SPM Vendor Selection – Ten Tips
Just recently, I concluded a SPM package selection for a large silicon valley firm. It was a great learning experience. The SPM landscape is very competitive and package selection requires a considerable amount of preparation and planning.
While it is all fresh in my mind, I would like to share a few thoughts on running an SPM evaluation project.
Preparation and Planning
1. Budget – Prepare a budget estimate, discuss it with project sponsors and secure a nod for funding. Gather input from colleagues and consultants, avoid vendor’s sales reps at this stage!
2. Timeline – Prepare a rough project plan (RFP to Go Live). Obtain a buy in from both, Business Execs and IT folks.
3. Dependencies – Look around for other IT or business initiatives planned in the same time window. Make a note on your tentative timeline that these need to be looked into in greater detail at the appropriate time.
4. Invest time in creating a good RFI/RFP. Explain your comp plans, reporting needs, data sources, biz processes, HR policies and IT requirements.
5. Build an evaluation scorecard with appropriate weights assigned to each criterion. This would help keep any personal feelings or bias out of the evaluation equation.
6. Shortlist no more than 3-4 vendors based upon RFI/RFP responses and initial sales demos for the next step.
7. Setup a core decision making team before scheduling detailed demos. The key is to include the right people who will ask the right questions and whose opinions count. Email the scorecard to all the participants ahead of the demo meetings so they can use it as a reference during the actual meetings.
8. Shortlist no more than two vendors for a detailed POC (proof of concept). Set aside a full day for each POC. Provide real life Comp Plans/Data to vendors and give them at least 4-5 weeks to prepare(so they have enough time to have all their questions answered and no excuses).
9. In addition to the Comp data provided to the vendor, have a separate list of simple and relevant business scenarios and request the vendor to show/run those during the actual POC(like a surprise test).
10. Scope and Price Negotiation
- Negotiations will be more effective whilst there are still two players in the game and they are competing against each other. Sometimes it even helps to keep both of them alive all the way until the contracts are signed.
- Identify what you can do for the vendor, for eg. upfront payment, offsite work, press release, customer references etc. Do not reveal all the cards upfront, use them one at a time.
- SaaS contracts are too technical for Procurement to negotiate. Seek assistance from your IT.
- And yes, the dirty old trick of stretching the negotiations into the last few days of the quarter. Vendors get more accommodating just so they can meet their quarterly goals.
Good luck with your vendor evaluation!!
If you would like to see a scorecard sample, please contact me at firstname.lastname@example.org