Would you say it's resource capacity planning? Building continuous integration? Knowing if vendor bids are competitive? As a follow up to a recent post I shared on reducing uncertainty in digital transformation, I posed this question to my LinkedIn connections in a poll, giving them options I sourced from respected colleagues with experience in digital transformations. I also asked for suggestions not listed, in case there were challenges I might not have considered.  I appreciated the great feedback I received and wanted to share the valuable insights I gleaned from the poll.

42% voted for “Capacity Planning” as their biggest challenge, 29% voted for “Continuous Integration,” 10% voted for “Vendor Bid Evaluations,” and 19% voted “Other."

It happens time and time again. Clients look to their vendors to provide software development or configuration services and both sides are often left with big questions. Is the price fair? Can we really get the project done within our duration and resource goals? How can we negotiate for a successful outcome?

There are estimation solutions available that can help. The good ones will leverage empirically-based models, historical data, and industry analytics to uncover which proposals are feasible and which ones are risky.

In the first view below, there are two columns: the “Desired Outcome,” which is one vendor’s proposal and the second column, which is the data-driven “Recommended Estimate.”  The vendor is promising to complete the work in 3 months with a $750,000 price tag. You can see that this proposal is “Risky” and that the vendor will probably finish late and will either have to ask for more money or lose money in the long run.  The charts in the view provide a graphical representation.

In the second view for the same project, you see a second vendor’s proposal compared to the “Recommended Estimate.” The vendor’s bid is for 8 months with a $1,000,000 price tag and there is a “Moderately Conservative” rating. In other words, this vendor has a much better chance of achieving what they are promising. 

Managing vendors has become increasingly important in recent years.  In my account management role at QSM, I see both sides of the vendor management relationship.  The client wants a proven vendor that will partner with them in achieving their IT goals; and the vendor wants to win that business, employ their workers, and hopefully earn more work.  Unfortunately, that state of client/vendor Zen is not often achieved, usually due to legitimate (and sometimes not) misunderstandings on both sides.

On the client side, they are concerned with selecting a vendor with whom they are confident their tasks and deliverables will be achieved on time, within budget, and of the best possible quality.  After a round of RFI’s, then RFQ’s, then a final down select process, the vendor is chosen and work begins.  Often, at least in my experience, the overriding decision criteria comes down to cost, which makes sense, to a degree.  But in many cases, cheapest, I mean, least expensive bids often rule the day.  This kind of decision-making comes with its own set of risks; the most obvious is you get what you pay for and it’s often an ill-prepared vendor.