Buying technology right, first time

Many years ago, I worked as a small cog on a technology project that lasted five years, employed 400 people and cost a bank close on c.£200m in today’s money. It was a bit early in those days to be building data lakes but nobody really knew that then, and this drove a series of poor technology decisions that led to missed regulatory obligations and unhappy customers. Ultimately, the project was a contributing factor to the bank being sold. What a mess it was.

I now often engage with clients on legal technology procurement and do my best to not “pick a side” but rather work to ensure two things:

1. that the overall process is structured and fair and supports a buyer procuring what they need from a vendor, whose capabilities, credentials and experience are legitimate; and
2. conversely, that a vendor is given the space to ingest what a buyer is looking for and given the necessary forum to accurately articulate how their product meets the buyer’s needs.
   
   

As you can already see, there are two sides to this dialogue but for the purposes of this article, I am going to focus on some of the considerations a buyer should be conscious of as they move through the process. The vendor’s journey is an article for another edition of Insights.

Well, the things to look out for start at the start, as they say. Here are some upfront considerations:

• The ‘canned’ demonstration: many of us have lived through what is called a “canned demonstration”. This is where serious sales people in grey suits come in and provide a highly orchestrated demonstration of their technology, dealing with the exact issues you have only just recently diagnosed and discussed internally. Here, as the old adage goes, if something looks too good to be true, it usually is. My advice in these situations is to immediately start probing use cases outside of the strict “set piece” you are being actively led through, to quickly determine if the technology is a one trick pony.
• Resistance to context: further to the above, it is actually very rare that a piece of technology is an exact match for a requirement set. However, if the technology is stable and mature, it should be possible to either calibrate or develop to a requirement set within reasonable timeframes and costs. What is critical though, is for the vendor to be open to, or indeed vulnerable to, going through a buyer’s context in the early sales calls and exposing where the technology works and where it does not. This is uncomfortable for vendors because if the early sessions are not handled carefully, it risks the conversations shutting down over a seeming lack of functional alignment. But, if vendors do not engage at all with the buyer’s context, or will only do so with months to prepare, a buyer should reasonably start suspecting that the vendors are hiding something or overstated functionality at the outset and are now developing madly behind the scenes.

Whilst being wary of the items raised above, buyers should talk to as many vendors as they can and get a feel for what is available in the market. Talking to vendors quite often helps buyers reframe their challenges and become more conscious of what is possible. At some point, browsing needs to abate, and the heartbeat transition to a structured process that sits within a change management framework, must be agreed. Here are key items that I think need to be kept firmly in consideration through this process:

• The short list: I have always seen the sense in keeping the list to five names, if possible. Three of these names should be vendors who you feel, from your earlier conversations, have the best chance of making the grade. For the final two places, one should be reserved for a vendor that is seeking to solve for your challenge in a completely unique way, even if the functional alignment is low, relative to your “top three”. I suggest keeping the final spot for a vendor with whom there is good chemistry and/or who is just starting out, as it may turn out that nobody can meet the majority of requirements but a party that is easy to deal with and hungry to work with you is a far more interesting, valuable proposition.
• Don’t hide the hurdles: before you engage with your shortlist, invest the time to understand your own procurement process and then be as transparent as possible from day one. Recognize that vendors are going to invest significant time and resources in your process, which they will need to account for. Having to compensate for late breaking requirements could actually push them into hardening commercial positions prematurely because they cannot justify the cost of sales any longer. Typical items here that cause pain are data and cyber security reviews but increasingly, supply chain reviews driven by ESG factors are also creating challenges.
• Understand what you want: take the time, prior to initiating the procurement process, to compile your requirements, both functional and non-functional. Get these signed-off by your key stakeholders. Assign a business or change analyst to transition the requirements into a vendor selection requirements document which clearly sets out the requirements and the basis on which decisions will be made, including how each requirement is weighted and assessed. Similar to the above point, having to compensate for material late stage requirements, could make or break a deal or severely injure a good faith working relationship. That’s not to say that you should follow a ‘waterfall’ process where everything needs to be defined up front, but be clear on your ‘minimum viable solution’.
• Get real value out of the process: how your vendors stand up to your requirements will be measured by self[1]disclosures versus the vendor selection requirements and also how they fare through a structured assessment process. Traditionally, this is a “Proof of Concept” (POC) where the buyer sets out a number of carefully thought through scenarios, typically using the buyer’s data, where the vendor will need to demonstrate how their technology performs. Increasingly, we are seeing buyers implementing “Proof of Value” (POV) tests – this is simply where the vendor is handed a live but self-contained business issue – say looking for Russian ruble exposure – and asked to help work on the problem with the buyer, like a small standalone consulting assignment. We are seeing buyers funding the POV tests, which removes some of the commercial pressure on vendors and also helps smoke out any potential contracting issues that may be lurking around. POV style assessments seem to drive better commercial behaviour; buyers get novel support on live business issue and vendors get their costs covered and an opportunity to build a genuine commercial relationship with a potential client. Neither side feels like it’s ‘throw away work’ as is often the case with POC’s.
   

Some say that there is a real ‘art’ to the perfect vendor selection, leveraging experience and intuition and being able to get behind sales rhetoric, however well-natured. That may of course be true, but I think my argument will always be that your intuition needs to be fed a diet of sensible data in order for it to do its sub-conscious magic. Whilst the points discussed in this article are not comprehensive, they should give you the backbone of what to avoid and also, how to begin to structure a selection approach.

I started this article with a depressing anecdote and will end with something different. The biggest single vendor selection I have been involved in was for an end-to-end derivatives booking platform. The selection was furiously competitive and close, took 11 months and endured many twists and turns but ultimately was successful. When I asked the COO of the trading floor what finally swung the deal, he simply responded, “This lot told better jokes…”