Why should a business consider running a formal vendor selection process?

1. To understand the variety of options in the market 

The market has several competitors offering a variety of products and services (PaaS, SaaS, deployed technology).

  • PaaS (Platform as a Service) combines end to end (E2E) software and infrastructure with back-office operations, processing and risk management. It allows a single entity to own, control and therefore continuously optimise E2E process automation and straight-through-processing
  • SaaS (Software as a Service) is application software you use via the cloud or virtual machine, as if it were installed on your computer. It enables the business to use an application without having the expense of setting up the infrastructure or the resources to maintain it. the expense of setting up the infrastructure to run it and the effort and personnel to maintain it
  • Deployed Technology is an implemented physical technology and IT stack

2. Requirements

Vendor selection will assess and understand the requirements and principles of why the business is going through the re-platforming. They can then assess their requirements against the competitors in the market, allowing them to select the most suitable vendor. Understanding the expectations and needs is a vital process to confirm that re-platforming is the right thing to do. It is important that a business does not choose a platform just because their competitors have used them, what suits their model and strategy may be very different.

3. De-risk implementation

Overcoming numerous common problems that can arise during a platform transformation, such as;

Governance and Ways of Working

  • Poor leadership / culture – it is important to define a clear escalation channel to senior vendor ownership
  • Unclear Governance model – it is important to define the right governance model to provide transparency and privacy
  • Insufficient delivery model – if the model is not clear, handoffs fail and gaps emerge causing delays
  • Poor MI – it is critical that joint MI is agreed to track progress and progress must be objective
  • Change resistant team – if the team is resistant to change they will not support the transformation and not deliver the programme effectively, it is important any resistance to change is identified and steps are put in place to overcome it
  • Reputational damage – if the transformation is not successful and leads to customers not being able to log into their account for prolonged periods of time or the system is less user friendly, this will impact their reputation 
  • Lack of financial support – platform transformations can be very costly to the business, it is important they have sufficient financial support in order to conduct the transformation in the most successful way

Solution Design

  • Inadequate planning - it is important to achieve early agreement of the Technical design principles and the approach for the API development
  • Unclear requirements – it is critical, particularly if the requirements are core out of the box functionalities, that these are understood
  • Vague configuration management – it is important to agree an approach to govern change and releases

Quality Management

  • Unclear acceptance criteria – it is crucial that clear acceptance criteria is defined to accept the product build
  • Unclear vendor testing scope – it is important test scoping is clearing defined and agreed for the vendor and measurement is agreed
  • Multiple QM tools – challenges can arise from using multiple QM tools

Common challenges seen during a vendor selection 

Unclear Scope and Requirements 

If scope and requirements are unclear, it is then difficult to understand which vendor is most appropriate for the business. This could result in selecting a vendor which does not offer the services and products the business requires, or by underestimating the scope you may have to invest more money and time into the programme at a later point and secure additional funding. Having clear scope and requirements enables the team to conduct a market scan allowing them to initial create a long list that then will be cut to a short list as the team learn more about the requirements as the programme matures.

Time consuming process 

RFPs can take a long time to create as there are numerous documents to be produced. It is especially time consuming if clients are starting this from scratch with no previous materials or accelerators. Furthermore, reviewing, scoring and comparing the responses from the vendors can take a lot of time and effort to set up the comparative effort if you do not have the tools and templates to do so.

Capacity constraints 

Significant engagement from subject matter experts across the business is required for a vendor selection to be successful. This can be difficult when capacity is squeezed and coordinating all the required resources (especially if there are differing time zones) can be difficult.

Change Resistant 

Key stakeholder and resources may not buy into the project as they do not understand the need for the change and therefore are not willing to support and may appear change resistant. It is important key stakeholders and resources are engaged early to secure buy-in and sponsorship for the change.

Team Vendor Selection experience 

Your team can be extremely knowledgeable in their field of work, for example they will have extensive knowledge of investment and wealth products, however, they have little or no experience in writing or assessing an RFP. They may also not have a lot of knowledge about the vendor market landscape. This could result in an inappropriate RFP being written and shared to the wrong vendors.