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Gartner @ Xplor

Gartner Decision Tools for Vendor Selection

Ralph Witcher
Director, SW Specialist

Decision Tools for Vendor Selection

What Is It?
Decision Tools for
Vendor Selection
is Gartners
dedicated IT
vendor and
product selection
service.

Created in 1995,
Gartners Decision
Tools for Vendor
Selection
covers technology
selections in over 20
IT areas.

Gartners Decision
Tools for Vendor
Selection helps
organizations make
better, faster and
more cost-effective
technology
selections.

Gartner helps end users make >5,000 vendor selections

Why Decision Tools for Vendor Selection?

Enterprises that have replaced ad hoc acquisition


programs with systematic acquisition programs have
reduced procurement costs by 15 percent to 18 percent.

Through 2004, a managed procurement process that


reflects an enterprise's organizational structure, business
objectives and implementation capabilities will reduce
time to implementation by at least 30 percent (0.7
probability).

Although a comprehensive request for proposal (RFP)


costs a typical enterprise $100,000 to $150,000, an RFP
will reduce the TCO by at least 5 percent when $2 million
or more is involved (0.7 probability).

Vendor Selection: Challenges Illuminated


...Can You Feel the Pain?
Top Organizational Challenges:
Selection not a core
competency

Top Project Team Challenges:

Identify appropriate
differentiating criteria

Unrealistic timelines and


expectations

Structure criteria into


appropriate context

Divided attention

Uncertain scope

Assign relative
importance within this
structure

Tactical instead of
strategic focus

Political agendas

Gather and validate


objective vendor
information

Justify the selection


throughout the
organization

Help!!

Gartner Decision Tools for Vendor Selection


Selecting the right vendor is a daunting task involving a
thorny process that often results in destructive chaos within
organizations.

Challenges . . .
Time:
3-to-15-month cycle time
9 months average elapsed time
Resources:
8 to 20 persons on decision team
Cost:
Selection costs 20% to 40% of dollars
spent
$500,000 purchase cost $100,000
to $200,000 selection
Risk:
An inappropriate selection
Potential project failure
Negative impact on business
processes

Goal!

To get it right!!

Gartner Provides the Answers


How should I structure vendor selections?

What criteria should I consider?

How do I weigh each criterion?

Where do I get the vendor performance data?

What?

When?

How?

The Value Proposition


Enables better, faster and more cost-effective decisions by
providing a consistent decision methodology that
encompasses key selection criteria and objective analysis
on IT suppliers.
Save Time
Value

Build Consensus
Make Better Decisions

Enables clients to simulate


plausible outcomes with all
vendors considered while
discerning their unique trade-offs
as their capabilities are mapped to
your enterprise requirements.

The Gartner Methodology


Process Methodology
Internal Needs Assessment:
Create project team
Needs identification
Mandatory
Valued
Nice to have
Requirements definition
Long list
RFI/RFP issued
Detailed Vendor Analysis:
Evaluate responses
Mandatory requirements analysis
Short list
Detailed vendor analysis and RFP
Scripted demos
Select finalists

Negotiation and Final Selection:


Develop Ts and Cs
Negotiating strategy
Negotiate contract
Select winner
Place contract

Research Methodology
Market data is derived from
three distinct sources:

Technology vendors. All


vendors covered by Gartners
Decision Tools must complete
a detailed request for
information (RFI).

End-user community. Analysts


turn to end users experienced
with vendors and vendor
products to tap into their
wisdom about what the
products can and cannot do.

Gartner research and


analysis. All areas of the
Gartner analyst community
participate in collaborative
research that focuses on
vendors strategic direction
and viability.

Combines Gartners
Research
With

Selection Methodology
Refined Hierarchical
Analysis (RHA)

Draws upon Gartners


extensive experience with
Fortune 1000 companies
that use the advice and
guidance of Gartner
analysts to make strategic
decisions

Being used by
commercial,
governmental, military and
nonprofit organizations
around the world

Research
Process
Math

What Criteria Do We Cover?

Decision driver models evaluate five


top-level criteria
Product Generally available field-deployed
product capabilities
Cost Initial and ongoing investments
Services and support Professional services and
support capabilities
Viability Financial and organizational viability
Vision Assessment of vendors product, corporate and
marketplace direction

Decision-specific criteria

Deliverables
Decision Engine
Software
21-Step Best Practices
Approach to Making IT
Decisions
Monthly Database
Updates
Best-of-Breed RFI
Unmetered Telephone
Access to the Vendor
Selection Analysts

Decision Tools for Vendor Selection Library


Models

Models (Cont'd)

Multifunctional Product (MFP)

Enterprise Information Portal

Enterprise Resource Planning Suite


Integrated Financials and HR Software
Intel-Based Hardware Suite

Enterprise Server Platforms


Integrated Document Management
Intel-Class Hardware Desktop
Intel-Class Hardware Notebook
Midmarket ERP Software

Asset Management Repository

Marketing Automation

Financial System Application Software

Contact Center Infrastructure

HR Application Software

Sales Force Automation

Content Management Services


Convergence Server Solutions
Customer Service and Support Software
Consolidated Service Desk
Extraction, Transformation and Loading
Provisioning
Customer Relationship Management Suite

Gartners Decision Tools for Vendor Selection Cost Justification


Enterprise Resource Planning (ERP) Selection Evaluation Services
Average Product
Selection Time in
the Enterprise
Management
Market

Average Number
of People Within
Organization Who
Consider Decision

Without
Gartner

6-18
Months

12

With
Gartner

3-6 Months

Soft Dollar Savings


$68,750

Hard Dollar Savings


$$$$$

Average Cost to
Organization of Product
Selection for Enterprise
Resource Planning*

$225,000 in
labor costs
$131,250 labor
+$25,000 Gartner
$156,250

Assumptions: Individual
spends one-quarter of
total time researching,
reviewing and negotiating
for selection of a
prepackaged business
application product.
Individual is salaried at
$75,000 per year.

Client

Final Quote
from Vendor

Final
Purchase
Price

Approximate
Amount
Saved

Manufacturing
Company in
Northeastern U.S.

$1,564,000 including
manufacturing, accounting and
supply chain software, services
and maintenance

$915,000

$649,000

Manufacturing
Concern in the
Southwest

$1,640,000 including
accounting and HR software,
project management and
maintenance

$650,000

$990,000

West Coast: CPG


Services Company

$1,100,000 including software,


services and maintenance

$550,000

$550,000

Gartner @ Xplor
Gartner Decision Tools for Vendor Selection

Ralph Witcher
Director, SW Specialist