As the project lead in your organization, you face significant responsibility and pressure to make the right decision when selecting a technology partner. Last week, in Part One of this blog series, I covered the qualities to look for in a partner, as well as the not-so-typical questions to ask potential vendors. Now, in Part Two, I cover the tricky "budget conversation" and the questions you need to ask yourself before making a final decision.
When Should You Tell a Vendor your Budget Range?
The tug-of-war that is the “budget conversation” is just not fun for anyone. Clients generally expect that a professional vendor will fully understand requirements and know how much time each piece of the project will take – so why shouldn’t they be able to give an accurate estimation range?
Let me put a scenario out there. Let’s say you want to build a house. You call a builder and tell them you want a 4 bedroom, 3 bath home with a garage, a porch, a pool, laundry in unit, etc. The builder does some recon, puts together some plans, even throws some ideas out there about how modern homes are being built to better utilize energy and save on monthly bills.
He calls you back and tells you all of this, and then says you’re looking at $450,000-$600,000.“Oh my!” you say. In your head you knew that about $325,000 would really sound high to you.
Why would you not tell the builder that your top price, or at least a number in your head, was $325K? If you had, you would have saved them and yourself a considerable chunk of time that you can’t get back. On top of that, the builder could have come back with a plan that says “OK, for about $275K we can give you plan ‘A’, which meets requirements 1, 2 & 3 but not 4 & 5. Or, we can do plan ‘B’, which is about $320K and the only thing we can’t do is requirement 1. However, after we build the home, you can easily add requirement 1 in a couple years.”
You called the builder because they are the expert. You’re calling a technology company because that’s what they do for a living – they build software and websites and technology. If you give them something to work with, everyone will save time and they can propose a number of options to help you get to where you want to be.
For clients that do have a conceived fixed budget, some internal conversations should be taking place. There are usually ways to pool funds or pull other levers to put money where its important. But why would anyone spend more than their initial budget on something like a website or new interactive tool?
The answer is simple: long-term return. Here’s another analogy for you. In 2014, the Seattle Mariners signed Robinson Cano to a 10 year, $240M contract. Why would they do that? I mean they certainly weren’t on the verge of winning a World Series in 2014.
It's because of the long-term return. Cano brought an air of excitement to the fans (your end-users!), gave the whole team something to believe in (your project team), and provided Seattle with an opportunity to perhaps win a title at some point over the next 10 years.
But aside from those perks, the contract actually brought the baseball club more money than it spent - season ticket holders increased (members, customers, users), more merchandise was sold, there was new interest in the team from younger fans (attract the next generation), and on top of all this the signing made Seattle an attractive team for other players to consider. The return is far superior than the price tag.
When you’re buying technology, there is usually a mission on hand. But selecting a partner that has the best interest of your future in mind is well worth the extra investment. Sure, it may mean a longer term of predictable revenue for the vendor - that does not mean you won’t reap the benefits as the client as well.
Last point on budget: If you do provide a cost range to a vendor or set of potential vendors, you can quickly learn whether or not you are on the same page. With just a little bit of intelligence on your end, you should be able to sort through the details of any proposal and know if the vendor was abusing your budget or actually trying to give you the most bang for your buck.
Questions to Ask Once You Think You’ve Made a Decision on a Vendor
There is a golden rule that companies often pass over when selecting a partner:
You’re not always looking for the partner that can provide the exact solution to your problem. You’re looking for the most long term value in a partner - one that you can see yourself leaning on, depending on, and walking down a path toward success with.
That partner might not always be the biggest company, they might not have previously built exactly what you’re looking for, and they certainly might not be the cheapest. But the intangibles count here - you’re making a decision that will pay off down the road as well as in the immediate term. When you think you’ve decided on a partner, you should ask yourself these three questions:
- Has this firm shown me beyond doubt that they have the chops to do what I need (even if they haven’t done the exact same thing before)?
- Does this firm seem to have a real head on its shoulders so that if things get off track or unforeseen changes are needed, I will worry the least? (And if you think that everything goes perfect with every technology implementation, you should just stick around a little longer - it gets fun)
- Is this firm better than a one-trick pony; are they someone that can add a lift to my business in several areas for the foreseeable future?
These are overall strategic questions that should come at the bottom of the decision funnel.Overall, being a good technology buyer is not easy. A good vendor should make all of your technology decisions easier by truly being a muse and an asset as well as a true partner to your business.
Hopefully this post - as well as Part One - have helped you gain some insight to the things you should be adding to your checklist during the selection process, thus relieving some of the stress. Now, if you’re picking good vendors to submit a proposal in the first place, your final thought should turn from “I am pretty confident this vendor can do the job” to “I am sure we’ve made a great decision for this project and for the future of the company!”