Six critical success factors for selecting and working with outsourced vendors. Don't make a decision without learning these first!

1. BETTER LEADERSHIP BLOG
BRIDGING THOUGHT AND ACTION.
VENDOR SELECTION BEST PRACTICES -
A PRACTIONER’S PERSPECTIVE
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2. KEY CONSIDERATIONS
• What are the key considerations when selecting an out-
of-house vendor?
• What types of relationships are you trying to build?
• What is the level of trust?
• What are some best practices?
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3. HOW TO EVALUATE AND SELECT
SOURCING PROVIDERS
 Determine your sourcing strategy and what your needs
are. Strategy will determine evaluation and selection
 Create structured, repeatable evaluation processes of
the vendors expertise in order to drive efficiency and
financial benefits
 Your strategy should be supported by a structured
analysis of the sourcing options that balances against
objectives.
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4. HOW TO EVALUATE AND SELECT
SOURCING PROVIDERS
 The evaluation process of outsourced service providers should
entail four primary activities:
I. Sourcing Strategy
II. Evaluation and Selection
III. Contract Development
IV. Sourcing Management / Governance
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5. HOW TO EVALUATE AND SELECT
SOURCING PROVIDERS
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6. THE EVALUATION PROCESS
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7. VENDOR EXPERTISE
LOWEST COST IS ALWAYS THE BEST, RIGHT?
•A service provider without industry specific business knowledge
in your vertical is akin to a ship without a rudder: You’ll never
get where you need to go.
1. How much additional effort will be required on your part to
train, educate and oversee the work? Will they be self-led
or require your input at every turn?
2. What is the additional cost in this oversight?
3. What is the missed opportunity cost?
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8. VENDOR EXPERTISE
Case Study:
•Established vendor vs. new service provider
• A reduction in Time-to-Market by 30%
• Discussion of requirements was reduced by 35%
• Time spent in testing decreased by 20%
• Accelerated knowledge transfer reduces cost. Ultimately,
an experienced vendor will bring new ideas, approaches
and knowledge that can reap huge benefits in the long
term.
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9. CRITICAL SUCCESS FACTORS
CRITICAL SUCCESS FACTOR #1: The involvement of senior executives who have
the birds-eye-view strategy must be committed and involved in the vendor
evaluations
CRITICAL SUCCESS FACTOR #2: Involve your IT organization early on to assure
that the service provider has a deep understanding of the requirements AND the
industry specific domain knowledge (They should assist in the development of
the RFP, SOW, and KPI’s.)
CRITICAL SUCCESS FACTOR #3: If you’re new to this process, hire an advisor. Plan
ahead to establish a set of best practices, a communication plan, and specific
goals of the engagement.
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10. VENDOR Evaluation – Weighted Model
CHANGE THE WEIGHTING TO FIT YOUR SPECIFIC NEEDS:
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11. Better Leadership Blog
About the Author:
Crowe Mead has been leading global sourcing engagements for nearly 15
years. As a management consultant this experience has ranged across the
Wireless, Technology, Energy, Manufacturing, Training and Travel
industries. His work has has resulted in significant cost savings and
improved quality for clients through activities such as product delivery,
the build out of Offshore Development Centers, vendor selection and
performance enhancement, reduced team attrition and the successful
negotiation of nearly $300 million in vendor contracts. You can learn
more about Crowe at www.betterleadershipblog.com
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