactive approach often leads to thinking about current situations and making decisions accordingly. Not taking into account the company roadmap and strategy might later bring you back on the drawing board.
It is never easy to engage with vendor(s) and rely on them for critical business functionality. It involves significant financial investment and time commitment ( at least in the initial phases ).
However, if you spend the time doing your research and asking the right questions, the chances of having an impactful relationship with the vendor are significantly higher. More often than not, a well thought out decision about engaging with a vendor proves vastly beneficial to the overall success of the company.