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10 Mistakes Businesses Make When Choosing an IT Vendor

Remember the TSB Bank IT meltdown of 2018? The incident was a full-blown disaster at that time and cost TSB an estimated £330 million loss. This wasn’t just a minor glitch. It was the consequence of not having enough planning while choosing an IT vendor. Choosing your technology partner is not just a matter of convenience or getting rid of the burdens of in-house team maintenance. It is a crucial business decision that has far-reaching implications.

IT vendor selection is like a marriage between businesses. An ideal IT partner will understand the business objectives, anticipate your needs and then empower your business to stay successful. The wrong choice of IT vendor will hinder growth, drain resources, and cause reputation damage.

This blog will guide you through the process of technology vendor selection just like a compass to success.

10 Red Flags to Avoid When Choosing an IT Vendor

Do you know what choosing the wrong technology partner can be like? It is like stepping on a landmine, hindering your movement and leading you to an explosion of losses. The TSB Bank IT meltdown example wasn’t just an isolated occurrence. A research from Bain & Company pointed out that around 88% of IT projects fail to meet their targetted goals. And they say the root cause of this is bad vendor selection and management.

We have listed out 10 mistakes to avoid when choosing a tech vendor. This will help you navigate through the vendor selection process with proper guidance and awareness.

1. Failing to observe and analyse a proven track record

Just like the old proverb says, never judge a book by its cover. You might come across alluring websites about the tech vendor selection process. There can be a power-packed sales team who raves about their haves for hours. But never get carried away with these. The real indicator of a reliable future would be their past performances.

  • Look into their case studies: Look for projects similar to your objectives and scope. Were they effective in delivering what was promised? What were the major challenges faced by the client and how were those solved? Look for answers to these questions.
  • Go through their client testimonials: Look up their presence on platforms like Clutch, Trustpilot, G2, and Google Reviews. Analyse the reviews and feedback that they have received.
  • Look up and analyse their portfolio: A diverse profile or portfolio speaks to the calibre and ability of the team. It will also reflect the vendor’s adaptability and experience across various industries.

2. Neglecting the aspect of scalability as a core

Scalability is a major aspect of evaluating tech vendors. The IT partner should be capable of accommodating your futuristic visions. They should be able to guide you with the best practices and technologies that will evolve as your business grows.

  • Have your long-term trajectory planned beforehand: Where do you see your business in 5, 10, or even 20 years? Do you think the tech vendor would scale up alongside your ambitions? Can their infrastructure handle increased data volumes, user traffic, and transaction loads as your business expands?
  • Thoroughly inspect their roadmap: Is the vendor investing in research and development activities? How do they envision staying ahead or preparing themselves for future technological advancements?

3. Believing the myth of “Cheapest is Best”

Staying within your budget and closing the most affordable deal is truly a winning factor. But neither should that be the sole factor for vendor selection nor it should compromise on quality. Lower quotes could be a mask for hidden costs, inadequate support, technical debts and a lot more.

  • Focus on value for money: Evaluate what is being offered in the package as a whole. Don’t forget to look for features, security, scalability and support factors.
  • Calculate the total cost of ownership (TCO): Try looking at implementation costs, training expenses, maintenance costs and potential upgrades. This will help you develop a true picture of the budget.
  • Beware of hidden fees: Never skip reading the contract and if possible read them twice. See if there are additional charges that are likely to be a factor for sudden inflation.

4. Forgetting the importance of maintenance and support

Unexpected technical failures can halt operations. Imagine facing such a downtime with no technical support to back you up. This is why you should ask about the support period and hours offered by the tech vendor at the selection time. Having a support agreement will act as a safety net. This will ensure that business continuity stays intact during downtime.

  • Establish clear service level agreements (SLAs): Define your expectations for response times, resolution methods, and escalation processes. A well-defined SLA is a framework for accountability from the IT vendor.
  • Evaluate their support systems and channels: Does the vendor offer 24/7 support? What are the available channels for communication (phone, email, chat)? Choose a vendor who can cater to your operational needs and preferred communication modes.
  • Outline responsibilities and maintenance: Who will be responsible for bug fixing, security patches and system updates? Develop a clear understanding of these responsibilities right from the start.

5. Not prioritising security and compliance expectations

Data protection and compliances keep getting tighter and so do cyber attacks. Navigating through the world of cybersecurity can be tiring, but never ignore it. A single breach and your entire business and reputation can be scattered in seconds.

  • Ensure compliance with the recommended industry standards: Compliance plays a major role in protecting your business as well as your clients’ data. See if the vendor adheres to relevant compliances like GDPR, HIPAA, or PCI DSS and possesses enough awareness of the same.
  • Evaluate their security measures: Ask them about their vulnerability management procedures, data encryption protocols, and access controls. Having a proper cybersecurity system in place is essential to mitigate risks and safeguard sensitive information.
  • Ask about their incident response plan: How does the vendor fix instances of security breaches or data incidents? A clear incident response plan displays their commitment to safety and security.

6. Skipping the fine print: Contracts and SLAs

IT partnerships involve complex technology implementations that cannot be agreed upon just by word of mouth or handshakes. Make sure you have a detailed contract prepared at the time of project kickstart. This will provide a framework for the partnership and protect the interests of both parties.

  • Document everything that is possible: Ensure all terms, conditions, responsibilities, and deliverables are mentioned and outlined in a legally binding contract. This should not pave the way for misinterpretation or ambiguity.
  • Define SLAs with attention to detail: Specify the KPIs, uptime guarantees, and penalties for non-compliance. A well-defined SLA will ensure that both parties stay accountable for the commitments made.
  • Seek legal counsel: Get your contract reviewed by a legal team. This will help in protecting your interests and avoid disputes in future.

7. Risking to proceeding without a pilot

Captivating PPTs and stylised demos could be mere eye candies. What really matters is whether they discover hidden limitations and the ability of the solution to cater to the requirements. The best practice towards uncovering this is through real-world testing.

  • Conduct thorough trials: Request trial access to a pilot program to test the solution in a real-world setting. This will give you the insights that presentations fail to provide.
  • Involve stakeholders and key users: Get reviews and feedback from employees who are using the technology daily. Their input is essential to evaluate user-friendliness, functionality, and overall adaptability.
  • Assess integration capabilities: Test how the solution integrates with your existing systems and workflows. Seamless integration is critical to avoid downtimes and ensure a smooth flow of data.

8. Not fixing misaligned expectations

Technology implementations often require participation from many stakeholders with varying perspectives and priorities. These can pave the way to confusion, delays, and even project failure.

  • Foster an environment of cross-functional collaboration: Involve participation from different departments. This helps to ensure that everyone is aligned on the project goals and requirements. A collaborative approach will ensure that all perspectives are taken into the picture.
  • Clearly define roles and responsibilities: Ensure everyone knows their responsibilities and role in the implementation process and the decision-making hierarchy. Clear roles and responsibilities prevent ambiguity and ensure efficient project execution.
  • Establish clear communication channels: Maintain transparent communication between teams to avoid delays and misunderstandings. Effective communication is a major pillar in successful project management.

9. Underestimating the need for cultural compatibility

A successful partnership extends beyond having technical expertise. Cultural compatibility is equally important for a harmonious and productive relationship.

  • Assess their communication style: Are their communications open and transparent? Are they responsive to your concerns and queries?
  • Evaluate their work culture: Does their approach to problem-solving, collaboration, and customer service align with your values? A shared cultural understanding promotes mutual respect and facilitates a strong working relationship.
  • Consider their team’s expertise: Do they have the right skills and experience to support your specific requirements? Valuable guidance and support throughout the implementation process and beyond have to be made accessible.

10. Ignoring the need to plan for exit strategies

While you aim for a long-term partnership, it’s equally important to plan for unforeseen scenarios where you might have to consider switching vendors.

  • Negotiate clear exit clauses: Define the process for contract termination in your legal documents. This should include data migration, IPR and any associated fees. A clear exit strategy prevents disputes and ensures a smooth transition if required.
  • Maintain data portability: Ensure your data is easily accessible and transferable in case you need to migrate to a different platform. This allows you to switch vendors without losing valuable information.
  • Document your systems and processes: Maintain comprehensive documentation of your technology infrastructure to facilitate a smooth transition. Thorough documentation ensures that you can easily onboard a new vendor and minimise disruption to your operations.

Take the Next Step: Partner with Emvigo for Tech-Driven Success

Many still have a notion that choosing a tech vendor is just a transactional decision. This is not true at all. Technology vendor selection is not just your stepping stone to success but also the blocks to a strong foundation for the future to be built. By avoiding these common mistakes in choosing a tech vendor and taking a strategic approach to vendor selection, you can minimise risks and maximise scaling up for success.

Emvigo has had the privilege of being a trusted IT Outsourcing Partner for over 500 companies around the globe. We prioritise a partnership over being just a vendor. This attitude has helped us maintain long-term relationships with our clients.

Need help navigating the complex world of technology vendor selection? Our expert team can provide guidance, tools, and support to ensure you make informed decisions and choose the right partners for your business. Contact us today for a free consultation.

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