How to Choose a Vendor

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How to Choose a Vendor

• N-TEN DC Regional Conference
• October 23rd, 2003

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Agenda

• Introductions
• Why selecting IT support is hard
• How nonprofits get tech support
• When to look for outside help
• How to find the right vendors to approach
• The Proposal Process
• Requirements through contract negotiations
• Goal understand how to make informed decisions
  when buying software and technical services

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Introductions Lisa Rau

• Confluence
• IT services firm providing support exclusively to
  the nonprofit sector
• Over 110 nonprofit customers and 25 staff since
  founding 3/2001
• Lisa Rau
• CEO and cofounder
• 20 years of experience in the IT support
  services industry
• Managed dozens of teams of contractors / vendors
• Negotiate contracts for service

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Services Breakdown
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Introductions Lisa Rau

• Responded to hundreds of RFPs
• Write around 2 proposals a week for nonprofits
• As IT contractor to the Federal government,
  learned best practices in procurement
• Frequent invited speaker on IT budgeting,
  fundraising for IT, and IT-related capacity
  building
• VP on the Board of the YWCA NCA
• Computer Scientist (BS, MS and Ph.D.)
• Peer Reviewer, for MD Nonprofits Standards of
  Excellence Program

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Why selecting IT support is hard

• Complex, unfamiliar material
• Benefits are hard to quantify
• Costs often run well beyond estimates
• The people explaining the choices are not always
  good at explaining
• Extra due diligence to ensure you are getting the
  right stuff at the right price
• Further exacerbating the situation
• Fewer economies of scale
• Every tech dollar seems a dollar not spent on
  clients
• Small capital budgets

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When to Look for Outside Help

• How do nonprofits get technical support?

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How do nonprofits get technical support?

• Accidental techie
• Limited relief from primary job
  responsibilities
• Self-taught
• Limited authority to make policy
• Lone consultant
• Can appear to be less expensive if based on
  hourly rate
• Cannot have breadth of skills
• Limited backup for when occupied or not available
• No quality assurance, best practices,
  methodologies, etc.
• Circuit rider
• Same as lone consultant
• Often focused on specific purpose

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How do nonprofits get tech support?

• For-profit organizations
• Best is exclusive / primary focus on nonprofit
  sector
• Smaller ones w/nonprofit practice can work,
• Commercial approaches are appropriate for the
  largest of nonprofits
• Nonprofit providers
• Special people for special projects
• Pro-bono / Volunteers
• High turnover and not necessarily there when you
  need them
• Contractual relationship often overlooked
• Same problem as lone consultants
• In-house IT Departments
• Other

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When to Look for Outside Help

• Do you fix your own phone system, copier, or
  program your own accounting system?
• Special expertise / Expertise not available
  in-house
• Design and development of database or website
• Selection and/or implementation of commercial
  software system
• Networking, security, equipment selection
• Outside is better than inside
• Independent view consultants are often heard
  more than internal staff
• Staff tend to open up more to outsiders who
  guarantee privacy
• Second opinion
• Unbiased and fresh perspective

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When to Look for Outside Help

• Extra Capacity / Initiative
• A consultant will make sure things move along
• Extra Hands
• A special project may need temporary extra effort
• Moving offices, major system upgrade over a
  weekend
• Philosophy / Cost
• Some organizations like to stay focused on their
  mission
• Maintaining systems and the technology
  infrastructure is often not part of the mission
• Paying a part-time expert is often more
  cost-effective than a staff member who dabbles

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How to find possible partners

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How to find the right vendors to approach

• In the Greater DC Area, there are vendor listings
  at the
• Washington Council of Agencies
• Maryland Association of Nonprofit Organizations
• Washington Regional Association of Grantmakers
  (paid)
• Technology Works for Good
• www.techsoup.org
• It was supposed to be coming soon N-TEN
  Capacity Map
• Exploit your network ask your peers
• Traditional Means
• Research (Internet, yellow pages, advertising in
  Chronicle of Philanthropy, etc.)
• Post on listservs
• Nonprofit-Tech-Jobs (mostly for staff)
• DC Web Women
• Disseminate

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How to find the right vendors to approach

• Know whether
• The recommendation is given freely or with a
  hidden referral fee
• Vendor / consultants had to pay for their
  listings
• The sponsoring organization did any quality
  assurance on the listings / referrals
• Time / Quality tradeoff
• The more widely you disseminate your need, the
  more time it will take to choose but the better
  the end result

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What if you already have a vendor you like?

• For major or new projects (outside the existing
  working relationship)
• Competition can only help your nonprofit. Why?
• Forces you to think through your requirements
  enough to communicate them effectively
• Can help provide leverage / negotiate with your
  current vendor
• You may find a firm that is better suited to do
  the work at hand
• Periodically re-compete your contract
• Like you re-compete your audit firm
• Ensures your vendor doesnt take you for
  granted
• Likely to get a break and/or find a better match
• Sooner or later, you reach the limits of that
• vendors abilities and/or experience

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The Procurement Process

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The Procurement Process

• Requirements Analysis
• Request for Proposal
• Questions and Answers
• Down-Select to Finalists
• Interviews
• Selection
• Negotiation
• Project Implementation and Management

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Requirements Analysis

• Figuring out what you want to do is often the
  hardest part
• The broader the staff input (and potentially
  boards) the better the end result
• It is OK to state outcomes in functional, not
  technical terms
• Write down the results of your analysis
• Prioritize
• Incorporate into RFP

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Requests for Proposals

• The proposals you receive are a direct reflection
  of the RFP you issued
• Provide
• The specific information you want from each
  vendor, in what order how proposals should be
  submitted,
• The evaluation criteria it should be complete
  and measurable
• Whats wrong with this Proposals will be
  evaluated on all appropriate criteria, including,
  but not limited to, cost, experience and support
  offered.
• Timetable and schedule
• Dont ask for information you dont need or wont
  evaluate
• Process for QA
• Costs should be clear and broken out
• into tasks / subtasks

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Evaluation Criteria

• Components to weight
• Capabilities of specific individuals
• Corporate Expertise in this area
• References and Prior Experience
• Technical approach
• Understanding of requirements
• Cost
• The quality of proposals is often an indication
  of the quality of the work
• Work must be broken into phases with visible
  milestones
• Evaluate credibility and reliability first

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Questions and Answers

• Do not let on who the other bidders are
• Use Bcc if emailing all vendors at once
• All questions should be submitted in writing by a
  certain date
• All questions and all answers should be responded
  to in writing to all respondents
• Ensures a level playing field

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Down-select and Interviews

• After receiving the proposals
• Now it is time for you to ask questions back
  give the vendors one chance to make it right
• CRs (Clarification Request) and DRs (Deficiency
  Reports)
• Price comparison requires apples to apples low
  bid is as dangerous as high bid
• Make a matrix with your evaluation criteria in it
  and score the responses
• Get a committee together to make the decision
• Consider bringing the vendor in for an in-person
  interview
• CRs and DRs can be handled through this oral
  process
• Make sure the company knows what kind of people
  to bring
• Often, the it is clear who the winner is
• the selection is obvious

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Hiring Technical Support Best Practices

• The specific individuals assigned to do the work
  is the biggest contributor to project success
• You get what you pay for
• The hourly rate fallacy
• But how MANY hours at WHICH rate? Is travel time
  included?
• Past performance is the best predictor of future
  success
• Check references last 5, not their choice
• Get resumes for the specific individuals who will
  be assigned
• Look for the real thing not someone who learned
  technology on the side
• Academic degrees or technical training
• 2 years on-the-job, relevant work experience

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Negotiations

• Dont pass up the opportunity to negotiate
• Terms of contract
• Price and payment
• Develop a web of relationships
• Technician and organizational point of contact
• Business managers
• Executives
• Contracts are there to protect your organization
• Non-solicitation - Nondisclosure
• Insurance - Payment / Billing
• Arbitration
• Intellectual property / ownership
• Escrows
• Lock-in future escalations

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Some Specific Observations

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Proposal Manners

• Dont issue an RFP unless you intend to issue an
  award
• Be sensitive to the time and effort of the vendor
  they arent getting paid for this!
• Always provide useful feedback to the vendor so
  they can do better / be more successful the next
  time

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Network / Desktop Maintenance

• Dont cut corners on wiring
• The incremental cost of adding another drop are
  small compared to bringing the cabling guy back
• Professional installations are appropriate for
  professional organizations
• Backup, support, and reliability are more
  important than performance
• Most nonprofits rarely tax their networks
• No such thing as set and forget with a network
  you need in-house skills
• Dont overbuy your server most nonprofits need
  moderate performance

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Web development

• This is a commodity now
• Make the oversupply work for you
• Websites are works in progress dont plan on a
  finished product
• The associated internal business processes for
  maintenance are as important as the website
  itself
• Putting responsibility in the communications
  department seems to work pretty well
• Build only as much as you can keep updated
• Think first about WHO will view your site, then
  about WHAT they will want to see
• Plan review of site every 6 months

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Custom programming

• These types of projects succeed or fail based on
  the quality of the up-front requirements analysis
  performed
• Make sure to get a broad set of staff input
  up-front
• If you didnt get sticker shock, the price is
  probably too low
• Budget 30 of development per year for updates
  and support
• Stick with commonly used languages and
  applications
• Youll use 60 of what you ask for buy only
  that
• Pay special attention to any contract you enter
  into protect your organization from exposure
• Negotiate with the vendor

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When you run into problems

• Dont hesitate to surface problems early
• Often, the firm doesnt know there are problems
  they arent mind readers!
• The best performing vendor is one who thinks they
  are about to be fired
• Suggest specific fixes i.e., replace the
  assigned technician
• The hardest decision to make is to cut your
  losses
• If outcomes are not achieved you MUST ask whether
  to continue
• Avoid blame and move on proving fault is very
  difficult in IT

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Conclusions / Discussion / Questions

• Time and effort spent up-front will pay off down
  the road
• Competition can only help
• Proposals you receive are only as good as your
  requests

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Contact Information

• Lisa Rau
• Confluence Corporation
• 202-296-4065 (office)
• 703-819-3067 (mobile)
• lrau_at_confluencecorp.com
• 1111 19th Street, NW
• Suite 900
• Washington DC 20036