End users spurn vendors' cheap options

Price is not a determining factor when selecting a vendor to outsource e-commerce projects, with IT managers claiming the 'cheap option' is often too risky.

Vodafone information services manager Oswin Martin said that going for the cheap vendor may end up costing more in the long term, particularly when dealing with e-commerce projects that involve leading-edge technology.

Martin was commenting on Yankee Group research that listed the top 10 selection criteria by which end users choose vendors. Price was listed as the least important consideration.

"There is a reason why one vendor will charge more; it has a lot to do with the risk/contingency factor and why someone else will charge significantly less just to win your business," Martin said.

"A proven track record rates above price; I like to see examples of proven implementations. Also, the availability of relevant skill sets in Australia is vital."

Martin said another essential criterion is the ability to work with the vendor. "They might be the best but if you can't see eye-to-eye, you can't work as a team to make it happen," he said.

Scholastic Australia IT manager Andrew Ogbourne also placed "a proven track record in comparable projects" at the top of his vendor selection list. This was followed by the vendor's business, management and technical approach to the project.

"Price is of course a factor but a cultural fit between both parties is crucial," Ogbourne said.

According to the Yankee Group's E-Sourcing Strategy report, end users listed vendors' business process knowledge and experience at the top of the list.

The report claimed that off-the-shelf solutions do not work for all but a few end users, because they need customised applications from service providers to free up internal IT departments, who are working on next-generation applications.

"When end users' expectations are not met, it is the vendor not meeting those expectations, rather than the technology," the report said.

"Geographic scale and scope is a big factor in selection as large organisations are well aware of the pitfalls of contracting with service providers that are unable to meet global deployments. This is why the Big Five consultancies are often called in to do global projects.

"One of the most significant criterion in today's marketplace is a vendor's track record. From an end user's perspective, they must be able to validate that the vendor has successfully completed similar projects," the report said.

Yankee Group also said that customers are becoming concerned with the long-term viability of the vendors they choose and also want access to a stable of trained staff and skill sets. This also includes access to new technologies.

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