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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.

3. Look for Backup Data

Vendors with ambiguous ROI claims undermine business-case integrity since their ROI assertions appear real but aren't. A common sign of misleading value statements are claims that have no data backing them up. For example, an impressive advertisement or case study may tout that "Client A obtained a 125 per cent ROI". If you see no explanations, rationale or footnotes that lead to a clear explanation, ring up a "no sale" for that vendor. By the way, hold industry analyst firms to this same standard. Just because such advisers may have an impressive client list doesn't mean any given ROI statement is a fact. If their publications don't keep this guess-versus-fact distinction crystal clear, call them on it. Always ask for specifics and any hard numbers they can give you. The best way to determine if any claim is valid is to go directly to the source to learn what the claim is based on.

4. Hold Vendors to a Higher Standard

Take the attitude that an ROI claim must be held to a four-way test of tangibility, understandability, measurability and relevance. For example, I know of one collaboration management solutions vendor that claims its client has recouped its investment cost within the first two months of implementation just from saving employees time in manually managing Web seminars. Close examination of the vendor's claim reveals that the savings are tangible, clear, measurable, link directly to the vendor's solution and are substantiated in writing by the manager directly associated with the project. If the environment upon which such claims are based is analogous to yours, then this type of claim is eligible for confident placement in your business case.

5. Leverage the Good Guys

ROI-savvy vendors can boost the cost-effectiveness of your entire evaluation process. I overheard one CFO tell a vendor: "Had you come to us [with your ROI tools] earlier, you would have saved us six months of lost vendor and product evaluation time and effort." Another client asked a vendor to conduct an ROI discovery workshop that unearthed $20 million in benefits, enough to get the application approved by an ROI-obsessed board of directors. Using vendors that know their ROI can provide you with faster and more comprehensive assessments, greater confidence in your recommendations, and fewer funding disappointments. When it comes to IT projects, an ounce of business-value focus is worth at least a pound of features and functions. Reward such suppliers by giving plenty of evaluation points to those who demonstrate such ROI intensity. Once you have collared an ROI-aware vendor, use it for all it's worth. Request the company's help for such activities as researching relevant benefits, getting interview data, pr oviding business-case creation tools and supplying samples from other clients. After all, most vendors will fly multiple sales and demo support people to you at the drop of a hat. Ask them for the same level of support for your all-important business case. If they are hesitant, maybe their priorities are misplaced.

Good vendors often bear gifts of ROI help. Distinguishing the trustworthy suppliers from the fraudulent or clueless is the first crucial step toward ultimate project success.

Jack Keen is founder and president of the IT consultancy The Deciding Factor (www.decidingfactor.com) and co-author of Making Technology Investments Profitable: ROI Road Map to Better Business Cases

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