Last month, we walked through needs definition, the start of a business performance management (BPM) project. Hopefully, you arrive at this point with an accurate definition of needs, a budget and your stakeholders on board. With all that in place, you can tackle the request for proposal (RFP) and vendor evaluation process. This is easier said than done. In this process, you'll confront a growing number of choices, with marketing materials that sound alike, demos that look alike and crucial differences concealed in the detail.
The biggest risks in this phase include buying from the vendor with the best marketing, buying more than you need or buying from a vendor that won't mesh well with your company today or in the future. Secondary risks include getting inadequate "under-the-hood" detail, architectural incompatibilities and choosing the wrong implementation partners.
However, you can mitigate these risks. Much of what you'll read here is already familiar to information technology (IT) managers. While the process is standard, the specific details are not.
If you hire outside expertise in just one phase of the BPM project, let it be vendor and solution selection. What's at stake, apart from time, money and perhaps your job? In the worst-case scenario, the wrong decision delivers partial failure. At least in a total failure situation, you might replace a system that doesn't work. Systems that are half-acceptable tend, for financial and political reasons, to hang around for years and provide suboptimal results.
Vendor selection should go well if you focus on three perspectives. The first, knowledge of your company and its systems, you already have. The other two, probably not available in house, are an understanding of how other companies have fared with BPM projects and up-to- date knowledge of the software vendors and what they offer. We recommend getting outside expert guidance that is vendor-impartial.
The Starting Pool of Vendors
There are two broad classes of solutions: tools for building customized solutions and packaged applications. Choose one of these approaches. If your needs are within the standard feature set of software packages, an off-the-shelf application typically gets you up and running more rapidly. If your requirements are outside the standard mold and capable programmers and analysts will be available to meet the needs of your business end users, then a custom solution is indicated.
Once you've chosen between applications and tools, look at the broad universe of such vendors and pick six to ten that look feasible. Send your RFP to them. You'll find a fairly complete list of BPM vendors on the BPM Partners Web site. Don't overlook vendors who are unfamiliar. They could have a better solution or deliver equal functionality for less money.
Companies frequently ask us whether they should buy a BPM solution from their enterprise resource planning (ERP) vendor. That is usually a viable choice, but not always the best one. A BPM-centric vendor brings different benefits and challenges. Don't automatically promote your ERP vendor to your short list. Let the vendor earn a place through their response to your RFP.
This document should be detailed, as it must enable you to distinguish between vendors making claims that sound alike. Of course, if you go overboard on detail, some vendors won't respond, or they'll hand your RFP off to a junior staffer who may give canned marketing answers.
However, you need to pull out key facts. For example, integration with Excel is often required in BPM projects, and nearly every vendor has it, in some fashion. We recommend asking very detailed questions in this area, including whether the system uses Excel for direct data entry and dynamic reporting, whether access is by cell or by row/column and how the system uses existing Excel models.
When you receive the responses from vendors, use a scoring matrix that gives appropriate weights to each area based on what the needs definition has shown to be important. For example, if a vendor is weak on multi-currency consolidation, does that matter a great deal to you? In the end, the RFP leads you to a short list of a few vendors who have passed the bar on all of your key points.
Vendor selection usually starts easy and then becomes more difficult as it progresses. We're often brought in to help around the time when finance and IT realize that vendors offer what appear to be the same features, but with some significant variations in performance, integration, ease of use and ease of maintenance. The ideal time to discover the details of these differences is before installation!
Other issues, such as the vendor's future development plans, may be unveiled only after a certain intimacy has been achieved through a sale or that information may simply be outside the realm of a sales representative's knowledge. This is where your outside expert has to earn his or her paycheck. Assuming they've had access to the vendor's senior management, they can help you understand whether the vendor is going to devote its resources to the software modules you care about most.
The Short List
Once you have narrowed your short list to two or three finalists, take a dual-pronged approach. Interview the finalists' existing customers using reference questionnaires and prepare for the demos.
Prototyping and Custom Demos
All vendors can present a nice demo for you and highlight the standard features that most customers ask about, but sometimes that beauty is only skin-deep. You need to push vendors into areas that are unlikely to be part of a canned demo such as ease of setup, use and maintenance. Have the demo customized to your particular needs, focusing on the functionality you will use most often. Ask to see how one of your standard reports would look or how the system would handle some of your toughest calculations.
Make sure that each vendor understands the requirements so that they will have an equal ability to address your needs in the customized demonstrations. Prototyping, which is more difficult for all concerned, may be necessary if your data volume is particularly large or your requirements are in large part unique. If you prototype performance, make sure it is done on your hardware, not the vendor's.
Schedule the demos in close succession. You may have to gather all the right people (IT, end users, finance, and other key stakeholders) in a room for marathon sessions for a few days in a row. Have your end users step in to drive the system in the demo, and see what that reveals about ease of use. Also, probe to learn how easily the system can be maintained and customized. When vendors show a key calculation and the right result, have them also show how that calculation is written and how it is changed. For technical details, you might designate the final hour as an IT- only hour.
Because demo scoring is very important, have your scoring system ready and be sure it will show the clustering versus dispersion of responses. Similar average scores can indicate either consensus or polarized opinions.
Throughout the entire process, keep in mind that you are selecting not just a product, but a company as well. You need to determine if it is easy to do business with the company, if their service people will integrate well into your team and if they have the financial stability and vision to stay in business to keep your product moving forward and well supported.
Don't Announce the Winner
When you have ranked the finalists, begin negotiations with the leader. Keep the others warm until you know the results of the negotiating process.
Once you purchase the software, you are ready for the next phase in the BPM project life cycle: implementation and engagement management. Our next column will look at this phase in detail.
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