3 must-ask questions while evaluating vendors for digital initiatives

Capabilities that determine whether or not your initiative will have strategic potential

evaluation ts

It pays to be more careful today. If you look at the websites of tech vendors, you’ll find that some of them have simply added new jargon such as "digital," "customer experience design," and "blockchain" – without first gaining expertise in those areas. A subset of these vendors simply searched for the term “IT” and replaced it with “digital,” turning their content into plain nonsense.

In today’s digital era, should you take a re-look at the criteria you've always used to evaluate vendors? There are a good many reasons to do so.

Corporate goals have changed; smaller companies are the future, as suggested at the Bloomberg Global Business Forum 2017. Second, strategies are no longer limited to the traditional four: low cost, product leader, complete solutions, and lock-in. Third, business models have changed so much you may not find comparable ones in the past. Fourth, a much larger number of shiny new technologies are out there today (although the ones that matter the most were probably invented in the 1990s or earlier).

All these mean one thing: There’s a need for change in the methods and in the skillsets. And that means a need to re-evaluate the vendor selection criteria. Here are three that are probably the most important for organizations.

1. Do they understand the broader horizon?

In the past, the question often used to be, “Do you know inventory management?” Today the horizon is broader. As described in “Digital success: 3 areas where you need to broaden your horizons,” the scope is a “reservoir,” which might comprise several processes, including multiple channels, external consumer processes, or even processes that belong to a different industry.

2. Do they have strategy translation method and skillset?

Since strategic themes that drive digital initiatives may span multiple processes, the vendor needs to have the capability to start with such a broad strategic theme (or objectives) and translate it into a strategic architecture. And that includes the ability to choose tech elements that can make a strategic contribution.

Strategy translation is a multi-disciplinary skillset and therefore hard to find in a single vendor – whether it’s a tech vendor or a management/design consulting firm. For your initiative's success though, the vendor – by themselves or with their partners – must bring strategy translation method and skillset to your organization.

3. Do they have the capability to define the most appropriate technology stack/architecture?

Choosing one or more tech elements that can collectively contribute to strategic outcomes is one thing (part of question 2 above). Defining the technology stack/architecture is another. Does the tech vendor have the skillset to recommend and apply the most appropriate technology stack to implement the strategic architecture created as part of strategy translation? For example, if one of your tech elements will be on cloud, requiring a certain level of elasticity, and used by thousands of users, NoSQL might be more appropriate than MySQL.

End note

We just focused on the primary set of criteria, without which your digital initiative will not have the potential to generate the strategic outcomes targeted.

All other questions, relating to cost, schedules, etc., are important too, but secondary. The fact that they are secondary may not be obvious at first. Only if the tech, when operational, fails to generate strategic outcomes will that become obvious.

If potential vendors want to talk about their company in terms of vision, mission, and such things, request them to move it all to the end of the conversation or document. What's much more important is that they show you public or "sanitized" versions of actual similar projects they have done that demonstrate their capability in the primary three areas.

While traditional vendor selection tools such as Gartner's are still very helpful, it's critical now to pay attention to the three most important selection criteria.

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