Expert Panel

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Vendor Evaluation Process


By Ron Montgomery, Management Consultant & Owner, OnPoint, LLC

Too often, vendor selection is an ad hoc, subjective process that leads to project failure or premature replacement. The selection of a vendor typically involves a considerable investment, and the decision-making process should be commensurate to the investment. We recommend a simple, but thorough, four-step process for selecting a vendor.


Step 1 – Best Practices Review

The goal of this step is to provide the evaluation team with an awareness of the potential solutions in the marketplace. This step will also provide the evaluation team with ideas for vendor requirements to be considered in Step 2 of the process. The approach to the Best Practices Review must be customized for the specific needs of both the project and the evaluation team. Potential information sources for the best practices review could include team review of vendor exhibits at industry conferences, a scan of the industry literature, review of vendor white papers, and research by unbiased third-party research firms.


Step 2 – Request for Qualification

The goal of this step is to narrow the field of potential vendors down to a manageable number, ideally two to three vendors. The qualification must be based on functional and technical requirements that the evaluation team agrees as critical to a successful implementation. These requirements should be translated into a point-weighted evaluation matrix against which each vendor will be screened. This step should be considered a “multiple choice” test that is applied consistently to each potential vendor. A well-executed qualification step helps limit the risk of selecting a vendor that is poorly qualified but politically well-connected. Any vendor that makes it through this step of the process is one that could potentially provide a satisfactory solution.


Step 3 – Request for Proposal

The goal of this step is to select a vendor that can be viewed as a long-term partner. This step should be considered an “essay question” test that will highlight aspects of the vendor’s experience and culture that will help the evaluation team determine which vendor is the best fit. Since the functional requirements have already been evaluated, the focus on the proposal should be on questions such as vendor experience with similarly-sized implementations, stability and qualifications of the vendor executive team, and the vendor’s management philosophies. Reference checks should be completed at this step, and then the evaluation team should then identify a first vendor choice and a runner up.

Step 4 – Negotiate Contract

The goal of this step is to ensure the long-term success of the relationship with the selected vendor (or the runner up, if contract negotiations fail). This means that the evaluation team must carefully consider what success will look like, and translate that into fee structures and service level agreements and a means of management these over the long term.


Written by Ron Montgomery,
Project Management Expert for ManagingAmericans.com, Management Consultant & Owner, OnPoint, LLC


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