Procurement process
Introduction
The process of buying new technology can be baffling, especially if this isn’t your natural comfort zone. Following the steps below can help to create structure so you don’t miss anything crucial. It can also ensure expectations are managed, and will get your supplier relationships off to a good start.
Research
Once you’re clear on the functions you need to address, do some research. Searching online is a good place to start, but it’s also worth visiting some competitors and seeing what they use. Talking to your team about the systems in place in previous employers can also be useful. You can also approach providers and ask for an informal discussion; normally they’re only too happy to provide a demonstration. Be clear that the meeting is for market research only, and that a more structured procurement process is to follow. Include users of the software or service from the very start of the project, as they will be able to describe what the product should do. They’ll also quickly spot pitfalls or challenges that someone non-operational might miss.
Tender documents
Use your research to establish a list of all the things you need your software to do. This should include:
Who will use it, and how
What will be different as a result of using the software
What other systems it will need to integrate with
Any particular security or access concerns
What success will look like, and any particular performance guarantees you need
Who will be responsible for managing the relationship with the supplier in business-as-usual
Pre-qualification questionnaire
A pre-qualification or PQQ is used to sift a large group of potential suppliers. It seeks to establish whether the potential provider is the sort of business you’re prepared to do business with. It covers things like credit rating and financial standing, size of the business, turnover, ethical policies and so on. If the market is small, or if you’re short on time, you can skip this step, but it’s well worth considering for significant purchases.
Invitation to tender
Invitation to tender (ITT) is just a formal way of requesting a quote. You need to give suppliers as much information as possible to enable them to quote accurately. This document and the supplier’s response will form the basis of your contract, so it pays to get this right. You’ll also need to include details of how tenders (quotes or proposals) should be submitted, by when and to whom. You should also include details of how you will evaluate tenders, and any dates of possible interviews, demonstrations etc so suppliers can keep them free.
Tender questions
Once you’ve sent out your ITT, your potential suppliers may have questions to clarify the wording or to fill in any gaps. It’s good practice to share the question asked and your answer with all the suppliers to whom you’ve sent the ITT. That way, they all have the same information, and you’ve kept it fair.
Tenders received
You should set a deadline for tenders to be received that gives bidders enough time to research your requirements and give you a quote. This could take some time and may need to be signed off by senior colleagues, so you should allow at least two weeks (and ideally three to four) for them to return their proposals.
Evaluation
As part of your research and writing your tender documents, you should have established a process for scoring the bids. This might include things like several colleagues scoring against set criteria, weighting certain responses over others, and considering whether price (lowest cost) or quality (best value) are more important. You may sift the bids to get to a shortlist, at which point you might hold a ‘beauty parade’ where suppliers come to you to demonstrate the software and give a pitch presentation.
It would be helpful to have someone who will use the product try to use it as part of the demo, to ensure it is easy to use and fit for purpose. If it’s a customer-facing system, or it has different user interfaces (like a POS system with a back office system to change prices and layouts), ask to see all of them, not just what the customer will see. Some tech companies invest heavily in a simple ‘front-end’ that they neglect the ‘back-end’.
If you haven’t already done so by this point, it’s really important to see the product in action. Ask the supplier to arrange for you to visit another merchant who is using the system or product so you can ask them how they’ve found it. If they can’t persuade any of their customers to talk to you, that may imply the product isn’t very good - but this will depend on how commercially sensitive the data it contains is.
Negotiation
Once you’ve picked your preferred provider, there is likely to be some negotiation over pricing, payment terms, delivery schedule and so on. At the start, you’ll think this will take a day or so. It will almost certainly take several weeks. As the old adage goes: act in haste, repent at leisure.
Contract award
Once you’ve chosen a supplier and agreed terms, they (and you) will probably want to issue a press release. You may have agreed to providing a video testimonial, attending a conference etc; it’s a good idea to make this conditional on successful set up and delivery.