What you need to know about vendor selection

What is the cost of indecision? Furthermore, what is the value of a well-chosen software provider?

To find the answers to the questions posed, I have been conducting market research with thought leaders in HR, digital transformation, software and related services. Having worked in the software industry for almost two decades, I noticed that many of my clients needed an impartial adviser to assist them through the vendor selection process. So, I went on a quest to see if my concerns are shared. I spoke to organisations such as CIPD, BCS, Microsoft, Accenture, Capgemini, IBM, Workday, SAP, HSBC and many more in the SME space. 

A part of my research was focused on HR leaders who had HR tech projects rejected and on what happened after that. One story (which may sound familiar to you) is about a rapidly growing SME whose recruitment team was maxed out. They had just received another round of investment, which meant that the growth targets were going to continue increasing. The answer to these growing pains was acquiring an HR and Recruitment system. So the HR team attended several expos and conducted a thorough assessment of the market, then created a long list of potential suppliers and then the shortlist. Finally, after six months of hard work, the preferred solution was chosen. It ticked all the boxes and would undoubtedly help them attract the best talent around. HR, Recruitment, IT and Sales departments rejoiced after investing so much time in the project. 

….except that the project never went ahead. Three months of indecision followed the previous six months of selection, resulting in the CEO vetoing the initiative in favour of maintaining the status quo. 

What happened next?

The recruiters who were already maxed out were not happy to continue in this archaic environment. They were required to give just 30 days’ notice so promptly resigned. 30 days is not enough time to hire a top recruiter and conduct handovers, so other HR personnel had to step in. They also resigned, along with the HR director. With the business unable to meet growth demands set by their investors, the CEO decided to outsource their recruitment at a far greater cost to the business than the original tech investment. They were in a hole and needed a way out. Good news for their RPO partner. Bad news for their bottom line. 

They lost valuable people, missed sales targets and the cost of hire went through the roof. Not to mention the nine months of wasted effort invested by the aforementioned teams. Don’t forget the preferred tech provider’s time too. They also felt the pain.  

Can you identify the point of failure here? On investigation, I believe it was due to the business case not being strong enough. It was prepared by a highly talented HR team with some support from their vendor. Unfortunately, the HR team did not have enough experience building business cases  and the vendor (like many other) did not provide enough value support based on evidence. 

The HR director admitted that the business case could have been better. This particular skill was not a requirement when embarking on a career in HR in the past. It was not part of any CIPD course, as pointed out by Glenn Jones in his book, ‘Human Resources Changes the World’. However, that has since changed with the introduction of ‘Commercial drive’ as one of CIPD core behaviours. In his book, Glenn explores the reasons why Chief HR Officers don’t become CEOs. There are many reasons why few (if any) have made the leap to the CEO role. In any case, I won’t attempt to summarise the book other than to say that commercial awareness plays a large part. 

What could they have done differently?

Now that we have identified the problem, it is easy to find the solution. Ensure you have buy-in from all key stakeholders throughout the process and build a rock-solid business case. 

This is just one story from my research, but the scenario was familiar to many I spoke with. Here are the top recurring themes from those meetings:

· Vendor selection processes are inefficient

· HR Tech business cases are generally not strong enough – many result in ‘no project’

· Actual HR Tech ROI is lower than expected

· Good demos and RFP responses don’t always translate into good projects

· HR teams need impartial support throughout the software selection process.

To bridge these gaps, I have taken the big leap forward to found Centigy. Centigy is an impartial consultancy that relies on my experience, and that of my extended network, to provide the advice needed for successful HR tech projects. This may consist of requirements gathering, key stakeholder engagement, business case building, vendor due diligence, support for the vendor selection committee, negotiation or training, to name a few. 

My research shows that buyers, sellers and independent bodies such as CIPD and BCS all see benefits in having an independent consultant involved in this selection process. A successful project and a good buyer-seller match is valuable for both sides. For the buyer the advantage lies in: 

· Less resource required 

Having external resource actively working on the project and improving efficiencies in your selection process means your workload will be dramatically reduced. 

· Reduced project risk 

Centigy will prompt you to ask the right questions at the right time. Together we will uncover the vendors and SIs (System Integrators) best fit to deliver your desired software on time and within budget.

· Improved ROI

By aligning your required system to strategic business outcomes, we can narrow in on technology that will deliver real value. 

· Improved brand (both personally and business)

A successful HR tech project can help provide a strong competitive advantage. By improving efficiencies in how you attract/develop/retain talent, your team can focus on the human aspects of the workplace, such as building a strong culture, innovation and empowerment. 

There are several advantages for the vendors too. Before we investigate vendor value, it is important to note that Centigy is wholly focused on the buyer’s best interests. We will not accept any financial reward from vendors for successful proposals. This goes against our ethos. Having said that, the following areas of value are recurring themes when speaking with various SIs and Vendors, as I discovered during my research. I have found that stable, strategic, customer-focused providers welcome an independent third party, so let’s take a look at why:

· Shorter sales cycles 

An efficient selection process shortens the sales cycle. 

· Higher chance of project success

By reducing the unknown unknowns on the client side, the project will run more smoothly. The buyer will be more aware of the system capabilities, reducing many of the unpleasant surprises during implementation. 

· Higher late-stage close rate

Vendors and SIs will be ruled out early in the process if they are not a good fit. Only best fit vendors and SIs will make it to the final round, through a coordinated effort to identify deal breakers and suitability.

· Better customer advocacy 

Better matched clients and more successful ongoing deployments build a strong reputation.

In conclusion, an impartial advisor is a valuable asset to buyers and good vendors. However, it will not be good news for everyone. Software vendors who cannot deliver on their promises will be weeded out early. SIs who plan to assign underqualified implementation consultants will not be considered. Salespeople who answer yes to everything on an RFP won’t get far in the process. Essentially, it’s bad news for vendors with a business model of overpromising and underdelivering.

Our core value is impartiality. Centigy will only work in the best interests of our clients. Our business model is built around ensuring the client gets the best tool for your business, at the best price and under the best conditions. Being entirely impartial means Centigy can make tailored recommendations based on your particular requirements. This is a fundamentally different business model to consultancies that offer to manage vendor selection in addition to delivering implementations themselves. Our business model is, therefore, truly independent.

This is a challenging time for many businesses. Revenue is down while day to day disruption is at unprecedented levels. I can’t remember a time when doing more with less has been so critical. If the answer to the current business disruption is investing in technology, why not get in touch to see how we can help?

Kevin Butler, Founder of Centigy