IT Vendor Selection

The pressure to stay competitive, offer best-in-class service at prices comparable or better than the competition, and keep customers and employees happy are common imperatives for growth in any dynamic company. Managers, even in the traditional natural product market, are coming around to accepting that technology can enhance operational efficiency.

The natural products market has differences that set it apart from others. It is largely composed of small- and medium-sized companies. Decision making is often centralized in a single owner. Many of these companies do not have a dedicated information technology (IT) department. An IT-savvy manager often doubles as IT head—a function that is in addition to other duties.

Most companies’ important business decisions are made by a management team composed of the CEO and the heads of marketing, operations, human resource and finance. Most management genuinely believes that involving the IT head in day-to-day decision making is not value accretive to either the IT department or the company.

A discussion of investment into IT generally takes places after traditional efficiency-improvement approaches have not yielded the desired results. IT is rarely the first option. Once a determination to induct IT is taken, the IT head is then engaged and debriefed on the business need. From there, the matter is handed over and left to the IT department to select and induct an appropriate IT vendor.

The first step is to prepare a comprehensive requirements brief for IT vendors to respond to. Management steps back in only after the vendor is appointed, commences work and starts formally interacting with the organization.

The failure to do adequate pre-vendor selection work often results in many technology induction projects getting into trouble soon after the vendor starts work. The root cause is inadequately defined business requirement.

In other cases, clients request changes to specifications mid-way during implementation. The demand for mid-project change arises when business notices a misalignment between its business expectations and likely deliverables of the new technology.

IT vendors find it difficult to customize or change a product mid-way during implementation. The cost of rework is either prohibitive or technically not feasible. This problem is fairly common in cases where the IT department has an incomplete understanding of the business processes and needs. Conflicts arise, and it becomes a lose-lose outcome for both sides.

Smart IT departments with seasoned leadership understand these pitfalls and recommend safe solutions that often are not the best fit to a niche business need. Most recommend inducting an enterprise resource planning (ERP) solution, enhancing the network or hardware capability, as the case maybe. Branded ERP solutions come bundled with best-in-class processes, and implementation does result in substantial improvement in efficiency.

Inducting an ERP module or two may not be a complete fit for the specific business requirement, but often does help bring about enhanced organization efficiency. This path of least resistance is good for vendors, clients and the IT department. Everyone goes home happy.

However, in the hypercompetitive world, appropriate technology that is specifically directed to solve a business challenge has the potential to bring transformational change. This calls for a much more rigorous IT vendor and technology induction process. This starts with defining the business requirement in clear terms.

Business requirement definition can be done by management alone and not by the IT department. Management has the best understanding of existing business process, the challenges faced and the outcomes desired.

The IT vendor needs a detailed and well-defined business outline that clearly explains the business processes that require change. While it is understandable that the business user may not be skilled in creating a full use case, they are in a position to describe the business, the challenges and the expected outcomes clearly and in detail.

The IT department or a prospective IT vendor can use this input from management to document a formal use case. Such a document is critical for an IT vendor to propose and then induct the best technology fit.

The business requirement outline is best accompanied with a detailed enunciation of the existing hardware, software and network specifications. This information is often available in company records. It can be picked from the documents that inevitably accompany a software or a hardware when inducted in a company.

The IT vendor documents should also include a detailed note on the technology awareness and skill level of the company workforce. This information will help the IT vendor determine the nature and level of training required in each technology induction phase before, during and post induction.

With the detailed business requirements clearly defined, the process of selecting the appropriate IT vendor moves forward. A short list of vendors with the likely capability to bring in the appropriate technology to the company is made. Post proposal submission by short-listed IT vendors, the evaluation process commences.

When the company leadership actively engages in the evaluation of the IT product proposed, it rarely faces a problem either during product implementation or in achieving the expected business results.

Once the business evaluation is concluded, the IT department looks at the proposed technology from the viewpoint of technical integration with existing IT solutions.

In the natural product company setting—where every dollar investment has count—a rigorous IT solution induction process is a critical transformational imperative.

Sudhir Ahluwalia is a business consultant. He has been management consulting head of Tata Consultancy Services, an IT outsourcing company in Asia, business advisor to multiple companies, columnist and author of an upcoming book on herbs, “Holy Herbs." He has also been a member of the Indian Forest Service.