Part 1

Vendor Analysis and Selection:

SuccessfulBest Practices
In
System Procurements

Porter-Roth Associates 1
 Bud Porter-Roth
Porter-Roth Associates
415-381-6217
bud @rfphandbook.com
http://w w w.rfphandbook.com

Porter-Roth Associates 2
Request for Proposals

Part One:
Spring Training – Review of
Essential Activities

“If you need a machine and don’t buy it,

you pay foritwithout getting it.” Henry Ford
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Determine the Proper
Procurement Type

¾Request for Quote (RFQ)

À Know exactly what you are buying
¾Request for Information (RFI)
À Questions about what you are buying
¾Request for Proposal (RFP)
À Have a clear idea of what you are buying
¾Direct purchase from vendor(s)

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Benefits of an RFP Process

Requires you to:

¾ Establish a real need for new product/system
¾ Define basic requirements
¾ Estimate a budget
¾ Develop and establish project timelines
¾ Consolidate & scrub final requirements
¾ Identify and monitor potential problems
¾ Gather information on products and vendors
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W hen to Use an RFP?

¾ Used when specifications cannot be sufficiently

explicit to permit vendor selection based on
price
¾ Vendor solutions/proposals will be based on
different products
¾ Vendor proposals will differ in the services
provided/offered
¾ Vendor pricing is not for “off-the-shelf” products

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RFP Mechanicals

¾Pre-RFP Activities
¾Project Planning
¾Project Budgeting
¾RFP Activities
¾Post-RFP Activities
¾Evaluation

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Pre-RFP Activities

¾Identify need or problem for project

¾Quick first study to ballpark the solution
¾Organize study team
¾Develop schedules
À RFP schedule
À Project schedule
¾Formal needs analysis study
¾Product and technology education
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Pre-RFP Activities (Cont.)

¾Build list of potential vendors

¾Vendors can include:
À Original vendor
À VARs More on this
À System integrators later.
À Teaming arrangements
¾Send out letters of interest
¾If list is large, try to pare it down – how?
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Pre-RFP Activities – Education

¾Research products, vendors, technologies

¾Attend industry conferences/trade shows
¾Attend vendor demonstrations or bring
them in-house
¾Attend user group meetings
¾Try to get references for similar types of
projects/systems/technologies

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W hich Vendors do W hat?

¾Document imaging
¾Electronic document management
¾Document workflow
¾Content management
¾Enterprise content management
¾Intranet (or Internet) content management
¾Knowledge management
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W ho are the Vendors?

¾How do you decide on a vendor type?

¾Who do you send the RFP to?
¾Where do you get the vendor names?
¾Can you “pre-qualify” some vendors?
¾Is it ok to chat up vendors before the
RFP?
¾What if a vendors says “Nope, too busy”?
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Determine the Proper Vendor
Type

¾Vendor direct
¾VAR
¾System integrator
¾Other?

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Vendors, VARs & System
Integrators

¾Vendor – makes the product ??? Or

combines products from others
¾VARs – adds “value” to a standard product
and are somewhat limited in their focus
¾System Integrator – concentrates on
integrating hardware and software
components from different vendors

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Project Planning 

¾Develop reverse calendar

¾Beginning with the “go live” date & list all
of the activities providing a start/stop date
for each activity
¾Work the calendar backward to get the
intended project starting date – “today”
¾Be amazed at how little time you have!

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Overall Planning Considerations 

¾Time to write an RFP

¾Time for proposals to be written
¾Time to evaluate responses
¾Vendor questions and answers
¾Time for product demonstrations
¾Time for reference checks & site visits
¾Time for negotiations and award
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Needs Analysis Study

¾Identify problem/need
¾Interview users or identify what work is
processed or what work is performed by
the equipment
¾Write functional requirements
¾Identify potential products/technologies
¾Estimate potential costs
¾Develop ROI
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RFP Activities

¾Write RFP
More on this
¾Send to vendors in Part 2.
¾Hold vendor conference
¾Respond to vendors’ questions
¾Receive proposals

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Post-RFP Activities (cont.)

¾Evaluate proposals
¾Short list of vendors established
¾Vendor demonstrations (short list only)
¾Reference site visits
¾Reference checks for non-site visits
¾Negotiate contract with potential winner
¾Award contract
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Evaluation Criteria Philosophy

¾Consistent with, and based on, RFP

requirements
¾Points or weights consistent with project
objectives

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Purpose of Evaluation Criteria Is
To Determine That….

¾Vendor has relevant experience

¾Vendor understands the task
¾Vendor can demonstrate appropriate
resources
¾Vendor has appropriate products
¾Vendor has appropriate
management/implementation skills

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Proposal Evaluation Strategies

¾Provide evaluation criteria or not?

¾Requirements and evaluation points go
together
¾Evaluation is a way to measure
compliance
¾Evaluation can be both subjective and
objective

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Evaluation Recommendation &
Report

¾Names of all vendors

¾Outstanding issues/problems
¾Evaluation criteria review
¾Review of short listed vendors
¾Final recommendation
¾Reasons why

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Subjective Evaluation

¾ Follow the letter or spirit of the RFP

¾ Professionalism of proposal and communications
¾ Professionalism of vendor personnel (However,
don’t confuse a salesman with the
product/company.)
¾ Are there clues that a company is struggling?
(Annual report, 10K, recent layoffs, sale rumors)
¾ Can you work with this group?

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Objective Evaluation

¾Meets mandatory administrative

requirements
¾Meets mandatory technical requirements
¾Meets mandatory management
requirements
¾Pricing can be normalized and is within
the competitive range

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W hat is the Co mpetitive $$
Range?

¾Consistent with estimated budget

¾Consistent with other proposals
¾Within approximately 25% of each other
for pricing

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Scoring and Evaluations

¾Simple good/bad/maybe?
¾Numerical scoring
À Technical = 50 pts Management = 50 pts
¾Weighted scoring
À Project plan multiplier *2

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Exam ple Matrix – Non-weighted
Description Points

Administrative requirements 100

Technical requirements 100

Management requirements 100

Price 100

Presentation & demonstration 100

Total 500

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Non-W eighted Evaluation Detail

RFP Point Total

Reference Value Points
2.5 Search Requirements 200
2.5.1 Search methods
2.5.1.1 Std key word search 25 25
2.5.1.2 Std Boolean search 25 20
2.5.1.3 Natural language search 25 15
2.5.1.4 Proximity search 25 25
2.5.2 Use of Metatags 100 100
Bonus points for additional search methods 10 0

Based on an equal point value of 200 for each section.

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Simple Matrix - Weighted

Description Points

Administrative requirements 50

Technical requirements 400

Management requirements 200

Price 300

Presentation & demonstration 50

Total 1000

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Co mplex Matrix - Weighted 
Section Weight Score Total

Admin 0.1 90 9
Tech 0.4 80 32
Manag 0.3 75 22.5
Ref 0.1 86 8.6
Price 0.1 90 9
(=100) 81.1

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Evaluating Risk

¾“Risk” is a potential issue with

À a vendor
À a product
À your staff
À the project itself
¾Risk can be an important evaluation factor
¾Note what are some examples of risk in
your project

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Evaluating Price

¾Not “only” evaluation factor if “value” is

primary consideration
¾Ratio of overall score to price to get a
value per dollar figure
¾Must have apples to apples comparison
¾What happens when prices range from
$500,000 to $5,000,000

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Validating Vendor Pricing

¾Compare with other vendors

¾Compare to estimated budget
¾Outside estimates from consultants
¾Prior projects

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Price Variations Among Vendors
When pricing varies by more than twenty-five percent in either direction, the RFP
requirements should be reviewed to determine where the pricing discrepancy lies. For
example, based on an estimated budget of $750,000, you receive the following:
$300,000
$325,000
$675,000
$1,700,000
$1,825,000
$2,000,000
If we are trying to keep within a 25% differential, pricing should fall between:
$560,000 to $940.000
If the above prices were received, something was wrong. Where did this RFP possibly
go wrong?

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Price Variations Among Vendors

A more reasonable price spread, based on $750,000 budget, would look like:
$550,000
$625,000
$700,000
$825,000
$1,000,000

Remember the 25% spread would be $560,000 to $940,000

Also, remember that prices submitted with the proposal are not the “final” prices and
(sometimes) the list pricing could easily be reduced.

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Conclusion

¾Questions?

Thank You

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