Conduct Your Due Diligence
You are rocking and rolling through this vendor selection effort. The attention to detail and analysis and relentless pursuit of balancing being respectful and firm are definitely worth it.
Anyone else need that pep talk at this point? Maybe just me.
It’s due diligence time! We’re getting more familiar with our finalist solutions and teams. This may be the moment we meet some new vendor stakeholders focused on implementation, whether from the vendor organization or a third party they recommend based on our organization profile and use cases. (New people means repeating yourself, so you’re going to get good at introducing the organization and what you’re looking for in the new solution.)
Through the due diligence process, we’re aiming to look around the corner. We’re not going to prevent every surprise in implementing or using a new solution, but we aim to understand and proactively address as many potential issues or opportunities as we can.
A technology leader who’s worked on several vendor selection projects with us said it best: “Performing thorough due diligence in technology vendor selection ensures you not only choose the right vendor for today but secure a partner who will enable success well into the future.”
Let’s get to work.
This Phase at a Glance
In the Due Diligence & Consideration phase, our goal is to cut through the sales pitch and figure out which option(s) are truly a good fit.
Here are facilitator activities at a glance:
Conduct detailed fit discussions and refine scoping
Understand/refine implementation approach and cost estimates
Conduct reference checks
Get realistic proposals
Facilitate team consideration
Here are selection team activities at a glance:
Participate in scoping discussions and reference checks
Conduct security review
Review vendor proposals, noting feedback
Rank options
At this point in the project, our vendor count is probably three. We may narrow this to more like two for the next phase, or we may take three all the way through negotiations to our final selection.
Key Activities
Let’s walk through each of the activities in this phase, with what success looks like and considerations to work through.
Conduct detailed fit discussions and refine scoping
We may have uncovered, clarified, or reprioritized requirements through the course of demos and discussions. Take the opportunity to share the latest version of requirements, along with clear and consistent scope expectations, with each vendor, for them to create realistic proposals.
We’re seeking both a solution and a team to help us implement it. Vendors will likely have engaged their implementation or professional services team at this point, so expect to repeat yourself. As the facilitator, do everything you can to bear the brunt of this repetition – sharing materials ahead of time, scheduling pre-meetings, etc. – so that the rest of the selection team isn’t restating their pain points and requirements yet again.
When vendor teams do have questions that go beyond your knowledge, engage SMEs from the selection team to participate in scoping discussions. (They joined in vendor discovery sessions a few phases ago, so they’re becoming pros at navigating vendor questions.)
Understand/refine implementation approach and cost estimates
This is the time when we’re trying to uncover as many remaining gotchas as we can in the allotted time. Expect to have a combination of deep-dive conversations, emails, and texts with the Account Executive to zero in the vendor’s proposed scope on the capabilities that we need to be successful.
This may include discussions about delivery methodology or phased approaches, to maximize the chances of a successful implementation. It also likely includes pressure testing precisely which modules we need to go live, if the vendor has a modular approach to their solution. Again, knowing that we’ll never perfectly predict the future, we provide vendors with the input and guidance they need to sharpen their proposal and implementation plan.
(We’ll negotiate pricing in the next phase, so focus more on getting scope just right at this point. But make it clear that we are aiming to get the right solution at a good price.)
Conduct reference checks
Set up 30-minute discussions with references and key participants from the selection team, asking about the references’ experience with the solution and vendor.
Shockingly, in light of vendors’ providing what are presumably their best references, we often learn a lot in reference checks. Three-year implementations (when we’ve been told it can be done in six months), pricing structures that differ from what was offered to us, regular system downtime, the need to pay for a lot of support after the implementation… get ready to learn!
Sometimes, despite our best efforts, we get matched with a reference that just isn’t relevant to us. They use the on-premise version of the solution when we’re considering the cloud version, or their transaction levels aren’t comparable to ours. Depending on how critical the reference feedback is to your decision-making, consider working with the AE to get a better fitting reference. Either way, help the selection team shake off the experience and stay curious for the other reference discussions.
Ideally, the vendor Account Executive introduces you directly to the reference and then leaves you two to find time to meet. (I don’t like when vendors try to handle the logistics for me; in this case, I reserve the selection team’s time in several blocks across several days and offer those times up.)
I also prefer not to have the vendor team attend the reference call, since that sways what the reference is willing to say. But I am happy to tell the vendor AE when the reference is and send an update afterwards.
You’re not surprised to read that I set up two identical meeting invites for references: one for the reference and one for the selection team. I just don’t like to assume that people want their email address shared. (If everyone is amenable to connecting after the reference, you can always share email or LinkedIn information afterwards.)
In the invitation to the reference, I share the organization profile and what we’re seeking in a new solution, who from the selection team will join the call, and a summarized list of the questions we’re aiming to address.
In the invitation to the selection team, I share the reference’s name, role, and organization, along with any notes of context. (The best Account Executives provide information around which modules the reference uses and how long they’ve been using the solution.)
I think the ideal number of selection team members for a reference call is three, but I often have more people than that who want to join in the fun. If we are bringing a big party to the reference call, I have the selection team divvy up topics they expect to ask questions about, and I include a preemptive “we’ll work hard to keep this from feeling like an interrogation” in my introductory remarks with the reference.
I tend to have the same selection team members do all references, so they can compare well, but you can succeed in rotating coverage, too. Just be careful to share context and updates with everyone involved if you’re taking turns connecting with references.
As the facilitator, create a starter list of questions for the selection team to consider and build on. I like to include questions like:
Overall thoughts
Overall, what are your thoughts on this solution?
What advice do you have to offer based on your experience implementing and using the tool? In other words, what do you wish you had known earlier?
User experience
Can you describe who on your team works in the solution, and what their experience has been working with the tool?
How do your end-users access the solution? What feedback do you receive from them about it?
Implementation
How was your team’s experience implementing the solution?
Was implementation on time and on budget?
What, if anything, was more difficult than expected that we can plan for?
Capabilities
Craft specific questions to test how top-priority requirements have worked for the reference.
Plan to cover set-up, key integrations, typical workflows, managing exceptions/edge cases, any customizations, etc.
Customer service and partnership
Do you rely on the vendor’s professional services? If yes, in what instances and how often?
How responsive is customer service in resolving issues and answering questions?
Are you pleased with the communication around updates and release timelines?
Has pricing changed meaningfully as you have grown with the tool?
As the facilitator, I like to do quick introductions and ask the first question, to get the discussion rolling. So, I typically ask something like, “what are your thoughts on this solution overall?” and then take a back seat unless I sense something important that needs to be clarified or drawn out further.
I tend to turn on transcription for reference calls (we’re all familiar enough with being recorded that a full recording would probably be just fine, too), and jot notes on the important aspects of the conversation.
As facilitator, I do like to publish notes from reference calls to share with the rest of the selection team. These aren’t word-for-word or even in the order we discussed topics. They’re about what we learned, what the reference recommends we do, and any big surprises.
After each reference check, I like to email the reference with our sincere thanks for their time and perspective. (I sometimes send $5 coffee gift cards, too, as an extra thanks and “enjoy a cup of coffee on us.” We don’t want to get anywhere close to triggering ethics rules, so a thanks is more than enough, but references are critical to our confidence in these solutions, so I like to make sure they feel our appreciation.)
Conduct security review
Many organizations have specific security reviews they like to conduct with new vendors. Work with a technology representative on your selection team to understand what’s needed for this, and act as an intermediary and logistical support for the technical teams to complete whatever information-gathering and/or discussions are needed.
Get realistic proposals
With the latest versions of requirements, scope, implementation approach, and everything else discussed… get real proposals from finalists, not just sales pitches. These are likely draft order forms and statements of work for implementation.
Create a cover sheet or “read-me” document that provides context for the selection team’s review. Then share the proposals and context with the team and support any questions they have while perusing.
Facilitate team consideration
I like to adapt the questions we used after demos for the proposal review. Ask the selection team to share three pieces of information with you after they’ve considered proposals:
Any options they’re unwilling to consider further (and why)
Rankings for the remaining options
What questions they want answered before feeling confident in moving forward with an option
You may benefit from having a 1:1 discussion with each selection team member (or have the project sponsors do so) to get individual perspectives, particularly if you’re concerned about analysis paralysis or groupthink.
Then convene the entire selection team, share updated rankings for each option, and open up the floor for discussion. It may work well for each person to describe the rationale for their rankings, or sometimes it’s most expedient to align on which option(s) we are no longer willing to move forward with. We’re aiming to decide which vendors to take forward to negotiation – we can do so with all three finalists, or we can narrow to the one or two we’re most excited about if others have very clearly fallen in our view.
Remember: no option is tradeoff free, so we’re balancing needs and getting to the best options we can in a reasonable timeframe.
After the selection team has aligned on the vendors moving forward to negotiations, share with each finalist that they’ve been further shortlisted. Be very clear with vendors which items we’re working through in the next stage (negotiations, best and final proposals, a final selection) and the timeline we’re aiming to hit.
After the finalist vendors have acknowledged next steps and confirmed they’re willing to work with you on them, share with the remaining vendors (if any, at this point) that they weren’t selected as a potential fit for this opportunity.
Use the same care and caution as you did in the previous step with the vendors that weren’t selected, knowing that they’ve spent considerable time and effort trying to win this deal.
Advanced Class
As facilitator, you’re uniquely positioned to keep vendors honest with what they’ve said through the process. You’ve read every email and response and proposal, and you may have portions of the product walk-through memorized by this point.
When you receive proposals from vendors, review them with a very critical eye. I’ve had vendors slip in materially different implementation timelines in a statement of work than they’ve represented through the sales process thus far. If this happens, work with the vendor team to understand their thinking between versions. (And, likely, flag the change for the selection team, so they are thinking about the option correctly.) Late-breaking changes are often because the sales team’s estimation was at a different level of granularity from the implementation team’s, or because scope components were meaningfully updated.
Tools & Artifacts
Due Diligence & Consideration is enhanced by creating several sets of analysis:
Due diligence packet, including reference check summaries
Compiled proposals, with a cover sheet highlighting big picture items, context, and potentially instructions on how best to read through proposals
Full option analysis summary, with due diligence details called out (for me, this is a set of slides that show our progress and thinking at each phase, with our rationale for decisions very clearly stated)
