Gartner Decision Tools For Vendor Selection - Help4Access

Gartner Decision Tools for Vendor SelectionRalph WitcherThese materials can be reproduced only with Gartner’s written approval. Such approvals must be requested via e-mail —quote.requests@gartner.com.

Decision Tools for Vendor SelectionWhat Is It?Decision Tools forVendor Selectionis Gartner’sdedicated ITvendor andproduct selectionservice.Created in 1995,Gartner’s DecisionTools for VendorSelectioncovers technologyselections in over 20IT areas.Gartner’s DecisionTools for VendorSelection helpsorganizations makebetter, faster andmore cost-effectivetechnologyselections.Gartner helps end users make 5,000 vendor selections 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. 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 efficiency.Page 1

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. 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(0.7 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 (0.7 probability).Page 2

Vendor Selection: Challenges Illuminated.Can You Feel the Pain?Top Organizational Challenges: Selection not a corecompetencyTop Project Team Challenges: Unrealistic timelines andexpectations Divided attention Uncertain scope Tactical instead ofstrategic focus Political agendas Identify appropriatedifferentiating criteriaStructure criteria intoappropriate contextAssign relativeimportance within thisstructureGather and validateobjective vendorinformationJustify the selectionthroughout theorganizationHelp!!Who 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 3

Gartner Decision Tools for Vendor Selection“Selecting the right vendor is a daunting task involving athorny process that often results in destructive chaos withinorganizations.”Challenges . . .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 businessprocessesGoal!To get it right!!Page 4

Gartner Provides the AnswersHow should I structure vendor selections?What criteria should I consider?How do I weigh each criterion?Where do I get the vendor performance data?What?When?How?Page 5

The Value PropositionEnables better, faster and more cost-effective decisions byproviding a consistent decision methodology thatencompasses key selection criteria and objective analysison IT suppliers.Save TimeValueBuild ConsensusMake Better DecisionsEnables clients to simulateplausible outcomes with allvendors considered whilediscerning their unique trade-offsas their capabilities are mapped toyour enterprise requirements.Clients 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? 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 team.Page 6

The Gartner MethodologyProcess MethodologyInternal Needs Assessment: Create project teamNeeds identificationMandatoryValued“Nice to have”Requirements definitionLong listRFI/RFP issuedResearch MethodologyRefined HierarchicalAnalysis (RHA) Technology vendors. Allvendors covered by Gartner’sDecision Tools must completea detailed request forinformation (RFI). End-user community.Analysts turn to end usersexperienced with vendors andvendor products to tap intotheir wisdom about what theproducts can and cannot do.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 worldDetailed Vendor Analysis: Evaluate responsesMandatory requirements analysisShort listDetailed vendor analysis and RFPScripted demosSelect finalistsNegotiation and Final Selection: Develop Ts and Cs Negotiating strategy Negotiate contract Select winner Place contractSelection MethodologyMarket data is derived fromthree distinct sources: Gartner research andanalysis. All areas of theGartner analyst communityparticipate in collaborativeresearch that focuses onvendors’ strategic directionand viability.Combines Gartner’sResearchWith ResearchProcessMathProcess 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 choice.TheSelection 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 conditions.Research 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?” 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 claims.Page 7

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 8

DeliverablesDecision EngineSoftware21-Step Best PracticesApproach to Making ITDecisionsMonthly DatabaseUpdatesBest-of-Breed RFIUnmetered TelephoneAccess to the VendorSelection AnalystsPage 9

Decision Tools for Vendor Selection LibraryModelsModels (Cont'd)Multifunctional Product (MFP)Enterprise Information PortalEnterprise Resource Planning SuiteIntegrated Financials and HR SoftwareEnterprise Server PlatformsIntegrated Document ManagementIntel-Class Hardware – DesktopIntel-Based Hardware – SuiteIntel-Class Hardware – NotebookMidmarket ERP SoftwareAsset Management RepositoryMarketing AutomationFinancial System Application SoftwareContact Center InfrastructureHR Application SoftwareSales Force AutomationContent Management ServicesConvergence Server SolutionsCustomer Service and Support SoftwareConsolidated Service DeskExtraction, Transformation and LoadingProvisioningCustomer Relationship Management SuitePage 10

Gartner’s Decision Tools for Vendor Selection Cost JustificationEnterprise Resource Planning (ERP) Selection Evaluation ServicesAverage ProductSelection Time inthe EnterpriseManagementMarketAverage Numberof People WithinOrganization WhoConsider DecisionWithoutGartner6-18Months12WithGartner3-6 Months7Soft Dollar Savings 68,750Hard Dollar Savings Average Cost toOrganization of ProductSelection for EnterpriseResource Planning* 225,000 inlabor costs 131,250 labor 25,000 Gartner 156,250Assumptions: Individualspends one-quarter oftotal time researching,reviewing and negotiatingfor selection of aprepackaged businessapplication product.Individual is salaried at 75,000 per year.Client“Final” Quotefrom facturingCompany inNortheastern U.S. 1,564,000 includingmanufacturing, accounting andsupply chain software, servicesand maintenance 915,000 649,000ManufacturingConcern in theSouthwest 1,640,000 includingaccounting and HR software,project management andmaintenance 650,000 990,000West Coast: CPGServices Company 1,100,000 including software,services and maintenance 550,000 550,000Page 11

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