It is well established that the pandemic triggered an acceleration of digital transformation efforts across most businesses and industry sectors. Companies were forced to make rapid and radical changes to their normal working patterns, and the issues they faced to enable remote working drove home the fact that legacy systems were no longer fit for purpose and could not deliver what was required. Organisations soon realised that the best solution to this problem was to embrace cloud solutions, and all that it offered in terms of flexibility, scalability and ROI.
Processes were reshaped as businesses deployed cloud at pace, redefining operations and service models. However, what many companies perhaps weren’t prepared for was how different it was to procure a cloud solution compared to the traditional on-premise legacy software purchase. The most significant difference is that whereas the latter typically involved the one-off upfront purchase of a software application, cloud solutions are delivered as a service, procured as a term contract, typically over three years or more. Buying a service is qualitatively different from buying a product and consequently requires a different approach to evaluation and engagement. Entering into a long-term partnership agreement requires a different set of assessment criteria than a simple product purchase and that entails using an alternative means to select the best vendor. The ideal approach can be split into four phases.
Step 1 – Building an evaluation team
First and foremost, businesses need to ask themselves some simple questions. What are they actually trying to achieve, and most importantly, why? Once this is established and the ideal outcome defined, only then can the process start.
Building an evaluation team that matches the size and complexity of the task in hand is essential. Project governance is critical and executive engagement key, as well as input from subject matter experts and users.
This team needs to examine the existing solution and its shortcomings, not only in terms of cost and inefficiencies, but also in alignment to business strategies. The latter is why it’s so vital to have representatives from across the breadth of a business.
If the team is evaluating a new solution, then pinpointing the critical things it needs to accomplish is essential. Ultimately, the team needs to answer the question: are we using the best solutions to get the job done for our key stakeholders?
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Step 2 – Gathering intel
The business will only find the best solution for its needs if it can provide potential suppliers with clear, concise details around their needs. This will enable prospective vendors to produce their most attractive and compelling solution. The information provided should include the company’s business objectives, current systems landscape, and the future desired state. Whilst it is useful to describe current business processes and issues to provide business context, it is more important to focus on the future and the processes that the business will need to adopt. Replicating the current processes likely won’t fix the issues that have already been identified and almost certainly will not deliver for the future.
When defining requirements, consider developing a MOSCOW list for picking a solution: the Must-have, Should-have, Could-have, Would-like-to-have criteria. With those nailed down, the decision makers can set some agreed upon expectations and priorities for the right cloud application ahead of any evaluation. It provides a robust framework to ensure a fair comparison between the available options.
It’s important to ensure that both functional and non-functional requirements are defined and that consideration is also given to future needs to align with any market opportunities, growth plans and competitive requirements.
Step 3 – The selection process
With business and IT requirements decided upon, it is time to evaluate the market to make sense of the options available. You need to know what’s going on with your market and what different vendors can offer. Industry analysts and external advisors such as G2, TSIA and SPI can help your team understand the comparative strengths and weaknesses of available solutions, and how they might map to your business’ specific needs.
Peer recommendations and analysis of your competitors’ solutions can be useful and it is important to understand the industry credentials of your prospective vendor to ensure that they really understand your business. Remember, you are entering into a long-term service contract, so you need to consider what the vendor’s future product roadmap looks like, its commitment to your industry and the culture of the organisation. Is this a company that you can trust and really want to work with?
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Step 4 – Evaluation and negotiation
Software selection traditionally used to involve complex RFP processes covering off hundreds of questions and multiple structured demonstrations. This structure for product evaluation doesn’t work with cloud solution procurement, however, as it doesn’t reflect the needs of a service contract and a working partnership. Because of this, organisations are now taking more appropriate and creative approaches to evaluation. For instance, this may encompass having vendors provide creative responses to multiple business scenarios.
One interesting point to consider is that during the evaluation process tensions and conflicting preferences may arise between different parties within the evaluation team. As such, ensuring evaluation criteria are fully defined around business priorities is essential to overcoming any differences of opinion. When making the final decision, price will obviously be a consideration, but total cost of ownership and return on investment are more important. In addition factors such as service level agreements, the product roadmap, performance requirements and liability issues should also be high on the list of criteria.
Whichever solution a business decides to adopt, it’s more important than ever that business leaders can enter a strong and trusted partnership with their solution vendor and partners. Digital transformation is not a one and done affair; it is a continuous process, and businesses should be looking to eke out more and more value from their cloud solutions long after the initial implementation has been completed.