Business Integration Vendor Selection - Process and Criteria

102 Pages·1995·6.3 MB·English

Business
Integration
Vendor
Selection:
And
Process
Criteria
INPUT
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BUSINESS INTEGRATION VENDOR SELECTION: PROCESS AND CRITERIA INPUT
Abstract
The need to improve the processes organisations have in place via which
they buy mission critical, business systems, is a major concern to both IT
user and supplier communities. Users unsurprisingly need to maximise
their chances of making the "right" buying decision, whilst vendors need
to understand the steps by which they are able to benefit fi*om and
influence user's decisions and minimise their own commercial risk.
Improved buying processes can be seen as a part of the attempt to benefit
from the opportunities which correctly utihsed Information Technology
offers an organisation.
The principle objective of this report is to assist vendors of Business
Integration (BI) services in gaining a better understanding of the
dynamics of vendor selection in order to compete successfully in the
increasingly dog-eat-dog BI marketplace.
In summary, the report:
• Analyses the processes users have in place to make selection decisions
and the way in which these processes have been developed. It examines
the roles and the relationships between differing functions in these
processes and also the role external consultants play in these processes.
• Examines the actual criteria, and relative weighting of these criteria,
users have when selecting a suppHer to work major systems
development or integration projects.
• Discusses the marketplace conditions against which Business
Integration vendors are having to compete. It also fists the leading
European Business Integration services providers.
© 1996by INPUT. ReproductionProhibited.
Published by
INPUT
Cornwall House, 55-77 High Street
Slough, Berkshire, SL1 1DZ
United Kingdom
Business integration Programme -
Europe
Business Integration Vendor Selection:
Process And Criteria
Copyright © 1996 by INPUT. All rights reserved.
Printed in the United Kingdom. No part of the
publication may be reproduced or distributed in any
form, or by any means, or stored in a database or
retrieval system, without the prior written permission
ofthe publisher.
The information provided in this report shall be used
only by the employees of and within the current
corporate structure of INPUT'S clients, and will not be
disclosed to any other organisation or person
including parent, subsidiary, or affiliated organisation
without prior written consent of INPUT.
INPUT exercises its best efforts in preparation of the
information provided in this report and believes the
information contained herein to be accurate.
However, INPUT shall have no liability for any loss or
expense that may result from incompleteness or
inaccuracy ofthe information provided.
BIT1 - SIS' 1996
BUSINESS INTEGRATION VENDOR SELECTION: PROCESS AND CRITERIA INPUT
Table of Contents
Introduction
I 1
A. Objectives 1
B. Methodology 3
C. Report Structure 4
INPUT
D. Related Reports 5
II Executive Overview 7
A. Understanding Selection Processes and Criteria are Mutually
Supportive 7
B. Vendor Selection: Art, not Science 9
C. High Premium on Existing Customer Relationships 10
D. Contract Innovation Must Be Driven By Customer Need 12
E. Cultural Issues Are Key 16
F. Cost, Models, and Consultants 17
G. Recommendations to Vendors 18
III Business Integration Users' Selection Processes 19
A. Poor Processes Lead to Poor Decisions 19
B. IT Directors Look to Appear as "Part of the Solution" 22
C. Selection Project Teams are the Norm 25
D. Differing Processes for Different Expenditure Levels 28
E. Bids are Judged Relatively Rather Than Absolutely 33
rV Business Integration Users' Selection Criteria 37
A. Guaranteed Performance is Key 37
B. Financing Requirements Become Crucial in High Risk
Environments 44
C. Importance ofAppropriate Sales "Front End" 45
D. Skills Transfer and Change Management are Increasing
Differentiators 47
E. Formal Certification of Skills Seen as Relatively Unimportant 50
F. Contract Innovation is More Than Marketing 54
BIT1 © 1996by INPUT Reproduction Prohibited. I
BUSINESS INTEGRATION VENDOR SELECTION: PROCESS AND CRITERIA INPUT
V Business Integration Market -Major Trends and
Issues 55
A. New Challenges and Opportunities 55
B. Marketplace Differentiation Set to Increase in Importance 58
C. Changes in High Growth Vertical Market Profile 60
D. Key Areas of Project Focus 62
VI Business Integration Market Defined 65
Appendices
A. Questionnaire used for survey 71
B. Companies Interviewed for Report
C. Exchange Rates
ii © 1996by INPUT. Reproduction Prohibited. BIT1
BUSINESS INTEGRATION VENDOR SELECTION: PROCESS AND CRITERIA INPUT
List of Exhibits
1 Industry Sector Analysis of Questionnaire Respondees
•
II
-1 Key Findings of Report 8
^
-2 Business Integration Vendor Selection - Most Important Criteria 10
-3 Development of Contract Preference 13
-4 Contractual Approaches to European Systems Integration Projects
1990-2000 13
-5 Relative Weightings of "Soft" and "Hard" Issues in Selection
Process 16
III
-1 Views of Existing Processes 21
-2 Influence in Promoting use of a Business Integrator 22
-3 Influence in Selecting a Business Integrator 23
-4 Formation ofVendor Selection Project Team 24
,
-5 Composition ofVendor Selection Team 26
-6 Use of Formal Selection Methodology 27
-7 Projects Under Three Months Duration 28
-8 Projects Between Three and Six Months 29
-9 Projects Over Six Months 29
-10 Use of Formal Expression of Request 30
-11 Use of Formal Invitation to Tender document 30
-12 Evaluation of Prime and Sub Contractors 31
-13 Percentage of Overall Project Cost Spent on Selection Process 32
-14 Percentage of Selection Process Cost Spent on External Advice 32
-15 Use of Formal Methodology to Analyse " Feel Good Factor" 34
BIT1 © 1996by INPUT. Reproduction Prohibited. Ill
BUSINESS INTEGRATION VENDOR SELECTION: PROCESS AND CRITERIA INPUT
IV
-1 Key Selection Qualities 37
-2 Key Selection Qualities Comparison between US and European
Companies 39
-3 Judgement ofVendor's Commercial Stability 44
-4 User's Views of the Relative Importance of the Vendor's Sales
Team
45
-5 Client/SuppHer Relationships ' 47
-6 Importance of Skills Transfer and Change Management 48
-7 Importance of Skills Certification 50
-8 SigniJicance of Risk Factors - CHent Perception 52
-9 Sources of Project Risk - Vendor Assessment of High Risk Factors 53
-10 Users Favoured Method of Project Contracting 54
V
-1 Leading Business Integration Vendors 57
-2 Business Integration Marketplace - Competitive Coverage 59
-3 Systems Integration Services Growth in the Telecommunications
Sector, Europe 1995 - 2000 60
-4 The Broader Professional Services (PS) Opportunity Around SAP
Products 62
VI
-1 Integration of IT and Business Processes 66
-2 Information Services Industry Structure 67
-3 The Customisation Spectrum 67
-4 Systems Integration and Turnkey Mapping 68
-5 Similarity/Differences Between Systems Integration and
Turnkey Systems 69
iv © 1996byINPUT. ReproductionProhibited. BIT1