Get certified - Transform your world of work today

Close

Vendor Selection: An Iterative Process

26 October 2016

Karthik Venkataraman
VMware India Inc


VMware is a global leader in cloud computing and virtualization, with products focused on satisfying a major customer requirement of one cloud, any application, and any device architecture. The core focus of VMware is to challenge itself and disrupt the market with industry-shaking innovations in its product line. To achieve this ever-required focus and success, projects within the organization need system and knowledge support, which are generally available within the organizational span.

However, for the cases in which we need extensive system and knowledge support, VMware banks on its pool of vendors to achieve its goals. As we grew from a college project to an industry leader, we have built a strong framework around our sourcing and supply chain to get the best support in our growth. However, the growth levels over the past years have increased by multiples, and hence we felt a need to revisit the selection process of our vendors, which forms the basis of this article. The project was aimed to improve on and provide our internal teams with the systems and knowledge needed, at the right time, with the right levels of expertise, within a cost-supported environment.2,3 This requires a well-oiled vendor selection process that can meet our organizational needs and challenges with timely results and good resolutions.
 

Introduction

This article shares the process flow that was initiated within VMware to develop a process-driven framework for selecting vendors and systems for various internal and external projects. As a knowledge enhancement and career-building opportunity, the VMware – WW Operations teams identify top-performing employees to contribute in process improvements initiatives, thereby ultimately improving the business process. The vendor selection process was missing a framework internally, which was leading to silos.

The selection process usually involves the following major activities:5,11
  • Identifying potential vendors/systems
  • Interviewing/demoing
  • Sourcing discussions
  • Finalizing the vendors/systems
However, there was no structured way of achieving these requirements. The review of the process resulted in providing all business units with data-driven models, which would ease the selection process and bring better project results.
 

Process study

Vendors include consultants and systems that are required to support operational activities and day-to-day business functions. In the world of cutthroat competition, organizations are expected to deliver more with minimum investment. This balance can be achieved only when there is the right mix of brains and systems, which is not always readily available7 internally within the organization.

When this basic challenge arises, organizations are expected to look either for the best minds outside their organization to assist them on a short-term basis, or for systems that can speed up the outcomes. On further analysis, we found that the need was met by word of mouth and networking, and not with a process. Hence, we began talking to stakeholders1,7 to identify their requirements, a few of which are highlighted below:
  • Eliminate the middle man concept.
  • Have voting rights.
  • Cultivate collaborative teams.
  • Create templates to capture requirements.
  • Create a dashboard view of the outcome.
  • The calculation is simple to reach during the selection process.
On reviewing these requirements, we decided to capture them all in three different Level 1 capabilities:2,8,9
  • Framework
  • Scalable and adaptable method
  • Templates and documents


Revise the process flow

As we started to work on simplifying our vendor selection process, it evolved into a challenge that we needed to overcome, rather than turning into a process-related issue. For this work, we aimed at building a revised, simplified process flow that can be deployed in a real-life scenario1 in identifying a vendor/consultant or system.
 

Method

After a deep dive into the requirements, we identified the needs under each of the Level 1 Capability buckets, which were further classified as Level 1 Capability and Integrator. This laid the foundation for a method that would create the Level 1 Capability – Integrators.
 
Level 1 Capability Integrator
Framework End-to-end process flow map
Scalable and adaptable methodology Scope to vendor/system capability mapping
Templates Business requirement document
Use case document
Request-for-purchase document
 

Integrator: Taking a deep dive

Framework: End-to-end process flow.5,7 The Integrator step was focused on identifying all stakeholders who would be controlling the process and who required detailed changes in advance, for a high-level perspective. Their important role was to know when they needed to act and what would be the trigger for their actions. To simplify the process, we built a new process flow, mapping the end-to-end flow, which can be referred to at the start of the method.
1-end-to-end.jpg
Fig. 1: End-to-end framework

Scalable and adoptable method:1,3,6 Scope to vendor/system capability mapping. During this Integrator step, we determine the expected vendor or a system capability and how this capability can be driven through the framework.
2-methodology.jpg
Fig. 2: Scalable and adoptable methodology

Before following recommended steps in the scalable and adaptable method, it is important to validate the framework's end-to-end process flow map at every phase and modify the map to meet the business challenges before finalizing it.

Important phases within the methodology track:4
  1. Initiate. During this phase, we have a project charter that includes an executive summary, problem statement, goals, scope, time lines, and stakeholders.
  2. Analyze.7 During this phase, we review the end-to-end framework to finalize the stakeholders and process flow and prepare a draft flow for business approval.
  3. Design. Start work on the templates. For example, business requirement documents, use cases, and Vendor Scoring sheets are designed according to business needs.
  4. Validate.11 Ensure that stakeholders validate and sign off on the end-to-end framework that will be used for the process cycle.
  5. Implement. Sign off the templates and onboard the vendors/systems.
  6. Close. Secure and streamline the documents used during the track. Document the learnings and evaluate feedback.


Results

With the framework and method in place, we determined whether it would work on a real-life selection process. It was deployed in one of the system selection process, and the results are documented below (results are captured as simulations).4,5,6,7,11

Simulation 1

Requirement: The VMware Global Marketing team was looking for a new system to manage their content management streams. They had reached out to the project management team to assist in the selection process. The selection process, with the framework and methods, was used to arrive at the best system.
 
3-success-story-system-selection.jpg
Fig. 3: System selection
 
4-graph.jpg
Fig. 4: Graphical representation of system selection
 

Simulation 26,7

Requirement: The VMware Knowledge Management team was looking for a consultant organization to manage their knowledge management streams. They reached out to the project management team to assist in the selection process. The selection process, with the framework and methods, was used to arrive at the best consultants.
 
5-success-story-consultant.jpg
Fig. 5: Consultant organization
 
6-graph.jpg
Fig. 6: Graphical representation of selecting the consultant organization
 

Knowledge sharing1,2,3

To evangelize the framework and method, internal presentations were made within the organization via:
  • Team talks on conference calls.
  • Brown-bag sessions for the local team.


Conclusion

The VMware vendor selection process for projects routed via the Project Management Office follows the framework and method discussed in this article.

As seen, decisions were made based on the experimentation with data and observations around the data impact, which implies that the process is empirical in nature. Therefore, the framework is a truly adaptable one for process enhancements, as was demonstrated in the two simulations.
 

Appendix

VMware, Inc., is a leader in virtualization. For more details, visit http://www.vmware.com/in/company/.

WW Ops, also known as the Worldwide Operations, is the VMware business unit that supported the process study and its implementation of the process enhancements.
 

Acknowledgment

The process study and enhancements were fully supported and implemented within VMware, Inc. The simulations were all validated against actual business requirements and were deployed in accordance with all business and stakeholder approvals.
 

References

  1. PMBOK® Guide and Standards, 5th ed. (Newton Square, Pennsylvania: Project Management Institute, 2013).
  2. Mulcahy, Rita. PMP Exam Prep, 8th ed., RMC Publications, 2015.
  3. Green, Jennifer and Andrew Stellman. Head First PMP, O'Reilly Media, Sebastopol, CA, 2014.
  4. Yacura, J. "Third Party Supplier Risk Management," http://www.isg-one.com/knowledgecenter/whitepapers/private/papers/White_Paper_Supply_Chain_Risk.pdf.
  5. Byatt, G., G. Hamilton, and J. Hodgkinson. (n.d.), "Working on Projects with Suppliers and Vendors: Seven Factors to Consider," http://pmicie.org/images/downloads/Articles/98___working_with_suppliers_and_vendors_on_projects___seven_factors_final_distribute.pdf.
  6. Evantix (Ed.). (2013, July), Vendor Risk Management, http://info.evantix.com/hs-fs/hub/37288/file-208373936-pdf/docs/vendor-risk-management-evantix.pdf?t=1458021710531.
  7. Chithur, Devaraj. "Effective Vendor Management: Improving Supply Chain Efficiencies, Reducing Risk," http://www.tcs.com/SiteCollectionDocuments/White-Papers/Effective-Vendor-Management-Supply-Chain-Efficiencies-0115-1.pdf.
  8. FactPoint Group. “Vendor Management By Banks—Beyond Compliance,” http://www.factpoint.com/Vendor-Management-for-Banks.pdf.
  9. Watson, Noel, Brian Serumaga, and Joseph McCord. 2012, “Selecting and Implementing Vendor Managed Inventory Systems for Public Health Supply Chains,” http://deliver.jsi.com/dlvr_content/resources/allpubs/guidelines/SeleImplVMI.pdf.
  10. Marrero, Rafael. “VMO Startup Guide: How to Launch a Vendor Management Office and Get It Right the First Time,” 2015, http://www.rafaelmarrero.com/wp-content/uploads/2015/08/White-Paper-VMO-Startup-Guide-Rafael-and-Garry-Co-Authors_v3.pdf.
  11. Litcom. “5 Best Practices for Effective & Efficient Vendor Management,” http://www.litcom.ca/5-practices-effective-efficient-vendor-management/.

Opinions represent those of the author and not of Scrum Alliance. The sharing of member-contributed content on this site does not imply endorsement of specific Scrum methods or practices beyond those taught by Scrum Alliance Certified Trainers and Coaches.



Article Rating

Current rating: 2.5 (2 ratings)

Comments

Be the first to add a comment...


You must Login or Signup to comment.

The community welcomes feedback that is constructive and supportive, in the spirit of better understanding and implementation of Scrum.

 

Newsletter Sign-Up

Subscribe