Dos and don’ts of vendor selection
Vendor selections can require an extensive amount of resources, time and personnel. And do-overs may not be feasible in the vendor selection space; you have to wait another one to three years (depending on the duration of the contract you signed) if you don’t get it right.
To make it easier, RFP360 asked Brad Mandacina along with our other friends in Lockton’s HR Technology and Outsourcing Practice to put together a list of Dos and Don’ts for the vendor selection process to help you choose the right vendor and reduce some of the stress surrounding the process.
So without further ado, here are their top tips.
- DO: Fully define what is in scope for your selection.
This will help you understand your solution priorities and weed out vendors that can’t meet your needs. We recommend having a collaborative session with your HR, IT and executives, and asking all stakeholders to voice their needs and goals.
DO: Establish a budget prior to starting the vendor selection process.
It’s really important to have budget approval (and overall project approval) from your C-suite prior to starting the process. Pricing is all across the board with vendors, and you don’t want to get too far along and then find out the vendor is way out of your budget.
- DO: Select a project manager or project lead.
This will be very important if/when issues arise, or for assigning responsibilities. Establishing stakeholders and a steering committee upfront is also key to project success.
- DO: Determine your critical decision factors – what is most important to you?
Your critical decision factors are going to ultimately drive your purchasing decision and could be any of the following: price, specific functionality or features (call center, reporting tools), service, the vendor’s reputation, etc.
- DO: Take time to research the vendors.
There are a ton of “HR technology” vendors in the market. Take the time to vet the functionality and service offerings of each vendor. Also, look at what customers have to say about their solutions or services.
- DO: Be detailed and specific in your Request for Proposal (RFP).
Being specific in your RFP will help you get the best pricing estimates and service offerings. When vendors know exactly what you are looking for and how your company works, they are able to determine if it’s a good fit and provide accurate pricing proposals.
DO: Make sure to ask the right questions in your RFP.
Develop questions that help determine if a vendor meets your needs and those critical decision factors we discussed earlier.
- DO: Maintain communication with your key stakeholders and project team.
Keep the lines of communication open and flowing with anyone even remotely involved in the project. (Don’t forget to include your IT team in the communication as well.) Most executives don’t like surprises and want to be well informed of the status of the project.
- DO: See if you can remedy any service or technology issues before committing to select a new vendor.
(Marriage counseling, as we like to call it.) In most cases, it is usually cheaper and easier to fix current issues versus starting new with a different vendor.
- DO: Ask for best and final pricing and service level agreements from your vendor during contract negotiation.
It never hurts to ask, right?
- DON’T: Sign the contract without reviewing it first.
Most contracts are for three years, some for one year minimum. That’s a long time and a lot of money. Have your legal team take a look at the contract and even attempt negotiations if something is questionable.
You have the right to redline and vendors expect you to give some pushback. Vendor contracts are generally written in their favor, so you need to make sure you are looking at it with your best interests in mind.
- DON’T: Make a decision based on price alone.
Poor service is the biggest frustration most employers have with technology, not the price. Functionality and service are other big areas to consider before making your decision.
- DON’T: Panic!
Take a deep breath. You can do it!
Since Lockton’s HR Technology and Outsourcing Practice works with both clients and vendors throughout the vendor selection process, we also put together a list of Do’s and Don’ts for vendors.
- DO: Fully understand your clients and their specific needs.
Not all employers are the same, so a cookie cutter approach simply won’t work. Take the time to understand exactly what potential clients are looking for in their next system, and give them a tailored plan for how your solution can meet their needs and fix their unique problems.
- DON’T: Promise things you can’t deliver.
We understand you’re trying to sell your product, but agreeing to meet certain deadlines or promising features and service you can’t provide will only anger Buyers. Overselling may get you the deal, but in the end, it backfires.
- DON’T: Be pushy!
One of our biggest pet peeves (and honestly our clients’ too) is when vendors get too aggressive. We understand the sales role and how the sales process works, but we still want to be treated with respect and not like another paycheck. So please, don’t get too pushy! It could end up costing you the business.