Vendor engagement can introduce risk in your project portfolio. Learn how to mitigate those risks in this multi part series.

Reduce Project Portfolio Risk

Part 2:  Vendor Engagement Processes That Ensure Success



If you use vendors to deliver any portion of your project portfolio, you are confronted with numerous risks that can negatively impact your organization.  This is the second part of a series to discuss ways you can minimize risk when sourcing projects to vendors.  In Part 1, we discussed vendor engagement models.  In Part 2, we discuss best practices surrounding 4 vendor engagement processes.


If you use vendors to deliver any portion of your project portfolio, you are confronted with numerous risks that can negatively impact your organization.  If a vendor relationship breaks down it can introduce financial, operational and legal risk.  There is a high cost associated with a poor vendor relationship or a failed project, regardless of how much consideration was spent nailing down a perfect master services agreement.  Financially, large amounts of money are invested which could be difficult to recover.  And if a vendor is helping deliver systems tied to products, services or critical business process, it can jeopardize your organization’s ability to operate or meet customer expectations.

There are several actions that can be taken to help reduce this risk.  In this article, we discuss 4 vendor engagement processes you should be incorporating into your organization and best practices that will help ensure successful delivery of products and services.

What?  Vendor Engagement Processes?

Finding the right vendor to deliver products and services for your organization can be difficult and time consuming.  It is important that you carry out the right amount of due diligence and put in the time necessary to select the vendor who is a best fit to serve your needs.  There are 4 key processes that you should incorporate into your organization when engaging in a new vendor relationship.  They are:

  • Request Information about vendors (RFI)
  • If buying a product, you want to Get Proof (POC)
  • Select the right vendor for the job (RFP)
  • Buy the product or service (SOW)

Each of these processes requires the appropriate amount of planning and documentation.  Define all processes up front before engaging a vendor.  Document the process and include the necessary stakeholders from your organization.  The better the process is defined and streamlined up front, the smoother the vendor engagement will go.

Request for Information (RFI)

The goal of the RFI process is to collect information about the capabilities of the vendor.  In this process, the buyer (you) requests information from the supplier (vendor).  This process is especially useful when your organization has little familiarity with the vendor.  It may not be as useful if you already have preferred vendors whose capabilities are well known to your organization.

RFI best practices:

  • Create a document with a specific and uniform format that will make it easier for you to compare more than one supplier.
  • The goal of the RFI is to ensure that the supplier has the capabilities to meet the objectives of your organization. That means you must be be very specific about the information you need.  This will help the supplier understand what is being requested so that they can provide relevant information.
  • Consider requesting information about facilities, financial statements, corporate culture and anything that relates directly to the product or service that you need (certifications, standards, compliance, etc.).
  • The RFI is not an invitation to bid. DO NOT request pricing information.

The results of the RFI process should help you, the buyer, choose which suppliers will participate in the Request for Proposal (RFP) process.

Proof of Concept (POC)

The goal of the POC process is to validate that a product meets the needs of your organization and environment.  Free trials are a great opportunity to test the capabilities of a product, BUT, make sure that you engage the vendor during the free trial to run through a proof of concept, especially with enterprise products and software that tend to be more sophisticated.

POC best practices:

  • Select the key users and stakeholders that will be involved in the process. The key users should be hands on with the product during the POC.  Stakeholders should include any required management and decision makers.
  • Know your business requirements. What are the needs of your organization that the product must fulfill?  In order for the POC to be successful, you must understand the problem that the product is solving for you specifically.
  • Define uses cases around your business requirements.
  • Work with the product vendor to run through the uses cases with your key users.
  • Document the results of the use cases. Does the product meet your needs?  If not, does the vendor offer customizations?  In many cases, there is no one size fits all solution and customizations can be a path to a tailored fit product for your organization.

The result of the POC will help you decide if the product is suitable for your organization.  If you decide to move forward with the product, you will need to work out pricing, licensing and request a statement of work (SOW) when customizations will be provided.

Request for Proposal (RFP)

The goal of the RFP process is to solicit bids for services from outside suppliers.  The 2 primary components for a successful RFP are a well-defined process and comprehensive documentation.  Define the RFP process up front including the tasks required and the resources or departments who are responsible for different parts of the process.

RFP process best practices:

  • Write and review the RFP documentation (best practices below). Include an RFP timeline with schedule that defines dates for review, Q&A, submission, presentations, etc.
  • Select participating suppliers and distribute. Run the RFP process with a minimum of 3 suppliers who were hand selected by the RFI process or from your preferred vendors.
  • Collect supplier questions and respond accordingly. This is important because it gives the suppliers an opportunity to gain complete clarity about the RFP which helps them deliver a better quality proposal and ultimately better quality services.
  • Collect proposals and conduct an internal review. Request amendments, if necessary.
  • Select the supplier who is best fit to deliver the services required by your organization.

There are typically post-selection processes to procure the services based on your organization’s standards.  This can include various legal, purchasing and controlling reviews, contracts (master or global services agreement, statement of work, purchase order, etc.), required signatures and approvals.

RFP documentation best practices:

  • Define the goals and objectives of the services that your organization requires. Clearly define requirements and scope of work with specificity.
  • Include an RFP timeline with a schedule of dates.
  • Define service level expectations and penalties, if necessary.
  • Outline any organizational processes that the supplier must adhere to.
  • Make sure to include your organization’s point of contact, instructions on submission, and any expectations on format of the proposal.

Statement of Work (SOW)

The goal of the SOW is for the supplier to define what work will be performed and delivered to you, the buyer.  The SOW should define the requested services and deliverables in a clear format with understandable and unambiguous terms.

SOW best practices:

  • Make sure all terms and conditions are clearly defined without ambiguity. Be sure to play on words.  Words such as “either” or “and/or” introduce ambiguity in the contract.
  • Review to ensure that the SOW meets all of the organization’s requirements and service level expectations. Do not assume that everything is covered.  Refer back to your requirements and make sure that there isn’t anything missing.   Again, play on words.  For example, mandatory work cannot be defined with words such as “may” or “should”.
  • Providing the supplier with an outline for the SOW document can make it easier for all parties in your organization to review.
  • The SOW is part of a legal contract. Make sure that it references any necessary agreement(s) such as a master or global services agreement.

In summary, incorporating key vendor engagement processes into your organization will pave the way for successful delivery of products and services.  And when you select the right vendor for the job, you greatly reduce the legal, financial and operational risk that can result from a poor vendor engagement.

About AlignIT Software

AlignIT software is equipping IT organizations to deliver better quality technology solutions with greater efficiency.  AlignIT is a lightweight and flexible enterprise project portfolio management solution that creates alignment between the people and processes in your IT organization.  AlignIT’s Enterprise PPM Vendor Management edition offers innovative vendor management capabilities that helps reduce the financial, legal and operational risk that can result from vendor engagements.  AlignIT is offered on premise or in the cloud for rapid deployment.