The SI engagement playbook
Make no mistake, your SI’s plan to secure a sole source award for your Implementation is set in motion from the moment they land resources to begin the strategy phase of your transformation initiative. There are several key tactics SIs will employ to lay the foundation to obtain a sole source implementation award:
- SIs immediately begin by endearing themselves to your senior leadership and quickly work to establish trust and gain insights into your organization. As that trust builds, they make it harder for other SIs to gain that access.
- Your SI strategy team works hard, as well, to establish trust and rapport with your project leadership team over the 6-10 weeks of strategy development, in such a way that your team can’t imagine reinvesting that time with another provider.
- The SI strategy team manufactures additional leverage in how they represent the timeline. SIs engineer their timeline in such a way that you couldn’t possibly go out to RFP without impacting the productivity of the team. They accomplish this by positioning quick wins post-award that leverage their depth of knowledge and understanding of your business, knowing you would be hard pressed to maintain that cadence should you select a new partner. They know full well you would lose traction and momentum on your implementation as you bring a new SI up to speed, essentially putting your project team on the shelf.
These specific tactics are intended to incent you and your organization to provide them a sole source opportunity to secure an award for your implementation and not take this opportunity to market.
7 effective countermeasures to combat these SI tactics
Despite the tactics your SI has most certainly deployed to ensure you’re deeply invested in the relationship, you may still decide to provide your SI an opportunity to sole source your transformation implementation. As outlined below, there are several countermeasures to use before, during and when exiting a sole source negotiation to combat these SI tactics. These countermeasures are meant to position you to effectively evaluate every step of your decision-making process when contemplating and executing a sole source negotiation.
I. Pre-engagement countermeasures
1. Conduct a readiness assessment
Before committing to a path of sole source negotiation, ask yourself:
- Is your SI ready to transition from strategist to implementation provider? To date, your SI has cultivated a relationship at both the executive and project level providing executive-level investments, subject matter experts (SMEs), and organizational change management (OCM) advisors demonstrated value in strategy and planning. While these qualities drove the highest value in the strategy phase, the shift to implementation requires accountability, a commitment to delivery, and a willingness to share risk. Now is a good time to take stock of the relationship you’ve developed with your SI. Ensure your plan allows the time to evaluate your SI’s ability to make the transition from what made them successful with your strategy engagement to what they must demonstrate to win your implementation award. You will need to critically evaluate their behavior thus far and re-align expectations where necessary.
- Have you planned enough time to conduct sole source negotiations and still go to market if negotiations don’t result in an award? Before you decide if you are willing to provide your SI with the right to win your implementation award, validate that your plan allows time to conduct a sole source negotiation while still preserving time to go to market, if needed. Ensure that your plan accounts for the commitment to additional investments required to engage and educate alternate SI partners and still deliver on your transformation implementation goals. Reinforce with your SI that your plan affords both you and the SI a limited window within which they must demonstrate their plan to successfully implement your transformation with the right resources, commitments and commercial constructs. Setting clear expectations and deadlines will incent the right behavior and response required to get to the most desirable outcome in the time you have allotted.
- How will you demonstrate that you have a competitive deal upon conclusion of your sole source negotiations? Your ability to demonstrate that your deal is competitive to the market is essential to gaining approval for a sole source award within your organization. Lacking competing bids, you can still secure independent verification of the commercial constructs of your deal through third-party validation of the cost, commercial terms, scope and estimate validations. Before you commit to engage in a sole source negotiation, be sure to secure sources that possess SI-specific market intel that will form the basis to assess the competitiveness of your SI proposal response. This will be key to demonstrating the highest levels of due diligence.
2. Secure objective data from your SI strategy team
Prior to exiting the strategy phase, it is critical to ensure you secure from your SI a solid understanding of the scope and effort of your implementation. While you still have your SI under contract completing your strategy phase, ensure you obtain the following outputs that will form the basis of your validation of implementation scope:
- Solid estimates of staffing (yours, the SI’s and any third-parties)
- Transparency into the models your SI used to generate their estimates which will serve as the basis, once confirmed, for objectively evaluating changes in scope and related costs
- WRICEF counts categorized by complexity that will serve as a baseline for scope.
II. Execution countermeasures
Take control of the sole source negotiation process with your SI by setting clear expectations up front in what you expect in an implementation proposal. Reinforce that any decision on a sole source award will be dependent on the strength, completeness and competitiveness of their response. Leverage the executive level engagement to date to communicate, via top-to-top discussion, the expectations you have of your SI.
3. Maintain the same level of rigor as you would have if you went to market
Whether you’ve developed a full-blown RFP for your SI to respond to or you simply solicited a proposal based on the most critical commercial and program-specific terms, setting clear and strong expectations with your SI is key. Your SI will look to pressure test what is and isn’t required to secure their award, making it critical to set expectations on the specifics of what definitive commitments and details are required within their proposal response.
At a minimum, I recommend:
- Inclusion of a good cross-section of your business so that it is not viewed as a sole source decision-making process vs. a sole source award process.
- Inclusion of requirements (both commercial and project) that would have been provided through a normal RFP including named key personnel, full program rate cards, shared-risk financial structure expectations, investment credits and discount structure commitments.
- Validation of the resources proposed by following up with clients of the proposed SI (assessing other client’s experiences with the assigned resources in particular).
- Use of a third-party advisor to validate the commercial components of the proposed deal and the program effort estimate.
- Secured commitment to negotiated terms in contract form (both MSOW and ISOW) while securing rights that allow for an early exit strategy should things not work out.
4. Timebox the sole source evaluation process
Expect your SI to continue with their tactics to ensure a sole source award. Quite often, SIs attempt to elongate the time you’ve allotted to negotiate exclusively with them by delaying responses or providing partial responses to your proposal, re-proposal and clarification requests. Reinforce with your SI throughout the process that a limited window of time exists for them to provide a transparent, comprehensive, highly competitive proposal before taking your implementation opportunity to market. Managing your SI to a tight timeline and providing direct feedback via top-to-top discussions will ensure expectations remain clear while positioning your SI for success. Throughout the negotiation process, continuing to provide candid and precise feedback will be critical to maintaining your timeline and preserving the option to go to market should you not be able to secure agreement with your SI.
5. Leverage third-party benchmarks and your own due diligence
Having secured access to third-party intelligence allows for the objective comparison and review of your SI’s proposal response and will inform your counter proposal(s) as you work to secure a market competitive construct. The most effective benchmarks that will resonate with your SI come from comparable deals (in size, breadth of opportunity, and industry) that your chosen SI has provided to its other customers.
In addition to these external sources, make every effort to vet the talent your SI will commit to bring to support your implementation. Request references from your SI detailing where these named resources have assisted other clients through their implementations and check these references.
III. Negotiation close-out countermeasures
6. Leverage key steering committee/board approval dates to drive negotiations to closure
To ensure your SI isn’t allowed to unduly influence or take control of your timeline, leverage firm steering committee/board approval dates to drive negotiations to closure. Sharing these key executive level readouts will incent the SI to stay on track to your timeline and finalize all open points of negotiation within the time allotted, to place them in the best possible light as you take your recommendations forward for approval.
7. Determine your go/no-go decision
SIs are acutely aware that upon the completion of sole source negotiations you will be evaluating a go/no-go recommendation to take to your board for approval. Ensure your SI knows that you will need to demonstrate how the risks inherent in a sole source negotiation have been mitigated. Incorporating the countermeasures outlined coupled with your own due diligence, you will be able to assess the effectiveness of your efforts to mitigate the risks inherent in a sole source negotiation.
Common risks of a sole source bid include:
- Not receiving as good of a deal in general (inflated, high-level, low-ball estimate, etc.);
- Not having the ability to compare the talent you’ll receive to that of another (you might be getting a good deal on bad talent);
- Not being able to compare the assets that may be available from other companies that could accelerate implementation;
- Missing the opportunity to be more educated on overall risks by not taking the viewpoints of other firms into consideration;
- Opening yourself up to second-guessing if the project fails as a result of a sole source process.
Assessing the extent of how well you have mitigated these risks will help inform your go/no-go decision and assist you in determining if you’re recommending a sole source award or seeking additional competing bids via RFP.