How do organizations evaluate bids? A CIO’s perspective

While the business sponsor in the key buyer, the IT team is an important stakeholder in the overall buying process.

We put ourselves in the shoes of the CIO and based on our past interactions, came up with the key points that matter to them. Also covered the probable process/approach they follow in vendor selection. Here's the list>>

1. Business Need>> The bid process really starts with the business need. What business need is the solution expected to solve. Is it giving the buyer organization a first-mover advantage, is it helping in reducing costs or in improving revenues. There can be different use cases which drive the need. But the business need is the starting point. It is important for sellers to identify this key driver for the solution, even though it may not be explicitly highlighted in the requirement. And then tie their solution proposition to this core need.

2. Solution Research>> Once the need is established, then the solution/vendor screening starts. The primary criterion is the product/solution fitment, both in terms of short-term and long-term. Fitment to existing technology stack is an important criterion from any CIO’s perspective. Longevity of the solution is also important as enterprises want partners who will be with them well after the implementation and commissioning. Lastly, what is the solution installed base, are similar companies using the solution already, since when?

3. Vendor Capability>> Vendor’s organizational strength comes next. What is their ability to provide prompt support? This is especially true for business-critical applications such as core banking, ERP, ATM switch, etc. Because for such applications a single minute of downtime can mean loss of revenue or client satisfaction. Does the solution offer any value-adds compared to the requirements? If yes, it illustrates the vendor’s capability/understanding of the functionality/industry and definitely helps the vendor differentiate himself. A point to note by the vendors in this case, is that offering value-adds which you have in your repository but are not valued by the customer, are really no value-adds. Sellers often fall into this trap. They need to validate if their features are truly important to the client and only then emphasize them. Else they will continue to live in their own world believing that they have an advantage over competition.

4. PoC>> If the solution is complex or impacts multiple business processes, vendors may be asked to do a proof of concept (PoC) to show how the solution will work for the given scope/context. This is an important step as it gives the client the confidence that the solution has the necessary elements to meet the given requirements, at least from a breadth perspective. How does the vendor respond to the PoC, what capabilities does s/he show case, how much time s/he takes, are all crucial factors in the evaluation. In many cases the vendor short-list is arrived based on the successful PoC.

5. The Bid>> Once the bids are received the focus shifts to the details. What are the solution elements, the dependencies, the timelines, and the team? Detailed submissions give client the confidence that the vendor has done a thorough job in understanding the requirements and also in identifying the necessary steps towards delivering the solution. This is critical part which most vendors do not give enough attention to.

6. Pricing>> On the pricing front, today most organizations prefer an opex model wherever possible. That is the need of the hour. It gives the buying organization more flexibility and makes the internal justification easier. Payment milestones in line with the deliverables, is a similar expectation. Many vendors think – I have done my job, why should the payment be done later. And that is partly true. But vendors should look at it from the client’s perspective. You might have done the job but that is where the customer’s job starts. They need to take it forward, on-board users, satisfy them, increase adoption. That is when they will really start getting their ROI.

On the subject of L1. Yes, lowest price does not guarantee a win. But if there is no material difference between two competing products and there’s a visible difference in the pricing (and all other things being largely equal), then the lower priced bid will have an advantage

7. SLAs>> Next important criterion are the SLAs. They could be in the form of timelines, uptimes, resolution times, etc. Most organizations have their pre-defined standards for SLAs, which are adjusted based on the application criticality. Here vendors need to ensure they meet the expected benchmarks. And should be willing to accept penalties, if they falter repeatedly.

8. Customer Resources>> Lastly, customers like to know what is required from them – in terms of resources, people, timeline, etc. This ensures that the customers know their responsibilities and are ready for the same in advance.

9. References>> Before the final decision is taken the vendor may be asked to arrange for a reference call with existing customers or a visit to their facilities. Reference call should ideally be one-to-one with no involvement from the vendor’s side. This ensures that both parties are able to trade information in an un-influenced manner. Goes without saying that clients prefer references from their industry and ideally of their size and scale. This enables them to visualize the outcomes better and also plan for any future pitfalls. Visit to the vendor facilities is done to validate the organizational claims made during the bid. And also, to establish a connect with the vendor’s senior management.

The ultimate principle in the entire bid process is to be completely transparent! There is no worst aftermath for the customer than to find elements that were not counted for. This is another area where sellers make a mistake. They believe its ok to hide something in the garb of – where will the client go once the project has started. This is probably the greatest mistake a sales person will commit. Always be crystal clear about the exclusions upfront. Not being transparent can seriously damage the overall goodwill and eliminate the vendor from future opportunities.

All the above factors come into play in taking the final decision. From a CIO perspective, if you have addressed the above points satisfactorily, you will most certainly make it to the short-list. Just a few steps away from the podium.

Comments and observations welcome at hello@pricebid.co.