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Selecting and Managing IT Vendors

Originally published at TechSoup.org as Selecting and Managing IT Vendors on June 2, 2008.

Unless you know how to build computers from scratch and write your own software, it’s likely that you’ll have to talk with IT vendors sooner or later. Nonprofits have a lot of leverage when it comes to building and managing vendor relationships, but we don’t always know how to exercise our power. Getting the best service and the best price takes some thought and planning.

Below, we’ll break down the process of working with vendors and recommend a few good articles for each step along the way. We’ve used fairly general language (“project,” “purchase,” “purchasing decision”) to describe this process because our advice applies to a wide variety of situations. You may be looking to buy a workstation, a printer, a suite of productivity software, or an operating system. On the other hand, you might be in the market for a consultant or a contractor to build a database or a Web site.

Why Pay Attention to Vendor Selection and Vendor Management?

Key Actions to Consider:

10 Steps to Working Successfully with Vendors

STEP ACTION TO LEARN MORE
1 Determine if this is the right time to make this purchase. NPower’s guide to Selecting the Right Technology Vendor offers five criteria for deciding if you’re ready for a particular technology project. See the section on “Assessing Feasibility.”
2 If the project involves considerable time and labor, decide if you should outsource it. In other words, do you really need a vendor…or should you keep the project in-house? Summit Collaborative offers guidance for answering this question in its article Determining Whether to Outsource.
3 Figure out your organization’s needs. What are you trying to change in your organization by buying this product or service? What are the outcomes you’re trying to achieve? The article can help you define your needs up front. If you create a formal requirements document (also known as a needs assessment) that defines your required and desired outcomes, you can use this as the basis of your RFP and your vendor evaluation matrix.
4 Determine if you should write an RFP. Call your finance department or funder and ask if there’s a policy on RFPs. Frequently, RFPs are required above a certain dollar amount (for example, for bids exceeding $5,000 or $10,000). The article An Overview of the RFP Process for Nonprofits and Libraries explains the difference between an RFP (request for proposal), an RFI (request for information), and an RFQ (request for quotation), and provides guidelines to help you decide between a formal and an informal RFP process.
5 Become an RFP pro. The articles Writing an RFP and The RFP: Writing One and Responding to One each provide helpful RFP checklists to get you started. Beyond the Template: Writing an RFP that Works offers additional advice on making your RFP stand out from the crowd.
6 Research possible vendors. TechSoup’s Nine Tips for Navigating the RFP Research Phase recommends places to turn to when you’re researching a vendor’s track record, while TechRepublic’s Follow These Guides on the Road to a Valuable Vendor Relationship emphasizes the importance of checking a vendor’s references.
7 Develop vendor selection criteria. Idealware’s article Vendors as Allies: How to Evaluate Viability, Service, and Commitment offers some great suggestions about the criteria you should apply when choosing a software vendor, especially when the software in question is large, complex, and mission-critical.

NPower’s Selecting the Right Technology Vendor (510 KB PDF) includes a thorough list of evaluation criteria in its appendix.

8 Negotiate and write the Contract. Work with your organization’s individual or departmental expert in contract rules and regulations. Turn to them first so that you abide by the relevant laws and policies. However, for large, complex, important projects, make sure you and your colleagues are involved in drawing up the contract. TechSoup’s Writing a Contract offers helpful guidelines on contract negotiation, while Casanet’s Putting Agreements in Writing outlines the key elements of a written contract.

It may be appropriate to put a service level agreement (SLA) into some contracts, which defines the performance level a provider is bound to. For more information, see HelpDesk Journal’s Service Level Agreements Boot Camp, and Computerworld’s SLA 101: What to Look for in a Service-Level Agreement.

9 Manage Your Vendor Relationships. You can’t just sign a contract and then ignore your vendor. For tips on how to keep that relationship running smoothly, read Marc and Beth’s article on Techsoup.
10 Evaluate Your Vendor Relationships. Examine the market and your organization’s needs on a regular basis. The best vendor last year won’t necessarily be the best vendor this year. On the flip side, a long-term vendor relationship can pay off in service and perks. Also, a well-written contract often includes benchmarks that you can use later to evaluate the vendor performance.
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