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Taking the Measure of Vendors

Taking the Measure of Vendors

ROI-savvy vendors can boost the cost-effectiveness of your entire evaluation process.

Many vendors claim they can help CIOs make the case for ROI. Here's how to tell the good guys from the fakers.

A vendor appears at your doorstep with impressive ROI claims. A golden justification opportunity or a trap for the too-trusting? Embracing vendors' cost-benefit aid is tempting in today's "prove it or lose it" environment. Unfortunately, dangers abound. The risks in using vendor input are many - so CIOs must proceed carefully. My experience indicates that for every buyer who successfully uses vendor ROI input, there are four purchasers who risk sabotaging both their project justifications and their reputations. Tolerating suppliers that are (intentionally or not) oblivious, incompetent or misleading in their ROI words and deeds is ill-advised. Here are five tips for vetting vendor ROI claims and leveraging them for your own gain.

1. Know Thy Enemy

Two types of vendors are to be avoided: those with misleading ROI claims and those that say nothing about ROI at all. Warning signs of such value-challenged vendors include feature-laden demonstrations, jargon-invested proposals, unsubstantiated claims and too much focus on the technology, rather than on business value. Be especially alert if the vendor executives themselves appear value-adverse. When they can't talk convincingly about ROI, most likely neither can their troops. Even if their field folks can manage some occasional ROI-speak, chances are it won't be reliable. Fact is: Business-value focus reflects the culture of an organization. And a culture of pro, anti or neutral ROI talk begins at the top.

2. Ban Practices That Attract Bad Guys

Too often buyers employ evaluation techniques that unintentionally open the door to ROI-weak vendors. Here are four methods to avoid:

  • Feature-focused, rather than value-focused, requests for information and RFPs. If you insist on 105 whiz-bang features, with minor attention to business benefits, don't be surprised when ROI-challenged vendors respond with bits- and bytes-laden proposals.
  • Excessive conversations about features and functions. Don't let your evaluation people spend 95 per cent of their vendor conversation time discussing those things. Instead, insist they spend quality time learning from the vendor, beginning early in the evaluation cycle, on what true business value is possible, where such value resides, how it can be measured, how to make it happen and who says so and why.
  • Avoid using obscure and opaque decision-making criteria and methods. Such methods become a breeding ground for vendors that prefer behind-the-scenes "buddy" talk to publicly scrutinized business-value discussions. In addition, murky decision-making practices are totally out of step with today's push for more visible and trustworthy IT governance. If you have a well-understood and transparent process for making decisions internally, vendors will also be expected to conform.
  • Be intolerant of FUD arguments from ROI-weak vendors. Be clear that purchases made in your shop are based on manifest value, not market dominance.

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