IT Vendor Selection Guide: How Business Leaders Can Nail the IT Vendor Selection Process

Navigating the IT vendor selection process can be an intense and often nerve-wrecking process, especially given the financial stakes involved. Technology and data security costs are rising fast, with companies projected to spend $5.1 trillion globally on IT in 2024 alone. A simple, strategic approach can help you navigate this challenge, control your expenditures and locate a vendor who can meet your short- and long-term needs. Read on for tips to elevate your tech stack with the right vendor.

What makes a successful IT vendor partnership?

It’s a sad fact that most people today aren’t exactly thrilled with their IT vendor. In fact, CIO Dive recently revealed that nearly 75% of enterprises have experienced tech buyer’s remorse. Avoiding this outcome requires having a solid strategy in place before searching for contractors and making any decision. To do this, you must understand your company’s technical needs and determine your selection criteria. We will explore each of these below and address how you can finalize your selection with speed and confidence. 

Assessing technical needs

To begin finding the right IT partner, take stock of your company’s technical needs. Just like laying a poor foundation can destabilize a home, failing to account for basic technology needs can result in a shaky tech stack and lead to downtime, increased security threats and stunted growth.

Preventing these problems starts by determining what your existing IT infrastructure looks like. This enables you to evaluate if a vendor’s solutions can build off your existing set-up without costly customizations or workflow disruptions. 

Working with advisors, third-party engineers and vendor liaison teams can assist you greatly during this process with their unbiased perspectives. Not only can these experts enhance your understanding of your needs but also give you a high-level idea of the market trends and capabilities for any services you’re considering. 

Determine your selection criteria

Just as important as understanding your current IT stack is a firm grasp on your selection criteria. While every business is different in this regard, most companies will want to prioritize the following when considering IT vendors. 

• Cost value analysis: It’s an unfortunate reality that many companies wind up overpaying for IT vendors, with recent Forbes’ data showing a figure of 10% or more. Three things to look at to avoid this problem are:  
  
  • Total cost of ownership (TCO): Understand the long-term TCO of any contract, including maintenance, upgrades and training.
    
  • Return on investment (ROI): Equally important is potential ROI. Examine how proposed technology upgrades may deliver greater revenue, lower costs and expanded productivity.
    
  • Contract flexibility and terms: Lastly, prioritize vendors that offer different payment options, as well as the flexibility to scale services up or down. 

• Vendor reputation, references and experience: As with any other contractor, it is always wise to review the background of potential IT vendors as part of your normal due diligence. This involves looking at vendor’s:
  
  • Market reputation and credibility: Scrutinize vendor reputation in the industry. Request or seek out customer reviews, third-party ratings and testimonials.
    
  • Case studies: If vendor candidates have materials like case studies, request them to learn how they delivered successful outcomes for organizations comparable to yours. 
    
  • Experience: Be sure to find out if potential vendors have experience relevant to your industry, which may ensure a smoother transition and compliance with industry standards.
    
• Compliance and certifications: Due to ever increasing data privacy and security regulations, vendor compliance capabilities and certifications should be key topics of conversation during your selection process. Before signing any agreement, take the time to verify each vendor’s:
  
  • Industry-specific compliance capabilities: Ask vendor candidates how they will tackle your industry’s compliance standards and if they have experience navigating regulatory frameworks like the GDPR, HIPAA and PCI-DSS standards.
    
  • Security certifications: Investigate if they are certified in information security management, data framework protections or if they hold common vendor certifications like ISO 27001, SOC 2 and NIST.

• Incident response and disaster recovery: Ask candidates how they mitigate risk and what their response looks like if an incident occurs or disaster strikes. Is it an off-site or on-prem response? And do they offer post-incident forensic reporting and analysis?

• Post-go-live and ongoing support: You need to factor each vendor’s post-go-live and ongoing support capabilities into your final decision, specifically what their policies are regarding troubleshooting and training.

• Scalability and flexibility: Request information about vendor delivery models and billing practices to verify if they can easily scale their services depending on where your business is in the moment. 

Use an IT vendor selection scorecard 

Considering all these variables, businesses need an easy mechanism for comparing vendors to one another. Vendor scorecards are a great way to do this, providing a clear representation of each vendor’s strengths and weaknesses. Here’s how this process works: 

• Quantify key criteria: Start by assigning scores to essential criteria like financial health, technical capabilities, cost, compliance and support. This will give you a swift, fair and bird’s eye view across vendors and reduce decision-making bias.
  
• Create weighted scores: Next, assign weight to each criterion based on the contours of your specific organization. This will help guarantee your business needs are met and that your vendor is aligned with your long-term strategy.
  
• Compare vendor performance: Then, use the vendor scores to streamline the selection process and clearly communicate your reasoning.

Using a scorecard will streamline your decision-making as the selection process nears its end, while facilitating alignment and consensus amongst stakeholders.

Execute the service level agreement

With your scoring done, it’s time to select your new IT vendor! But before you can pop the champagne, create a service level agreement (SLA) that adheres to these guidelines: 

• Define clear performance standards: This includes uptime, response times and resolution rates.
  
  
• Establish accountability for non-compliance: Establish penalties or corrective actions for non-compliance to ensure consistent quality and what your recourse is if your vendor falls short of the agreement.

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• Clarify support and maintenance obligations: Specify vendor availability for customer support and troubleshooting to gain clarity around vendor responsibilities and define reliable service.

When executed this way, service level agreements (SLAs) can offer you additional protections, support and clarity around your relationship with your new vendor. It is an important final step that can help you gain even more bang for your buck! 

Nail the IT vendor selection process

Nailing the IT vendor selection process can transform your business, but it can also be challenging to pull off. Our team can help you with the process from beginning to end, optimizing your technology procurement process and delivering positive business outcomes. 

Contact us today to schedule a 30-minute conversation.

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