Choosing a Solution Provider: It’s Not Just About Checklists

By Terri Mullaney
Senior Consultant

At Nolan, our projects often involve helping clients find the right solution provider. This entails evaluating outsourcers, system vendors, or other specialized resources. We all love our feature/function checklists, and Nolan feels that checklists level the playing field. To a certain extent, they do. However, when a client is trying to evaluate a solution provider who will be responsible for delivering critical services and providing strategic insight to the organization, there is more to consider. A strategic vendor is one that helps to shape its industry, thereby providing a level of relationship that makes the client stronger. They provide insight to their clients to help them determine how to advance their business.

Will the vendor you choose be an industry leader, become stagnant, or (worse) be obsolete in five years? Those of us who are old enough to have picked Beta over VHS back in the ‘80s know all too well the importance of factors beyond pure feature/function.

A number of factors can determine a vendor’s success or failure; these include client satisfaction, functional and technology strength, financial management, and regulatory compliance. While these are certainly important, other variables influence whether a company achieves industry recognition, which can be one predictor of success. These other variables include the following:

1. Product strategy. I don’t mean just putting a bunch of disjointed wish-list items from a few key clients on a piece of paper and calling it a product plan. What I do mean is taking a look at the market issues, trends, and drivers that are not only influencing clients today, but are able to interpret the market dynamics in an attempt to predict (and perhaps even shape) industry direction. How does the vendor gather this information? Do they sit on industry boards, work with consultants, and hold focus groups? Are they active with trade associations in agenda-setting activities? And then, can they translate the information into capabilities that are included in a multi-year product roadmap? Whether or not your organization needs all of the new functionality, you need a product that keeps ahead of the market.
2. Marketing. Getting their message out to the industry is what ensures that vendors are top-of-mind with prospective clients and the consultants doing the reviews. If they are not visible in the market, they probably aren’t being invited to many dances. I know that, in theory, it shouldn’t be this way. However, by selecting someone with no market presence, you run the risk of the vendor becoming insular and getting feedback only from the clients they currently serve. This is not about expecting vendors to spend a lot of money on advertising and trade shows. There are other ways to get publicity—independent analyst reviews, industry councils, and articles in peer-reviewed journals, to name a few.
3. New clients. When you look at their client base, what is the sales trend? A client may have 100 clients, but if none has been signed in the last three years, it could indicate a problem with the vendor’s ability to keep current. It could also mean that you will end up paying more over time because the money that is needed to run the company is coming only from existing clients.
4. Strong leadership. Is the vendor’s leadership team truly focused on making this company a success? Are they in it for the long haul? How do they see their company and leadership transitioning in the future? Do you see strong leaders at multiple levels of the organization? When you are talking to the vendor’s senior leadership, are they people with whom you can picture sitting on a task force to solve an industry problem? A “no” to any of these questions might be a red flag.
5. Client focus. It is important to understand the dynamics of the vendor’s relationship with their clients. Do the clients see them as industry leaders? Ask questions, not just about the nuts and bolts of the product, but about how the vendor has worked with clients to solve challenging business issues. Has the vendor brought industry insight into their clients’ organizations, or are the clients always leading the vendor? When a client is in the position of always leading and the vendor is no more than an order taker, it is a sign of a limited relationship.