C U R C I O W E B B Conducting a Vendor Search Presented by Brian Dennen Curcio Webb, LLC August 25, 2010

C U R C I O W E B B

Conducting a Vendor Search

Presented by Brian Dennen

Curcio Webb, LLC

August 25, 2010

2Copyright © 2010 Curcio Webb, LLC

About the Presenter

Brian Dennen

Curcio Webb’s Retirement Administration Practice Leader

Performing independent HR consulting since 1998

Regularly helps companies from strategy through implementation

Has led over fifty vendor selection projects


About Curcio Webb

Founded in 1997 – one of the largest independent consulting firm performing HR and benefit administration-related consulting

Dedicated to objective human resource, benefits administration, and investment consulting

No alliances with administration vendors or products Don’t work for or accept compensation from vendors or

investment managers – all revenues generated from clients

Conduct vendor selection projects for various sized organizations in a wide variety of industries – including the selection of administration vendors, actuaries, health care consultants, and executive compensation consultants


Topics for Today Vendor selection planning

How to pick vendors to include in your process

Key aspects of the search process

Elements of a Request for Proposal (RFP)

Ideas for decision-making

What to do once you select a vendor


Before You Start… Question if you should even undergo this project

Line-up internal support - get senior management buy-in, determine who will make decisions, and identify a passionate project sponsor

Determine need for outside support

Assess internal resource availability Assess internal expertise

Select vendor selection team

HR/benefits/compensation Procurement/purchasing Legal IT Tax/accounting/treasury


Create Your Strategy… Do you have a need to reduce the number of vendors you manage?

What issues are deal-breakers?

What might cause you to cancel the project?

Do you need to prove the likelihood of meeting financial objectives before starting a vendor selection process (business case)?

What is your governance structure?

What are your vendor performance expectations?

What change management would be required to manage various project outcomes?

Answers to these questions will determine your key selection criteria


Proposed ApproachStep 1: Kick-off

Step 2: Perform fact-finding

Step 3: Create and distribute RFP

Step 4: Assess proposals

Step 5: Meet with finalists/conduct site visits

Step 6: Conduct final selection activities

Step 7: Select vendor


Step 1: Project Kick-Off Create project team

Review potential delivery models

Determine project scope

It’s ok to not completely know scope/delivery model

Is important to know what to ask for

Create key selection criteria

Select vendors to solicit

Confirm project timeline

Think about change management – how will new vendor be managed, who will manage the implementation, and what resources are needed and for how long


Determining vendors Talk to peers about vendors they use

Determine service expectations/fee tolerance

If unsure, talk to vendor first

Don’t solicit more than 6 vendors per service area

Learn about marketplace changes – vendor consolidations, new entrants, changes in ownership structure


Step 2: Perform Fact-Finding Ensure plan materials are up-to-date (if not, document variances)

Gather characteristics that make your organization and plans unique

Document potential changes to your environment – plans, systems, organizational, geographical

Gather internal and current vendor costs

This is the opportunity to benchmark your services. However, sometimes benchmarking (with strong

contract negotiation) is sufficient to achieve desired outcomes.


Step 3: Create RFP Key elements of the RFP

Describe project scope/rationale for project

Provide a project timeline

List your key selection criteria (as discussed earlier)

Document unique characteristics/absolute requirements

Describe contract provision expectations

Outline “meaningful” performance expectations

Collect fees in consistent manner

Ask pointed questions to identify differences between vendors

• Get to key selection criteria

• Process oriented

We see little value in RFIs


Before Proposals are Due There will be a need to respond to vendor questions – uniformly across

all bidders

Create methodology for “scoring” proposals

Base your scoring on your key selection criteria

Allow for some subjectivity

Begin total cost assessment


Step 4: Assess Proposals Score proposals

Identify proposal issues

Don’t place too much emphasis on fees

Narrow down list of vendors to a “manageable” number


Step 5: Meet with Finalists Host vendor meetings or conduct on-site visits

Ask vendors to respond to service issues

Keep meeting topics and times consistent across vendors

Meeting dos:

Meet your team

View technology/supporting applications, and how they will work with your complexities

Understand implementation timelines/resources

Meeting don’ts:

Discuss fees and contract terms

Make comments about other vendors

Conduct more meetings than necessary

Re-score the finalists


Step 6: Final Negotiations Check references!!!

Finalize scope

Understand out-of scope items and fees

Confirm fees, contract terms, and performance standards

Understand fee offsets

Be willing to give a little to gain a lot!


Step 7: Select vendor Present solid business case

Award business

Agree on timetable to complete contract

Plan for project kick-off

Notify organizations not selected


Now What? Assign key roles

Project sponsor

Vendor manager

Project manager

Start to build internal project plan

Review internal organizational structure

Create project governance structure

Initiate transition communications

Develop plan to retain staff (if outsourcing)

Don’t underestimate project management requirements


Common Pitfalls Not obtaining senior management buy-in

Lack of implementation planning

Project governance is addressed after vendor is selected

Change management needs are ignored

Decisions are solely made based on cost – with little consideration to value

Failure to set performance expectations

Trying to negotiate contracts based on other standard internal contracts


Recap Vendor selection project planning

How to pick vendors to include in your process

Key aspects of the search process

Elements of the RFP

Ideas for decision-making

What to do once you select a vendor


Questions

Documents

C U R C I O W E B B Conducting a Vendor Search Presented by Brian Dennen Curcio Webb, LLC August 25, 2010