Business analysts use vendor assessment to evaluate the ability of a vendor to deliver and support a product or service.
If the solution is being provided by an external vendors there may be particular requirements in regards to the involvement of the third party vendor.
Those requirements might include: a need to ensure that the supplier is financially secure, the ability to maintain specific staffing levels, compliance with standards, and the ability to allocate suitably skilled staff to support the solution.
A vendor assessment is performed to ensure that the vendor is dependable and that the product and service meet the organization’s expectations and requirements.
The assessment may be conducted formally through the submission of a Request for Information (RFI), Request for Quote (RFQ), Request for Tender (RFT), or Request for Proposal (RFP). It may also be informally performed through word of mouth and recommendations.
The level of formality may be affected by organizational standards, the difficulty of the initiative, and the cruciality of the solution.
Vendor assessment has some components, which include:
1. Knowledge and expertise: Outsourcing the solution implementation to third-party vendors could provide knowledge and expertise not readily available within the organization.
It may be advisable to get vendors with expertise in specific technologies with the goal of having that expertise transferred to people within the enterprise.
2 Licensing and pricing models: The licensing or pricing model may be important when the solution is purchased from or outsourced to a third party vendor.
Usually there are numerous solutions with similar functionalities but different licensing models. So the different scenarios can be used to decide which option will provide the best cost-benefit ratio.
3 Vendor market position: the potential vendors should be compared to decide on the right one to chose. The comparison of the organization’s profile with each vendor’s customer community may also be used as an element in the assessment.
4 Terms and conditions: Terms and conditions refer to the progression and honesty of the provided products and services.
The organization should investigate if the vendor’s licensing terms, intellectual property rights and technology infrastructure would cause problems if the organization later chooses to change suppliers in the future.
There may also be questions related to the vendor’s use of,
and responsibility for protecting, the organization’s confidential data.
Considerations should also include, which customizations of the product will be implemented, the availability of a regular update schedule and roadmap of features that are planned for the solution’s delivery.
5 Vendor experience, reputation, and stability: References from the vendor’s previous customers could provide valuable information on how likely they are to meet their contractual and non contractual obligations.
Vendors should also be assessed for accordance and compliance with pertinent standards for quality, security, and professionalism.
Vendor assessment has its strength and limitations, which include:
Strengths
• It increases the chances of developing a productive and fair relationship with a suitable and reliable vendor, and improves the long-term satisfaction with the decision.
Limitations
• It may be a time consuming and tedious activity.
• It does not prevent the risk of failure as the partnership changes.
• The vendor assessment results may be biased based on the stakeholders subjectivity.