HOW MANY VENDORS?

You should decide early on how many vendors you want to bring into the process. If you're not going to consider a vendor seriously, then it's not worth including them. If your company makes $10 million a year in revenue, you shouldn't add SAP and Oracle to your selection list. On the flip side, if you are General Motors, you should not be considering QuickBooks.

Focus on the vendors that are relevant to you. Keep the platform in mind. If you are on an open source platform, maybe you'll want to look at an open source ERP solution. If you're on the Microsoft platform, you want to look at products that are going to play nice with your Microsoft infrastructure.

I would suggest a thorough review of somewhere between two and six vendors. In our first sales process, we were one of 14 vendors, but after a brief survey, they cut the group down to six vendors very early on in the process. The ERP selection consultant sent around a one-page questionnaire that focused on the solution and platform fit, and that approach made a lot of sense. You are just torturing the vendors and your team if you decide to put 14 vendors through the full evaluation process.

If you select six vendors to evaluate more fully, you still want to reduce further the number of vendors who will be involved in demonstrations or demos. You will give your team whiplash if they see six demos. It is way too much of a time commitment, and it becomes hard to distinguish between them when you look at that many. Many of the demos will take a whole day or maybe even two days, so you want to be mindful of your team's time. Determine your criteria for whittling down your vendors from six to three, with demos provided on your top two or three systems.

TO RFP OR NOT TO RFP

Let's start with the selection process. Within the selection process there are a few decisions that you'll want to discuss and decide how you want to move forward. One common initial question is, “Do you want to do a request for proposal (RFP)?” Within an RFP, you put out a questionnaire and ask the vendors to fill it out.

Your ultimate goal with an RFP is to determine what products have a high degree of fit for your solution within your industry. You can do an RFP and use that to gather most of the information, or you can prepare information for that discovery session and then have your team evaluate the vendors based on how they demonstrate the software you asked for in the session.

My guidance would depend on the size of the organization. Smaller organizations don't necessarily have to do an RFP; however, you still should be prepared to have all of the critical and nice-to-have features outlined so that you can compare how the vendors did against them along with what the timing is going to be for your evaluation process. If you want to formalize the process, you can prepare a request for information (RFI) so that you can collect information about potential vendors without it being a formal or binding process.

QUALIFICATION MEETING

If you did an RFP, you would look at the results of that before deciding which vendors you'd like to bring in for an initial meeting—the so-called qualification meeting. At that meeting, you will be trying to understand if the vendor is mature, is established, and has experience in your industry. You should know that your vendor will be analyzing you for “BANT” to make sure that you're ready for this project. BANT stands for the following:

• Budget: “Do you have enough budget set aside to do this project?”
• Authority: “Do you have leadership approval to do this project?”
• Need: “Do you have a defined need or pain driving you to do this project?”
• Timeline: “Do you expect to do this project in the next 12 months?”

If you prepared properly for the project, you should have no problem answering those questions. If you haven't prepared appropriately, you may have good vendors walk away from the project thinking that there's too much risk that the project won't go forward or won't work well.

Be upfront about your answers to the BANT questions and be upfront about what you want in a partner. It's going to save you and the vendor a lot of time if you both can be honest about the quality of the fit from the beginning. A recent study from CSO Insight's Annual Sales Enablement Study (copyright ©2019, Miller Heiman Group) indicated customers spend 44 percent of the total time spent evaluating a vendor doing research online and checking with connections. Most of the time, all of the work is done before they initially meet with the vendors. I think it's great to spend that kind of time. If you've done your homework already, focus the qualification meeting on validating if the company looks as good in reality as it does online.

Use that qualification meeting to ask the important questions that you've researched, such as the following:

Is this a fully cloud-based solution?

IaaS or SaaS?

What's the upgrade cycle?

What is your implementation methodology?

What does the sales process look like?

This is a good time to ask questions related to the four keys to making your selection spelled out in Chapter 3 in order to see if this vendor might be a fit for you.

After the Qualification stage, you should review the vendors and pare the list down to three (or two) to move on to the next stage. Once you've settled on those vendors with whom you would like to move forward, you'll next move into the Discovery and Demonstration stage of the buying process.

DEMONSTRATION

Moving on to the actual software demonstration, this is the big day and what you're building up to. You've been researching these vendors and their software for a while, and now is your time to see it in action. The purpose of this demo is a “day in the life” of your business. You want to see how the software is going to work for you. You've seen generalities, but now you want to see the feature functionality you'll need to run your business. The focus is going to be on the areas that are most important to you.

For the demo, you should expect the vendor to prepare the agenda and send it to you in advance so that you can see if it will fit with what you want to see. You will also need to bring in your subject matter experts for each of the areas relevant to them so that they can help evaluate the software. Depending on how much you want to do with your new system, you could have demos take anywhere from an hour to two days. If you're implementing a combo ERP and CRM session that affects your whole company, you'll want to do two days’ worth of demos.

During the demo, plan to ask questions if there's anything that you don't understand or if something isn't clear. This is your opportunity to make sure that you achieve complete understanding.

You'll also want to make sure that the vendors include a technology or technical section where they explain the technology platform. This is the opportunity for your IT team to ask questions related to the platform so that you can help determine the fit.

Make sure that after the demo, you have a complete understanding of those key processes and pain points and how the vendor plans to address them. You're going to want to rate these presentations to see which is the best fit from a feature functionality standpoint and which is the best platform for you.

ANALYZING THE FIT

During the demo, each of your subject matter experts should have a worksheet that they complete to help analyze the fit of the software to your requirements. You want to gather their general feedback on usability and how easily they think their departments could adopt the software. Collect those worksheets and review their perspectives to analyze the overall fit of the software for your business. Also, plan to poll the IT team members on their assessment of the platform after having seen the demo.

Coming out of the demo, your three candidates should be ranked first, second, and third. You still have work to do:

1. Discuss implementation strategy.
2. Review their implementation approach.
3. Estimate and go through the contracting process.

You don't want to tell the #2 and #3 vendors that they are out and just focus on the #1 ranked vendor at this point; you need to keep them engaged to make sure you make the best selection that evaluates the implementer and cost factors.

IMPLEMENTATION REVIEW

The Implementation Review could be included in the demo section, but the implementation discussion is not always done during the demo. Sometimes it happens at the same time, while at other times it does not. During the implementation discussion, you want to understand if this implementer will be the right fit for your team. You'll ask about their implementation methodology:

Do they use a waterfall approach? Agile? Scrum? Or some kind of hybrid?

What does their project team look like, and how will it partner up with your project team?

You'd like to get an idea of the project team and what experience the resources who would be dedicated to your project have.

Make sure that they present you with their high-level project schedule to give you an idea of when the project will be completed. You'll want to see if the steps and the staffing make it possible to complete the project within that amount of time.

I recommend that your key project team members sit in on the discussion of the implementation team and methodology. Your company's leadership team should be represented as well. Your CEO, CIO, and CFO could all lose their jobs if this implementation goes horribly wrong, so they should at least take the time to meet the people who will be doing this work that can change the course of the enterprise. You will work extremely closely with your implementation team over the next three months to five years. More than anything, you need a partner that you can trust.

PROJECT ESTIMATE

During the implementation discussion, talk to your vendor about their overall estimate of costs including the software costs, the ISV costs, and the implementation costs. They should prepare an overall budget for you based on the requirements that you have given to them. This will likely not be a detailed estimate, but you'll have an idea of what you will be expecting to spend for each of these ultimate solutions.

Many consulting organizations are now offering a “paid discovery” or “enterprise process review,” which is a short consulting engagement allowing them to get a deeper understanding of your business while helping you to prepare for the kickoff of your project. I'll talk about this in the next few chapters, but that's an option where you can “try before you buy” with some of these vendors. If you're considering a $3M project with a vendor, it's worth it to spend $50,000 to see if this vendor will be a good fit for you while still getting value from that initial engagement.

MAKING YOUR DECISION

As you've seen in this chapter and the previous one, many factors contribute to the decision of which vendor to select (see Figure 4.1).

One common mistake is to make a decision solely on the degree of fit from a requirements perspective; say this vendor is an 85 percent fit and another is an 82 percent fit. That's just one-fourth of the criteria. Don't make a decision on who has the best fit because the difference between 85 percent and 82 percent is not that much.

Evaluate the four criteria collectively:

• Fit
• Platform
• Implementer
• Cost

Make sure that they are equally weighted as part of your decision.

I suggest that you get all of the parties together for this decision with the final decision-maker. Ask your business owner to rank the fit of the vendors—rank them #1, #2, and #3, and share if they are close. Then ask your IT leader to rank the vendors #1, #2, and #3 across the platform. Next ask your project owner to rank the vendors #1, #2, and #3 on who would be the best fit as an implementer. Then ask your project owner and finance representative to review the ROI calculations across each of the vendors to assess cost. Rank those vendors #1, #2, and #3 and see where it all comes out. If one vendor is #1 across the board, then you have an easy decision. However, it usually doesn't work out that way. If it's close, I'd suggest that you break the tie by choosing the implementer for whom you have a clear preference.

CONTRACTS

Once you've settled on your first choice, ask them to send you their contracts. The vendor will send you at least two contracts—one called a Master Services Agreement (MSA) or Professional Services Agreement (PSA) and one called a Statement of Work (SoW). The MSA is the overarching contract that stipulates who owns the intellectual property to the works created, the limits on liability for each party, the billing terms, and the process for any potential conflict. Signing the MSA doesn't commit you to any dollar spending—it contains the terms under which future SoWs will be governed. The SoW is where the scope and dollars are outlined. This is the one that you want to examine closely to ensure that it's correct. It is essentially the contract that stipulates what you get and how much you are paying.

I also suggest that you have your legal representative (whether internal or external) review these contracts. It may add more time in the process, but it's an opportunity to negotiate the terms of the contract if you see something that could cause risk for your business.

VERBAL COMMITMENT

At the point where you have seen the contracts and believe them to be fair, it's a good idea to make a verbal commitment to the vendor to let them know they are your top choice. Why would you show your hand like that? The reason is that you want them to organize their team to be ready to start on your project as quickly as possible. If you wait until the last drop of ink is dry on the contract to inform the top vendor of the selection, you may be waiting two to six weeks for them to get the project team in place to get the project moving. If time is of the essence, you will want to communicate the decision and move forward.