Enhanced and Measurable Criteria Uncover Hidden Differentiators
UpperEdge, an independent third-party advisory company that empowers organizations to get the most value from their IT supplier relationships, has redefined and revamped how companies undertaking digital transformations need to evaluate, select, and negotiate with System Implementation (SIs) firms.
According to the McKinsey Global Survey on Digital Strategy, post-pandemic companies have started to take a more strategic view of technology. More than half of respondents say their companies are looking to technology as a way to strategically differentiate themselves from competitors. Bolder, at-scale investments in technology are significantly more likely to support a successful transformation than those that are smaller in scope.
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Given this, companies undertaking digital transformations are engaging with partners such as Accenture, Capgemini, Deloitte, EY, IBM, and PWC to support their transformation journey through strategy and business case development, design and implementation, and ongoing maintenance of mission critical platforms.
Given current demand for SI services, wage inflation and an overall war for talent amongst the SIs, those considering SI engagements to support their digital transformation require vendors to differentiate themselves beyond just talent and terms. They need to reevaluate their overall selection criteria for picking SIs and refrain from using criteria from 10 years ago that’s no longer relevant to the current market.
Aside from the measurable criteria you can compare on a spreadsheet, there are non-measurables or intangibles, such as the relationships of your senior executives to those of the SI’s, how well their connection is to the solutions you are implementing, etc.
“SIs are coming in with low prices for Phase 0 projects, cultivating a relationship, generating a sole source proposal, and urging their clients to avoid going out to RFP. This practice limits the examination of the differences between various SIs to select the firm that’s a best fit,” said John Belden, Project Execution Advisory Services Practice Leader at UpperEdge.
“It’s not uncommon for vendors to press their executive relationships, promise significant value delivery and an opportunity to move quickly to justify a sole-source approach. Beware of the vendor’s motives as, more often than not, this is an effort to onboard a client and minimize that client’s ability to fully vet critical decisions and to maximize the downstream revenue opportunity for the vendor,” according to Justin Parker, IT Sourcing & Commercial Advisory Practice Director at UpperEdge.
“While sole-source is an approach, it is one that should be leveraged as a broader integrated sourcing strategy to ensure you’re in the decision-making driver’s seat,” Parker added.
When conducting an evaluation and selection for these services, there are several areas of focus:
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- Assets. The firm that has assets that are most closely aligned with a customer’s business model and future state will provide the lowest estimated number of hours and a lower risk profile on delivery execution.
- Approach and Participation Variation. Participation variances are as high as 50% between different SIs. While less user participation will yield a higher price tag, it can also create a more attainable delivery model.
- Estimating Accuracy. All firms selectively leave things out of an estimate as a means of delivering a lower cost proposal. With multiple firms, these gaps are more identifiable leading to a more accurate initial program estimate.
- Talent Application. When firms know they are competing, they are likely to put forward a higher grade of talent. If all things are equal, then talent always wins.
- Return Enhancement. Pressing vendors to identify potential additional value streams that may be delivered by the program can improve the overall business case.
UpperEdge will provide a framework and offer insights into its recommended partner assessment and selection criteria including total cost and terms, teams and talent, and tools and technology in a webinar, “Selecting the Right Implementation Partner,” on March 30th at 11:00 EDT. Register at https://bit.ly/3tYgUmA and you will be sent the recording even if you cannot attend.
