Vendor Assessment Resources

There are a number of tools available to you to help you independently assess a vendor. In addition to the evaluation criteria and process you plan to use in your RFP package, here are some further considerations, methods and resources for learning as much possible about a preferred or shortlisted vendor:

Evaluating Vendor Corporate and Financial Stability, and Solvency

• Dun & Bradstreet Reports: Company financial reports and a DNB-applied solvency rating are published annually at this highly regarded and reputable organization’s website.
• Altman Z-Score: The Altman Z-Score is a proven, reliable tool for identifying a vendor’s present level of financial distress and predicting their risk for bankruptcy. This online Altman Z calculator is also an invaluable resource.
• Publicly Traded versus Privately Owned: There are pros and cons to working with each kind of company. Your research should help you determine if the vendor’s project track record suggests that they value customer satisfaction ahead of profit margins and shareholder returns. Does the vendor have a history of exceeding established project budgets with unexpected and excessive change requests to maximize profitability?
• Mergers and Acquisitions: High-growth companies with a strong M&A roadmap may be over-extended or be struggling with cash flow or HR-related challenges. Merging company cultures creates staff stress and instability. Are there any present or recent mergers or acquisitions underway at the company?
• Annual Research and Development Investment: Profitable, innovative companies commit to an annual research and development investment in order to keep their company and products current, compelling and viable. What is the vendor’s annual commitment to R&D? What has been the annual investment in the past 2-3 years? What new products, innovations, or best practices did that R&D investment produce?

Evaluating Vendor Performance and Capability

• Outcomes of Projects with Comparable Size and Complexity: Does the vendor have a proven and positive track record working successfully with jurisdictions of your size and with projects of your complexity? What have been the outcomes of their comparably-sized projects in the last two to three years, in particular?
• History of Legal Action, Contract Breaches, Failed or Cancelled Projects: Prospective clients should ask their preferred vendor whether there has been any history of failed or cancelled projects (including dates and with whom), what the perceived causes were and, even more importantly, if the vendor has any pending lawsuits or in-progress legal action? Some of this information can, and should, be validated independently through your own web search. The
  prospective vendor should be asked to confirm the nature and outcomes of any lawsuits they have been involved with.

Evaluating Vendor’s Customer Satisfaction Track Record

• Customer Surveys, Third-Party Surveys or Reviews: To gain a balanced perspective, vendors should be asked whether they conduct customer satisfaction surveys, what type, how frequently, and if those survey results or testimonials are available for your review? According to the popular customer loyalty diagnostic, the Net Promoter Score, the single most important question in a Customer Satisfaction and Loyalty evaluation is: “On a scale of 1-10, how likely would you be to recommend this vendor to others?”
• Customer Awards: Have other customers ever won or received significant awards or industry recognition for their implementation of the vendor’s software?
• Published Articles and Case Studies: Have other customers posted or published articles or case studies about their project success and benefits?

NEXT WEEK: Evaluating a prospective vendor’s proposed technology, culture fit and staff qualifications.