choice is selected. A successful preliminary screening lets the team cursorily review a comprehensive set of vendors to ensure all options have been considered but then rapidly narrow the list down to a handful of vendors for further due diligence. Exhibit 16.7 shows an overview of this process, from data gathering through due-diligence vendor selection.

The first step of the vendor screening is to identify a full set of potential vendors. The approach for this step is to conduct a sweep of the marketplace for vendors whose service or product offering fits in the scope defined in the previous step. If the scoping step was completed well, the vendor marketplace should be relatively easy to identify.

The team should employ a variety of sources for its vendor search:

Consultants: Large-scale consulting firms often have entire practice areas specializing in the selection of the service or product in question; in these cases, they are often willing to provide free, upfront advice in exchange for an opportunity to be involved in the bidding for later work.

Vendor list data sources

Industry publications

Trade show

Peer companies

Consultants

Web search

Vendor marketing

Financial analysts

Determine screening criteria

Vendor size

Product or service scope

Geographic presence

Industry focus

Screen

for criteria

Vendor size

Industry focus

Geographic presence

Exhibit 16.7 Vendor Screening Process Overview

Industry publications: There are usually several credible, independent publications focused on the marketplace that can provide vendor lists.

Industry trade shows: Many of the larger players in a particular field have a presence at professional services firm industry-specific trade shows.

Peer companies: Managers from firms in the same industry are an often-overlooked source of information, and they can be particularly valuable for their objectivity. Developing peer relationships with similar professional services firms can provide insight into their decision-making processes and rationale as well as give a jump-start on vendor data gathering. Peer managers who have recently been through a similar vendor selection exercise can be particularly helpful.

Focused web search: A web search can turn up candidate vendors as well.

Vendors: Although obtaining facts from the marketing obfuscation found in many vendor brochures and web sites can be difficult, vendor-supplied information can be useful once a specific set of vendors has been identified.

Financial analysts: As outlined earlier in this chapter, most large investment banks or money management firms have one or more full-time analysts covering the market in which a given large-scale vendor competes.

The evaluation team should manage its search using each of these sources to ensure that a reasonably comprehensive list is built. As the team reviews a variety of sources of data, the right list of vendors should fairly easily emerge. Except for the most unique searches, the team should avoid feeling that it needs to scour the earth to identify the suite of potential vendors- vendors that are difficult to find after multiple searches across a variety of sources are not likely to be viable vendors. Good vendors should not be needles in a haystack-the location of an obscure vendor is not necessarily the harbinger of success. Indeed, the best vendor names emerge repeatedly from the research.

The result of this step should be a list of vendors ranging from as few as four to as many as a dozen entries. Although vendors may be added as additional information is uncovered, this is probably the vendor list from which the winning candidate is drawn.

As vendors are added to the list, screening data should be gathered in a template to facilitate analysis. The specific information gathered depends on the vendor selection being completed, but it generally falls into a few categories. These categories are outlined, along with potential information to gather in each category and how much weighting each category might be given, in the following lists.

Vendor Size. Vendors should be of adequate size to continue to invest in the product or service and continue to attract additional customers. Exceptions may be niche-product vendors providing highly specific products or services.

Potential Information to Gather Vendor revenues Vendor profitability Acquisition history

Number ofemployees, staff, product specialists Number ofcustomers Number ofend users

Geographic Presence. Does the vendor have the appropriate geographic focus and availability? Is the vendor sufficiently focused on the geographies that matter for the company (U.S. versus Europe versus Asia versus other geographies that impact how the product works or support is delivered)?

Potential Information to Gather

Corporate headquarters location Nearest branch office Number ofbranch offices

Proximity of branch offices to company branch offices Primary location of development team

Industry Focus. Does the vendor have sufficient expertise in the specific industry to ensure development of the best solution? Does the vendor have a product or service line dedicated to the company industry? Is industry-specific expertise relevant for this evaluation?

Potential Information to Gather

Industry-specific additions/modifications to product or service Industry implementations of product or service (number of implementations/users) Presence of leading industry customers

This type of information is relatively easy to gather and can be used to narrow the vendor list down rapidly. As the information is gathered, the team should begin building a spreadsheet to capture the information.

This process is the most rapid, least-effort method to review the largest number of vendors and rapidly screen out the vendors that are not viable