Vendor evaluation is often inadequate. Typically, pricing and systems criteria are given greater weight in the decision versus people and performance management. In some cases, vendor selection is based on past business relationships rather than a pragmatic evaluation of capabilities.
The following vendor evaluation protocol provides guidance regarding the key areas to consider in vendor evaluation and a point scale for weighing each component of a vendor’s capabilities. Companies can compare vendors objectively by rating each vendor’s capability in each area and weighting according to the percentages and then adding up the total.
COST MANAGEMENT
10% Pricing Process
15% Price Projections
PERFORMANCE MANAGEMENT
8% Relationship
8% Risk and Compliance
4% Transition and Migration
3% Vendor Suitability
2% Future Service Provision
PEOPLE MANAGEMENT
10% Human Resources Management
10% Cultural Integration
4% Transition and Migration
1% Compliance
SYSTEMS MANAGEMENT
10% Service Management
4% Compliance
4% Disaster Recovery
4% Cost Savings
3% Technical Innovation
Source: Deloitte Consulting: Working Council for Chief Financial Officers research. http://bit.ly/babwO1
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