Gartner Decision Tools for Vendor Selection - …

1 Ralph WitcherGartner Decision Tools for Vendor SelectionThese materials can be reproduced only with Gartner s written approval. Such approvals must be requested via e-mail 1 Decision Tools forDecision Tools forVendor SelectionVendor Selectionis Gartner sis Gartner sdedicated ITdedicated ITvendor andvendor andproduct selectionproduct ,Createdin1995, Gartner s DecisionGartner s DecisionTools for VendorTools for VendorSelectionSelectioncovers technologycovers technologyselections in over 20selections in over 20IT s DecisionGartner s DecisionTools for VendorTools for VendorSelection helpsSelection helpsorganizations makeorganizations makebetter, faster andbetter, faster andmore cost-effectivemore Is It? Gartner helps end users make >5,000 Vendor selectionsDecision Tools for Vendor Selection A unique, dedicated service designed to help organizations make better,faster and more cost-effective decisions regarding IT product evaluation andselection, as well as to provide market intelligence for the vendorcommunity.

2 Portfolio of approximately 25 software-based Decision Driver modelsWhere do we fit .. Gartner Decision Tools deliver software applications, services andmethodologies that enable users to calculate and compare return oninvestment (ROI), make better, faster, more cost effective Vendor selections,and perform cost-of-ownership analysis. By understanding the ROI of technology investments, clients are equippedwith data to support their IT investment strategy. Decision Tools provide an ideal way to evaluate and select vendors andstrengthen negotiations. By understanding the total cost of ownership, organizations are able toreduce costs dramatically while improving operational 2 Why Decision Tools for Vendor Selection ? Enterprises that have replaced ad hoc acquisitionprograms with systematic acquisition programs havereduced procurement costs by 15 percent to 18 percent.

3 Through 2004, a managed procurement process thatreflects an enterprise's organizational structure,business objectives and implementation capabilities willreduce time to implementation by at least 30 percent( probability). Although a comprehensive request for proposal (RFP)costs a typical enterprise $100,000 to $150,000, an RFPwill reduce the TCO by at least 5 percent when $2million or more is involved ( probability).Page 3 Selection not a corecompetency Unrealistic timelines andexpectations Divided attention Uncertain scope Tactical instead ofstrategic focus Political agendas Identify appropriatedifferentiating criteria Structure criteria intoappropriate context Assign relativeimportance within thisstructure Gather and validateobjective vendorinformation Justify the selectionthroughout theorganizationTop Organizational Challenges:Top Project Team Challenges:..Can You Feel the Pain?

4 Help!! Vendor Selection : Challenges IlluminatedWho can take advantage of this research? Any organization evaluating or purchasing covered technology areas Executives seeking to standardize on Vendor Selection methodologies Project teams faced with specific Vendor Selection initiativesPage 4 Time:3-to-15-month cycle time9 months average elapsed timeResources:8 to 20 persons on Decision teamCost: Selection costs 20% to 40% of dollarsspent$500,000 purchase cost $100,000to $200,000 selectionRisk:An inappropriate selectionPotential project failureNegative impact on businessprocessesChallenges .. Selecting the right Vendor is a daunting task involving athorny process that often results in destructive chaoswithinorganizations. To get it right!!Goal! Gartner Decision Tools for Vendor SelectionPage 5 Howshould I structure Vendor selections?What criteria should I consider?Howdo Iweigh each criterion?

5 Where do I get the Vendor performance data?What?What?How?How?When?When? Gartner Provides the AnswersPage6 Enables better, faster and more cost-effective decisionsbyproviding a consistent Decision methodology thatencompasses key Selection criteria and objective analysison IT clients tosimulateplausible outcomeswith allvendors considered whilediscerning their unique trade-offsas their capabilities are mapped toyour enterprise TimeBuild ConsensusMakeBetter DecisionsValueThe Value PropositionClients save time and expense while reducing the risks associated withtechnologyselection. What are the benefits of this service to an organization?Up to two-thirds less time spent based on our leverageable methodology. As much as 25 percent reduction in project team expenses Provides substantial negotiating leverage with vendors Decision Tools for Vendor Selection enables project teams to make better,faster and more cost-effective decisions through: The identification of a comprehensive set of differentiating criteria Provision of a best-practices structure and weighting of decisioncriteria Access to validated Vendor performance dataWhat are the benefits to an individual?

6 Gain credibility Project team members can establish a new level ofcredibility with their peers and superiors by introducing both time-testedmethodologies and best practices into their Vendor evaluations. They canleverage Gartner analysts to bring content expertise and wisdom to the table. Achieve collaboration Gain critically important internal collaborationnecessary to attain an optimal Decision . Minimize exposure Project team members don t have to bet their careerson a Vendor Selection process mired in Vendor hype, politics and thedisparate background of others on the Decision 7 Market data is derived fromthree distinct sources: Technology vendors. Allvendors covered by Gartner sDecision Tools must completea detailed request forinformation (RFI). End-user turn to end usersexperienced with vendors andvendor products to tap intotheir wisdom about what theproducts can and cannot do.

7 Gartner research andanalysis. All areas of theGartner analyst communityparticipate in collaborativeresearch that focuses onvendors strategic directionand (RHA) Draws upon Gartner sextensive experience withFortune 1000 companiesthat use the advice andguidance of Gartneranalysts to make strategicdecisions Being used bycommercial,governmental, military andnonprofit organizationsaround the worldInternalNeedsAssessment: Create project team Needs identification Mandatory Valued Nice to have Requirements definition Long list RFI/RFP issuedDetailed VendorAnalysis: Evaluate responses Mandatory requirements analysis Short list Detailed Vendor analysis and RFP Scripted demos Select finalistsNegotiation andFinal Selection : Develop Ts and Cs Negotiating strategy Negotiate contract Select winner Place contractProcessMethodologyResearchMethod ologySelectionMethodologyCombines Gartner sResearchWith.

8 ResearchProcessMathThe GartnerMethodologyProcess MethodologyThe foundation of Gartner s Decision Tools approach to IT Vendor Selection : we refer to our formalized cradleto grave approach to Decision making as the Selection Methodology. The methodology is a road map,whichguides you and your project team through a structured evaluation and Selection process from the time youdecideyou need to make an IT purchase, to negotiating the best possible contract with your Vendor of Methodology consists of three phases: Internal Needs Assessment Identifying what your organization needs from an IT solution,prioritizing among these needs, and highlighting critical or mandatory requirements. Vendor Analysis Identifying which vendors or solutions in the marketplace best meets the needs ofyour organization. Negotiation and Final Selection Going out there and getting your solution and getting it at the bestpossible price and under the best possible terms and MethodologyDecision Tools analysts interview clients who have made specific IT decisions, asking, What priority orimportance did you assign to these criteria, and with the benefit of hindsight, what would you have donedifferently?

9 From these interviews arose a set of best-practices criteria weightings that can be used as aplatformfor discussion and customized to suit each individual organization s preferences and priorities. As for the objective data or the cold, hard facts Decision Tools is in a unique position to gatherand track valid information. We refer to our objective product data as our Comprehensive KnowledgeBase. It is, in fact an aggregation of three principal data sources: Information and feedback from the end-user community Speaking to clients who are actually usingthe Input from the Vendor community Our comprehensive best-of-breed RFI is submitted to thevendors and their responses fully validated. Audit and confirmation from The analyst community Gartner analysts throughout the organizationare tapped to validate Vendor 8 What Criteria Do We Cover? Decision driver models evaluate fivetop-level criteria Product Generally available field-deployedproduct capabilities Cost Initial and ongoing investments Services and support Professional services andsupport capabilities Viability Financial and organizational viability Vision Assessment of vendors product, corporate andmarketplace direction Decision -specific criteriaPage 9 DecisionEngineDecisionEngineSoftwareSoft ware21-StepBest Practices21-StepBest PracticesApproach toMaking ITApproach toMaking ITDecisionsDecisionsMonthly DatabaseMonthly DatabaseUpdatesUpdatesBest-of-BreedRFIBe st-of-BreedRFIU nmeteredUnmeteredTelephoneTelephoneAcces s to the VendorAccess to the VendorSelectionAnalystsSelectionAnalysts DeliverablesPage 10 Customer RelationshipManagement SuiteProvisioningExtraction.

10 Transformation andLoadingConsolidated Service DeskCustomer Service and Support SoftwareConvergence Server SolutionsContentManagement ServicesHR Application SoftwareFinancial System Application SoftwareAssetManagement RepositoryIntel-BasedHardware SuiteIntegrated Financials andHR SoftwareEnterprise Resource Planning SuiteMultifunctional Product (MFP)ModelsSales Force AutomationContact Center InfrastructureMarketing AutomationMidmarket ERP SoftwareIntel-ClassHardware NotebookIntel-ClassHardware DesktopIntegrated DocumentManagementEnterprise Server PlatformsEnterprise Information PortalModels(Cont'd) Decision Tools for Vendor SelectionLibraryPage 11$131,250 labor+$25,000 Gartner $156,25073-6 MonthsWithGartner$225,000 inlabor costs126-18 MonthsWithoutGartnerAverage Cost toOrganization of ProductSelection forEnterpriseResource Planning*AverageNumberof People WithinOrganization WhoConsider DecisionAverage ProductSelection Time intheEnterpriseManagementMarket$550,000$ 550,000$1,100,000 including software,services and maintenanceWest Coast: CPGS ervices Company$990,000$650,000$1,640,000 includingaccounting andHR software,project management andmaintenanceManufacturingConcern in theSouthwest$649,000$915,000$1,564,000 includingmanufacturing, accounting andsupply chain software, servicesand maintenanceManufacturingCompany inNortheastern Final Quotefrom VendorClientAssumptions.