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So you want to buy a phone system

Two points of view; lessons for all

Every firm or organization at some point must buy a phone system. In the call center arena this is an infrequent activity for most centers occurring on average about every 6 to 7 years depending on growth and or technology change. Manufacturers and members of their distribution channels, integrators or resellers, deal with phone system purchases weekly. This creates is a large information and experience gap between the two parties. With this dissymmetry it is a challenge to develop a process that is fair, transparent and accounts for the one sided nature of the exchange. Let’s briefly look at the two sides and the interests and their associated motivations to see what can be learned.

Client side
For any client or purchasing organization this is a time consuming process and one destined to live long after the people involved have moved on. It’s singular nature and low frequency of occurrence is fraught with a high perceived risk of errors.

Purchasing departments are excellent resources but not always available and are not always well suited to singular event purchases such as phone systems. Small, medium and even large companies do not always have professional purchasing departments available with expertise to buy phone equipment. While a purchasing department can help, their assistance is usually limited to the process and what not to do or avoid; they offer little in what to do right and to make it a success. So many managers alone or with a small team venture off to purchase a phone system. What are the steps that should take?

First is developing and establishing the requirements; what does phone system do now? What additional functions or features would we like it to be able to do? Which features are mandatory and which are ‘nice to haves’? With this in hand we can then set out to define our requirements in a formal RFP (request for proposal) and developing a list of suitable vendors. Do not underestimate the effort to get the vendors attention. This is not as easy as you might think. Each vendor is doing a risk/effort/reward analysis on the probability of getting the business. Hence is likely to consider whether you or the company is worth any effort if at all. This vendor-side assessment is often further complicated by the vendors own distribution network. Today virtually none of the major telephony vendors sells directly to a purchaser. Instead they rely on a network of integrators to manage the sales and installation process. While this model can work very well and does significantly reduce the manufacturers’ costs, it does create the potential for missed communications or ineffective communication as yet another party is now involved in determining if and how to proceed.

Afterwards, once the word gets out there that your company is looking, every officer who has a friend who know someone in the business is likely to get called wanting an introduction to the decision maker; so that the vendors can 1) develop a relationship; 2) better know and understand the needs; 3) influence the decision and or completely sidetrack the process into a soul source project. Yes, vested personal interest is alive and well.

Internally challenges of silos, fiefdoms, departmental rivalries, and personalities seek to circumvent the process to achieve a preconceived outcome for economic, political, personal or business gain.

Vendor Side
For a vendor every RFP is an expensive and time-consuming process. Here it is important to distinguish between an RFP versus “getting a quote”. Quotes are usually for commodity type products, a single router, a box of paper, a number of hours of services. “We want this. What is the price?” RFPs’ involve more thinking and preparing a solution to a presented problem. This difference involves more; work understanding the requirement; defining the solution; preparing submission documents as requested; editing, vetting, and approving the proposal for submission.

RFP have a high risk of failure. Failure is not winning the business. Contrast this with the fact that if we don’t respond we won’t get the business. Many in sales rely on who they know to get business and the building of the relationships with customers/prospects. This is the case where if there is a proposal they have an understanding of the players and reality of the proposal. Their judgment of the seriousness of the proposal enables a vendor to know if the opportunity is worth the effort.

Lastly and of particular interest is the ‘blind’ format RFP. This process eliminates the harassment of senior officers of every friend of a friend who contacts them to try to sell a system. In this approach the identity of the final client is blind because the RFP is issued by a disinterested third-party and all the vendors see is the request and the supplied specifications. No vendor likes this approach. Some manufactures have policies against responding to them. It is from their point of view a crap shoot. Lots of effort required and a much higher level of risk. From a client or purchasers point of view a blind RFP enables them to distance the organization from much of the up front noise; and allows them to concentrate focus on the two to three finalists.

Recent experience
Recent experience with RFP is interesting to review. Development of the criteria, vetting of the specific requirements and identifying what is mandatory versus just nice to have took about two months. Writing and issuing the RFP with a standardized format so that all vendors were compared using the same methodology took a couple of weeks. Identification of interested vendors and the appropriate contacts took four weeks. Of course a number of these activities took place simultaneously. Even then one third of potential vendors failed to follow-up on this opportunity. Of the fourteen vendors approached only seven submitted proposals. One proposal was immediately eliminated for non compliance with the submission requirements. The remaining six were scored according to a 10 point criteria for technical solution and approach; feature set compliance with the mandatory and nice to have requirements; clarity of proposal. Each vendor was asked to do a proposal review of one hour to clarify approach and confirm criteria scoring. Price and cost were then factored into the criteria to identify the total cost of purchase and ownership. Price while important was not the over-riding criteria. The client required a robust and adequate solution, but did not want the top of the line nor the bargain basement model and price.

The final step was to conduct interviews with selected vendor’s reference sites. Four were selected. This was more to confirm the installation and service experience than to review the features of the models or solution proposed. At this stage the two vendors distinguished themselves by providing sites similar in nature and solution to the challenge proposed in the RFP. Not surprising, the reference site contacts said how marvellous the vendors were. They were frank about some of the issues etc that they had along the way and the criteria they had use to make the decision themselves.

The other two vendors also distinguished themselves by poor quality; inappropriateness and or absence of references. This was odd considering the effort and fortune necessary to make it this far in the process. It is something that the sales management and marketing people of those firms need to take note of.

The next step in the process was to invite the last two remaining vendors to come to one of the clients’ sites to complete a site specific engineering exercise and supporting price proposal. This step was designed to ensure that the pricing and functionality outlined in the RFP responses were real and could be delivered into a specific site at the specified price.

Takeaways and lessons for all
A purchase of one time equipment and services requires a careful measured approach to minimize disruption to the firm and staff. A clear process, known to all, clients and suppliers is essential. Establish requirements, criteria and evaluation methodologies in advance. Have the decision makers sign off on the process and criteria in advance. Communicate with the suppliers or vendors the overall timetable, communication protocol and overall approach. Establish with all company officers that once started this is the way business is conducted. ‘Work arounds’, special ‘relationships’ are disruptive and not in the best interest of the company. Where price/cost is a deciding factor, ensure that the price component of the submission is separate from the technical or functional response. Score the functional response to generate a short list. As said above, in most cases you will not be working with the manufacturer but with the integrator, so visit sites and check references. Then look at the cost, both purchase and lifetime, to develop your final selection or selections.

Clients: Clear, well thought out RFPs’ will generate good responses. Take time to prepare the request. Vet it both internally and with people experienced in the process of purchasing what you are requesting. While legal is involved, the request must be clear and concise in order to get submissions that meet the requirements. Possible ask potential vendors for lists or samples of RFP’s that they thought were good with similar requirements to your own.

Finally remember to respect all who are involved. This is neither the first, nor the last of the relationships or purchases you or your organization will do. Today’s failed vendor is likely to be tomorrow’s winner.

Let us know what you think of this article or any suggestions you have for future issues by email at
[email protected].

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