gartner @ xplor gartner decision tools for vendor selection ralph witcher director, sw specialist
TRANSCRIPT
Gartner @ XplorGartner Decision Tools for Vendor Selection
Ralph Witcher
Director, SW Specialist
Decision Tools for Decision Tools for Vendor Selection Vendor Selection
is Gartner’s is Gartner’s dedicated IT dedicated IT vendor and vendor and
product selection product selection service.service.
Created in 1995, Created in 1995, Gartner’s Decision Gartner’s Decision Tools for Vendor Tools for Vendor
Selection Selection covers technology covers technology
selections in over 20 selections in over 20 IT areas.IT areas.
Gartner’s Decision Gartner’s Decision Tools for Vendor Tools for Vendor Selection helps Selection helps
organizations make organizations make better, faster and better, faster and
more cost-effective more cost-effective technology technology selections.selections.
What Is It?
Gartner helps end users make >5,000 vendor selections
Decision Tools for Vendor Selection
Why Decision Tools for Vendor Selection?
Enterprises that have replaced ad hoc acquisition programs with systematic acquisition programs have reduced procurement costs by 15 percent to 18 percent.
Through 2004, a managed procurement process that reflects an enterprise's organizational structure, business objectives and implementation capabilities will reduce 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 RFP will reduce the TCO by at least 5 percent when $2 million or more is involved (0.7 probability).
Selection not a core competency
Unrealistic timelines and expectations
Divided attention
Uncertain scope
Tactical instead of strategic focus
Political agendas
Identify appropriate differentiating criteria
Structure criteria into appropriate context
Assign relative importance within this structure
Gather and validate objective vendor information
Justify the selection throughout the organization
Top Organizational Challenges: Top Project Team Challenges:
...Can You Feel the Pain?
Help!!
Vendor Selection: Challenges Illuminated
Time: 3-to-15-month cycle time
9 months average elapsed timeResources:
8 to 20 persons on decision team
Cost: Selection costs 20% to 40% of dollars spent$500,000 purchase cost — $100,000 to $200,000 selection
Risk:An inappropriate selectionPotential project failureNegative impact on business processes
Challenges . . .
“Selecting the right vendor is a daunting task involving a thorny process that often results in destructive chaos within
organizations.”
To get it right!!Goal!
Gartner Decision Tools for Vendor Selection
How 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?What? How?How?When?When?
Gartner Provides the Answers
Enables better, faster and more cost-effective decisions by
providing a consistent decision methodology that
encompasses key selection criteria and objective analysis
on IT suppliers.
Enables clients to simulate plausible outcomes with all vendors considered while discerning their unique trade-offs as their capabilities are mapped to your enterprise requirements.
Save Time
Build Consensus
Make Better Decisions
Value
The Value Proposition
Market data is derived fromthree distinct sources: Technology vendors. All
vendors covered by Gartner’s Decision Tools must complete a detailed request for information (RFI).
End-user community. Analysts turn to end users experienced with vendors and vendor products to tap into their wisdom about what the products can and cannot do.
Gartner research and analysis. All areas of the Gartner analyst community participate in collaborative research that focuses on vendors’ strategic direction and viability.
Refined HierarchicalAnalysis (RHA) Draws upon Gartner’s
extensive experience with Fortune 1000 companies that use the advice and guidance of Gartner analysts to make strategic decisions
Being used by commercial, governmental, military and nonprofit organizations around the world
Internal Needs Assessment:
Create project team Needs identification Mandatory Valued “Nice to have” Requirements definition Long list RFI/RFP issued
Detailed Vendor Analysis: Evaluate responses Mandatory requirements analysis Short list Detailed vendor analysis and RFP Scripted demos Select finalists
Negotiation and Final Selection: Develop Ts and Cs Negotiating strategy Negotiate contract Select winner Place contract
Process Methodology Research Methodology Selection Methodology
Combines Gartner’s Research
With …
ResearchProcess
Math
The Gartner Methodology
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 and
support capabilities• Viability — Financial and organizational viability• Vision — Assessment of vendors’ product, corporate and
marketplace direction
Decision-specific criteria
Decision Engine Decision Engine SoftwareSoftware
21-Step Best Practices 21-Step Best Practices Approach to Making IT Approach to Making IT DecisionsDecisions
Monthly Database Monthly Database UpdatesUpdates
Best-of-Breed RFIBest-of-Breed RFI
Unmetered Telephone Unmetered Telephone Access to the Vendor Access to the Vendor Selection AnalystsSelection Analysts
Deliverables
ModelsMultifunctional Product (MFP)
Enterprise Resource Planning Suite
Integrated Financials and HR Software
Intel-Based Hardware – Suite
Asset Management Repository
Financial System Application Software
HR Application Software
Content Management Services
Convergence Server Solutions
Customer Service and Support Software
Consolidated Service Desk
Extraction, Transformation and Loading
Provisioning
Customer Relationship Management Suite
Models (Cont'd)Enterprise Information Portal
Enterprise Server Platforms
Integrated Document Management
Intel-Class Hardware – Desktop
Intel-Class Hardware – Notebook
Midmarket ERP Software
Marketing Automation
Contact Center Infrastructure
Sales Force Automation
Decision Tools for Vendor Selection Library
Average Product Selection Time in the Enterprise Management Market
Average Number of People Within Organization Who Consider Decision
Average Cost to Organization of Product Selection for Enterprise Resource Planning*
Without Gartner
6-18 Months
12 $225,000 in labor costs
With Gartner
3-6 Months 7 $131,250 labor+$25,000 Gartner$156,250
$550,000$550,000$1,100,000 including software, services and maintenance
West Coast: CPG Services Company
$990,000$650,000$1,640,000 including accounting and HR software, project management and maintenance
Manufacturing Concern in the Southwest
$649,000$915,000$1,564,000 including manufacturing, accounting and supply chain software, services and maintenance
Manufacturing Company in Northeastern U.S.
Approximate Amount Saved
Final Purchase Price
“Final” Quote from Vendor
Client
Assumptions: Individual spends one-quarter of total time researching, reviewing and negotiating for selection of a prepackaged business application product. Individual is salaried at $75,000 per year.
Soft Dollar Savings$68,750
Hard Dollar Savings$$$$$
Gartner’s Decision Tools for Vendor Selection Cost JustificationEnterprise Resource Planning (ERP) Selection Evaluation Services
Gartner @ XplorGartner Decision Tools for Vendor Selection
Ralph Witcher
Director, SW Specialist