Best practices are relied on heavily across all areas of the lending and leasing lifecycle, but when it comes to software vendor evaluation and selection, there is no consensus. Linedata director Johnnie Halliday offers some key advice to increase the chances of success
Software vendor evaluation and selection is generally a time-consuming, paper-intensive and expensive endeavor, often failing to achieve its stated objective, many companies never complete the process and revert back to maintaining legacy systems.
Go deeper with GlobalData
We believe there are some simple steps companies can take to ensure vendor evaluations and selections are successful.
Often overlooked at the very beginning is the creation of a formal charter. This should clearly define the expected outcome of the project, progress milestones and key roles and responsibilities. While this does not have to be a lengthy document, it does form the basis of the project and align team vision.
The most critical component is the inclusion of a project lead with decision-making authority and reliable team members who can ensure realistic expectations are set and deadlines are met.
In our experience, over 70% of requests for proposal (RFP) have overly ambitious timelines which are not met. The problem is compounded when these unrealistic expectations are taken on by the rest of the organisation, giving the illusion that the process of evaluation and selection is simple. The financial institution then understates the impact of the project, which becomes apparent in the evaluation process. This can be particularly damaging given that any software purchase can be disruptive, especially if it enables a change in business processes.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAnother important aspect of the process is requirement gathering. Collection methodology, requirement standards and limits on requirements are common issues. This results from the RFP process being divided among several business units, which can cause overlaps in requirements: Each team may be looking for the same overarching solution to an issue which is organisational and not specific to the business unit or discipline. This results in a duplication of requirements, with the vendor often making reference to a previous requirement. Referral to a prior response adds no value to the RFP.
An ideal solution is to establish standards to the requirement itself; in other words each requirement should be clearly defined and unique. Organisations tend to list multiple requirements in a single ask. This leads to an exhaustive vendor response and makes scoring ineffective, as the vendor can only choose a single answer (Yes, No, 1, 2, 3, etcetera), generalising the solutions fit to multiple requirements.
More is not necessarily better. Focus on what is important to your organisation and what you are seeking a software solution to accomplish. An RFP with several hundred requirements may appear comprehensive but in reality, it only slows the process. You will learn much more about the vendor’s proposed solution in the next stage of the process when you ask for a configured demonstration of the product utilising your organisation’s real world scenarios.
When you are ready to make a decision, make sure you include a comprehensive vendor evaluation. The following are some key questions to ask:
Does this vendor align with your expectations regarding financial stability?
You are forming a partnership with this vendor, and most likely for an extended timeline. Evaluate their financial stability the same way you would treat an applicant for credit.
Is the spend on the proposed solution greater than or equal to peers?
It is important and fair to ask the vendor about their approach to research and development to assess whether they are keeping up with market demands. Following on from this, ask what significant enhancements have been made to the solution over the last two years.
Do you have client references?
Always ask for client references and an opportunity to speak with them. Be sure to ask about solution use, user perception and the overall relationship they have with the vendor.
An effective vendor evaluation and selection process starts with a defined plan that sets expectations, focusing on what is important to your organisation and what it wants to achieve. A thorough evaluation of RFPs involves asking the right questions to paint a clear picture of the vendors behind the solutions, and how they fit with your mission and philosophy.
Ensuring these are a part of your evaluation and selection process will increase your probability of success.
