Vendor Selection

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Mr. Shullich recently managed a successful project to execute a product selection for an ERP system which will replace many back office systems. This presentation is a case study of the project.

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Vendor Selection

  1. 1. Vendor Selection Michael Shullich, CISSP, PMP
  2. 2. <ul><li>Defined Methodology </li></ul><ul><ul><li>Identification of best vendor/product </li></ul></ul><ul><ul><li>Efficient and repeatable process </li></ul></ul><ul><ul><li>Quantitative & qualitative scoring </li></ul></ul><ul><ul><li>Compliance </li></ul></ul><ul><ul><li>Address potential vendor challenges </li></ul></ul><ul><li>Sample Presentation Template to use </li></ul>
  3. 3. <ul><li>www.pmi.org/PDF/ap_pmicodeofethics.pdf </li></ul><ul><li>CHAPTER 4. FAIRNESS </li></ul><ul><li>4.1 Description of Fairness </li></ul><ul><li>Fairness is our duty to make decisions and act impartially and objectively. Our conduct must be free from competing self interest, prejudice, and favoritism. </li></ul><ul><li>4.3 Fairness: Mandatory Standards </li></ul><ul><li>As practitioners in the global project management community, we require the following of ourselves and our fellow practitioners: Conflict of Interest Situations </li></ul>
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  5. 5. 1 3 5 7 9 12 14 16
  6. 6. 4 = Must Have Without this requirement the system will not be considered for evaluation. 3 = Very Important It would be extremely difficult to function without this feature. 2 = Important This feature should be included. Can function without this feature but it will have a negative affect on performance. 1 = Desirable Although this feature is beneficial, its absence will not significantly degrade the system but its presence will improve efficiency.
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  9. 9. Evaluation Score Description Exceptional 1.00 Exceeds basic needs and provides significant additional useful value and potential Meets Requirements Well 0.75 The system compares well with competitors, meets all essential needs and gives all that’s needed Meets Minimal Requirements Only 0.50 System does not compare well to best performers in this category, but still does enough to be useful Meets Partial Requirements 0.25 The system does not meet all necessary requirements in this area, but does contribute some partial value Does Not Meet Requirements 0.00 The system does not meet any of the basic requirements at all
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  11. 11. Company Vendor A <logo> Vendor B <logo> Vendor C <logo> Product Product-A Product-B Product-C Employees 1,025 6,000 960 Location UK Los Angeles, Ca San Jose, CA Technology Window Servers Windows, Unix Cloud Experience Founded 1980 Revenue $300M Founded 1981 Revenue $400 M Founded 1998 Revenue $200M Potential 3 – Medium 4 – High 4 – High Customers 1,000 Customers 2,000 Customers 8,000 customers Pros Mature product Comprehensive solution Mature product Low initial Cost Good fit out of the box Cons Overly Microsoft centric Implementation High initial cost Implementation Company Not Profitable
  12. 12. Max Vendor-A Vendor-B Vendor-C Vendor Profile 23.00 16.50 20.75 15.25 Core Functionality 29.00 15.75 17.25 18.75 Extended Functionality 6.00 3.00 3.75 3.75 Regulatory 6.00 4.50 4.50 4.50 Technical 15.00 9.00 11.25 12.00 Usability 21.00 12.75 14.25 14.25 Overall Score 61.50 71.75 68.50 <ul><li>Vendor Profile : Global reach, stability, innovative, reputation, capabilities, resources </li></ul><ul><li>Core Functionality : <list items evaluated> </li></ul><ul><li>Extended functionality : <list items evaluated> </li></ul><ul><li>Regulatory : <list items evaluated> </li></ul><ul><li>Technical : <list items evaluated> </li></ul><ul><li>Usability : <list items evaluated> </li></ul>
  13. 13. Vendor-A Vendor-B Vendor-C One Time <ul><ul><li>Core Licenses </li></ul></ul>$50 $50 $35 <ul><ul><li>Implementation & Training </li></ul></ul>$50 $50 $35 Reoccurring <ul><ul><li>Annual Maintenance </li></ul></ul>$25 $15 $17 First Year Total $125 $115 $70 Five Year Total $245 $235 $140 Five Year Avg. / yr $49 $47 $28 <ul><li>Vendor-A not discounted </li></ul><ul><li>Totals do not include sales tax </li></ul><ul><li>Includes Price increase 5% on maintenance </li></ul><ul><li>Does not include 3 rd party software </li></ul><ul><li>Does not include any additional staffing </li></ul>
  14. 14. Cost vs. Functionality (sample) Estimated 1 st Year Cost Percentage of Requirements Met 40 70 100 $150k $0k $50k $100 A C B $200K Vendor C C B Vendor B A Vendor A

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