IT-Services Buyers Guide for Founders

Nine Golden Rules for IT / e-Marketing Service Purchase

The business plan has been written, the financing has been approved. At this point you are ready to buy services in areas such as web design or marketing, often digital marketing. Purchasing digital services, including competent IT service is a critical factor for your business’ success. Companies which act carefully have a strategic advantage over their competitors.

Generally, we distinguish 3 phases of the IT / e-marketing procurement:

• Before purchase (Rules 1 to 4)
• During the project period (5 to 7)
• After completion of the project (8 to 10)

We want to share our golden rules with you for each separate phase. These reflect our own experience and are intended to lead to the optimal purchase decision.
 
Overview:
 

1. Offers & Quotations
1.1. Provide a Market Overview
1.2. The Written Request
1.3. Take Your Time
2. Sales and Technology – Common Ground?
2.1. Be Aware of Who Your Business Partner Is
2.2. Check References Where Possible
2.3. Get Ready to Haggle
3. The Perfect Service Provider
3.1. Look for Someone “Your Own Size”
3.2. The Cost of IT Services is Dropping
3.3. About Self-Employed Individual Entrepreneurs
3.4. Package Offer or Diversification of Services?
4. The Decision
4.1. Clarify the Last Issues Over the Phone
4.2. Plan Your Time and Milestones
4.3. Go That Extra Mile When Negotiating
4.4. Be careful about the fine print and the legal aspects
5. Good Communication is a Recipe for Success
5.1. Tips On How to Communicate by Email
5.2. Visualize Where Necessary
5.3. Instruct as Appropriate
6. Responsibility
6.1. Combine Competencies
6.2. No Permanent Control
6.3. Learning Takes Time
7. Project Management 101
7.1. Always Be in Control
7.2. People Make Mistakes
7.3. New System – New Management Approaches
8. Project Tracking and Optimization
8.1. Specify the Goals
8.2. Recognize Potential
8.3. Demand Results
9. The End of a Game is The Start of a New One
9.1. Building Knowledge
9.2. Go Public
9.3. Follow Up On Your Cooperation

1. Offers & Quotations

1.1. Provide a Market Overview

To get an overview of the market, you should talk to as many suppliers and look for as many deals as possible. This may sound time-consuming at first, but it is key to successful service choice because the better you know the specter of services being provided, the better your decisions will be.

When doing research you should keep in mind that providers in highly populated areas and boom regions tend to be expensive, busier or to work with quite backward methods because they “have it easier” and can get away with it. If you have existing networks and customer contracts you do not need to acquire new clients – you can live off your years of work experience. As IT knows no natural geographical barriers, you should not always focus 100% on the local listing. Look for both German and global companies, depending of course on the size of your project. Crowdsourcing sites like Upwork, Guru or Fiverr offer further potential.

1.2. The Written Request

The written request to your potential partner should be standardized and always with the exact same wording. The more queries you send, the less likely you will be to remember individual formulations when you get a return call from a provider.

It is important that you provide comprehensive information in advance. The more fully the scope and timing of the planned project is described, the easier it will be for the provider to put together a proposal tailored to your needs. Project timelines, binding framework dates and kick-off events should all be duly noted in your request.

Resist the temptation to mention your budget or price limits. This is to prevent “budget-tailored” offers. Moreover, introducing budget limitations also places restrictions on your negotiating strategy, which can cost you a lot of money.

1.3. Take Your Time

Start with the supplier selection as early as possible. The more time you have, the freer and more relaxed you will be when negotiating with potential partners. Tight schedules and full calendars of service providers will limit your negotiating wiggle room.

In the worst case, you’ll have to go with the provider that is “just available”. He is very rarely your top choice and is even less likely to provide the best-priced IT services. After all, time pressure is a disadvantage when negotiating pricing.

 

2.  Sales and Technology – Common Ground?

2.1.  Be Aware of Who Your Business Partner Is

Not all sales professionals are technological geniuses, particularly when it comes to larger-scale providers, in which case a sales professional is closer to a trained salesperson. You as a potential customer must be aware of your potential partner when talking about future cooperation. When it comes to technical details, salespeople are often not the right ones to talk to. Sellers who earn commissions are incidentally also more inclined to make empty promises.

If you have planned clarification meetings or teleconferences, you should bring your own competent employees from the IT departments if possible. They know the technical requirements and your existing infrastructure and processes best and are best able to assess whether the solution offered by the service providers is both practical and inexpensive.
If you do not have such experts, get an objective external service provider for the IT procurement (eg. sourcingondemand.com).

2.2.  Check References Where Possible

Does your future service provider’s website contain a number of references? This is very good, because you can use the opportunity and check those references by phone. Sometimes small, routine activities are presented as gigantic projects or these “reference” customers were actually not as thrilled with the service as the website will have you believe. There is a special phone guide for such calls. Structure the conversation as follows – you’ll get an honest statement from a former client at the end.

Introduce yourself and your company quickly and ask whether information could be provided naming the concrete offer and the professional
• Ask questions about expertise, project implementation / project success and follow-up
• At the end of the call, ask the former client if he could give the provider a score on a scale in numbers. Alternatively, use the “Would you… again?” question.

2.3.  Get Ready to Haggle

The better prepared you are, the easier it will be to negotiate a good price. You should examine the submitted contract documents or offers of your candidates carefully and in advance.

Competition among providers is quite intense in some areas, which you can use to your advantage. In very specific areas this strategy can also backfire, because a great seller who has a lot of business will not want to haggle over a specific and laborious project, and one that will is perhaps not one that you can trust with regard to competence. Knowledge of the market will help you make the best decision.

You should know which product features are required by your organization and what services are not necessary at every stage of the negotiation. This will sustain your budget. Some solutions are often available only in interdependent modules and some providers use this to negotiate complicated / expensive bundle contracts. If you are not clear on the technical aspects of individual functions, ask your own experts. The more you ask about the details, the more skills you demonstrate prior to the stage of price negotiation.

Discrepancies between commitments made over the phone and the written offer must be resolved, whereby you insist on creating a qualitative distinction to orality by means of textualisation (emails are incidentally such, an email can even include a contract).
 

 

3. The Perfect Service Provider

3.1. Look for Someone „Your Own Size“

“Pick on someone your own size” isn’t just a schoolyard rule. Your partner should be a medium-size enterprise, if you represent a small or medium sized business.

Disadvantages of smaller companies: Small suppliers often depend on individuals and know-how carriers. If just one key staff member is unavailable, your entire project will be delayed. Another possible risk of failure comes from the fact that individual entrepreneurs rarely have sufficient capital buffers and the general business risk is relatively high. There is also the issue of data security; client passwords are not always well protected. But there are some arguments in favor of small entrepreneurs. More on this later.

Are large-scale service providers the right choice? Should you go for national agencies or the “stars of the branch”? We do not recommend this, because not only are the prices higher, but your contact person will also change frequently and your own market power is insufficient in comparison to that of the service provider. This is a sure source of tension and sometimes even a sense of powerlessness against the Agency. And that’s what you are, when you go to a large agency: The “small” one begging for the “big one’s services”, whose demands are seen as just a waste of time and who is constantly being ignored, victim to long telephone loops and lack of e-mail responses.

It is therefore best to look for a service provider who is about your company size. He knows your situation and your project and the long-term positive feedback is important to him, so he’ll actually try to provide services to your satisfaction.

3.2. The Cost of IT Services is Dropping

Now on to the issue of the cost of IT services. It would be a mistake to make assumptions about the quality of the IT services based on their cost alone. Even cheap providers can offer excellent performance and outstanding service under the right circumstances. The reason is that IT services have become cheaper in recent years. New technologies like cloud storage and more modern data centers offer great, easily accessible opportunities for outsourcing IT services so that providers can permanently reduce their costs.

This fact is directly reflected in cheaper prices. You should not dismiss cheaper providers so easily. They could be passing the price reductions directly on to their clients to gain a competitive advantage. Check the references to make sure.

3.3. About Self-Employed Individual Entrepreneurs

We warned you of the risks of contracting a lone freelancer, but there are also many positive aspects of working with self-employed persons. Individual entrepreneurs and self-employed persons are generally characterized by high commitment and a sincere interest in your success. You will often find real universal talents in one-man (or one-woman) shows that can save you a lot of work with their fresh ideas and easy, effortless implementation. Many medium-size enterprises appreciate freelancers’ flexibility and helpfulness, making them key consultants and very important members of a project team.

Again, be sure to check the references provided and ask the client what his experience with the independent IT service provider was. Chances are that he will paint the picture of an industrious and reliable little businessman who brings exceptional performance. If the specialization, the price and the chemistry are right, you should definitely get such an IT service provider / IT service providers in your team.

3.4. Package Offer or Diversification of Services?

Should you put all your eggs in one basket or contract different service providers for the different tasks? It is not possible to give a general answer to this question, since this decision is a strategic one. The fact that you can distribute risk and find a specialist in the relevant field speaks for diversification. But here the coordination and communication effort increases, and many specialists are too deep in their specific area and miss the “big picture”. Choosing a single provider can also be risky. If something goes wrong, all the services are affected. In this case you have just one contact, who is usually a generalist and knows enough about all the project areas. You should not expect detailed expert knowledge and the lowest possible rates at the same time.

You’ll have to live with your choice for some time, no matter whether you opt for more partners or just one, depending on the contract period. It is worthwhile to take the time to choose the right strategy after considering the critical factors.

 

4. The Decision

4.1. Clarify the Last Issues Over the Phone

By now you have compared, phoned, and considered a lot of different service providers. It has come to the choice of a service provider, with whom you will work for a long time and under certain circumstances set out in advance. Even if you have already done this in the past weeks and months, grab the phone one more time and call the service provider of your choice before signing the contract. This way you can clarify final issues in direct communication and see what your gut feeling tells you again. Your gut feeling or intuition is a valuable indicator of the viability of your decision. You don’t feel 100% happy signing with this provider? Then you better not.

4.2.  Plan Your Time and Milestones

Use this last phone call before signing the contract to make appointments and assign milestones. Milestones can help divide your project into smaller, easily checkable parts. The milestones must be approved before you move on to the next stage of the project.

If your assignment involves outsourcing IT services or other activities, it is advisable to form Service Level Agreements (SLA). These regulate the quality of the service provided in detail. Maximum downtime, response times in case of problems or key figures – you can agree on all objectively measurable aspects.

4.3.  Go That Extra Mile When Negotiating

The final phone call is your last chance to get some extra service. Ask calmly, but insistently if a certain service or product can be added to the package offer. To be more convincing, mention the offer of another candidate or promise to give publicly visible, positive client feedback (a testimonial) at the end. This may make the other party more willing to concessions.

The issue of a longer test period is quite legitimate if it is software or web services you’re contracting. This is because you usually get demo versions that are limited in terms of functions or time. Feel free to ask for additional test months for the full version – this can save you a few hundred Euro in some cases.

4.4.  Be careful about the fine print and the legal aspects

The General Terms and Conditions describe both how to use a product or service and the warranty or limitations of the service.

You should be aware of limitations on rights to use the software or service. You may need to negotiate the general terms and conditions to use the full potential of the solution provided to you without having to ask the manufacturer for permission if adjustments are needed at a later time.

Have you negotiated, discussed and tested everything? Is your gut feeling good? Then sign the contract to start working!
 

 

5. Good Communication is a Recipe for Success

5.1.  Tips On How to Communicate by Email

Email is a practical tool to communicate quickly and easily. The recipient will read your message when he can – you don’t need to expect an immediate answer. If you need information fast, calling them by phone would be better. From the provider’s perspective it is much more convenient to correspond by email. Phone calls can distract you from work, and the correspondence usually has to be in written form anyway.

Although it is a relatively new communication medium, there are still a number of formal rules for spelling and courtesy. If you do not have time to write a “good” mail, then put it off or pick up the phone.

Also, the amount of sent emails says nothing about the quality of communication. A single clear, comprehensive and informative email is better than a “patchwork” of 15 random messages that seems more like a written brainstorming session than structured communication.

5.2.  Visualize Where Necessary

Email is a flexible communication tool. Use visualization tools where appropriate in order to make yourself more easily understood. Screenshots (particularly easy using the free software IrfanView), “insert image” in Word or a simple drawing in Windows Paint are often sufficient to make a point – extra software is often unnecessary.

Mind maps can help you brainstorm by portraying connections and ideas. Non-specialists and people who are not involved in the project yet and do not have detailed knowledge need to be assisted with visual aids. Typical tools for “imaging” are:

• Flowcharts
• Prototype Photos
• Presentations
• Simulations
• Mockups (visual models eg. user interface or web design, usually created with Photoshop)

With visualization you create a better understanding of the project requirements or problems that need to be solved. All those involved in the meeting will acquire precise project knowledge more quickly.

5.3.  Instruct as Appropriate

People are very different in the way they work. Some require intensive instruction and feel well only if they know exactly what to do. Other people start feeling trapped and patronized if you are very specific about the work result. It is important to find the balance.

The external service provider is the first “newbie” in the team, who brings his own working methodology. Try to find common ground and strike a balance, avoid information overload, and respect the time of your service provider. You harm yourself by providing disorganized information because either the cost of training is added to the service or the provider will save the time at one of the next project stages. Only inexperienced service providers invest free time to make up for that lost in bad communication.

While information overload can be unconstructive, you should also avoid the mistake assuming your partner will just somehow “get the hang of it” especially in the early stages of project cooperation. He cannot know what exactly is expected of him.

Good communication is a two-way street. Be patient, move from milestone to milestone and don’t lose track of progress.

 

6. Responsibility

6.1. Combine Competencies

„One face to the customer.“ – We’ve heard this from many marketing consultants. If you want to contract an IT service provider, you should use the advantages a single contact person for the project can offer. You should give this role to a staff member in your company. The most effective work principle is giving him the respective decision-making authority.

He must be allowed to make his own informed decisions within the project framework, which should not be reversed by superiors because that would discredit him as a competent partner in the eyes of the service provider.

6.2. No Permanent Control

Permanent control of the staff member responsible is counterproductive. Instead, make it clear to him that he is ultimately responsible for the success, but he can rely on your full support in the event of a misunderstanding.

To ensure early identification of potential negative developments, weekly jour fixes (fixed days) are recommended to report on the status of the project or the cooperation. The next project steps or the decision on the status of the current milestone are discussed during these regularly scheduled appointments from then on.

6.3. Learning Takes Time

Competencies are developed over time. Your employee must gather the experience to build practical know-how and sufficient expertise. This means, however, that he won’t be able to work as actively on the other tasks allocated to him in some cases. If you want the project to succeed, give the employee time to work on it. It might also be useful to designate a workplace for project activities to prevent interruption from the daily business.
 

 

7. Project Management 101

7.1.  Always Be in Control

Knowing what stage the project is at and what milestone you’re on is the art of effective project management. There are a lot of tools you can use to facilitate project success. Some of them are as old as the Gantt chart, named after its creator Henry L. Gantt. Gantt was a management consultant and lived from 1861 to 1919. His chart has remained a cornerstone to successful project management.

A Gantt chart lets you list separate project steps in bars along a time axis. Duplication, dependencies and go / stop decisions can be structured easily with this simple project management tool.

You can adjust the degree of detail of the bar graph depending on the project scope and the desired depth of planning. You can also keep track of and quickly respond to delays and unforeseen problems. You don’t need any expensive tools; usually all it takes is a good Excel template. You can also use comprehensive solutions such as Microsoft Project. Other professional programs that alleviate project planning include the online PM-Tool Basecamp or Trello, a good tool for collaborative work in larger teams.

7.2. People Make Mistakes

There has rarely been a project in history that wasn’t delayed by mistakes or omissions by a participant. This is quite natural, because people make mistakes. The art of a good boss or project manager is to respond intelligently to failure to communicate clearly and openly. In this role, you should be fair and – although it may be difficult – try to deal with the employee in question in a constructive way. He may have done something wrong, but the way you respond to this will determine his future behavior in similar situations.

If you are too critical, he will make every effort to avoid addressing such problems openly in the future. This is dangerous for any project. So-called sandwich criticism is advised in popular management readings, but is wrongly formulated and non-constructive. An example: “You did the presentation as well as you could, but I would have done some of the slides differently”. Such a statement will make your employee feel small. Relaxed and open communication becomes almost impossible after such criticism. You can read more about “the right criticism” in the following guide.

7.3. New System – New Management Approaches

It is often not easy to overcome the resistance of your staff to changes. Insecurity, loss of relevant know-how, leaving the familiar working environment – the list of reasons to be wary of a new system goes on and on.

To alleviate the concerns and fears of your employees, it may be the best way to bring staff that has prior experience with the system and are aware of its advantages – if you have the resources for this. These new employees can coach the others without reserve. This opens new perspectives for your team.

Emphasize again and again the benefits of the new software. The training should be as intensive as possible. The more you invest in staff training, the more quickly the investment in the (usually quite expensive) new systems will pay off. Modern training approaches such as screencasts or webinars support the learning process. Screencasts (screen-learning videos that you can make available on your intranet for download) in particular are very useful in terms of learning anywhere and at any time.

Additionally, make it clear to your staff that non-constructive whining is neither welcome nor will bring the old system back.

 

8. Project Tracking and Optimization

8.1.  Specify the Goals

You wouldn’t have started this project if you weren’t trying to improve your business in some way. But what exactly needs to be improved? Can the project success be quantified?
If the success of a project cannot be expressed in numbers (lower operating costs, faster processes, higher revenues, more website visitors, more online sales, etc.), it is much more difficult to define it as such. It is also much easier to objectively define milestones if some key figures are present. These numbers facilitate the understanding of the project participants and help raise key issues. For example, everyone understands what cost reduction of 10% means at once. They also understand what it means when the project has resulted in cost reduction of only 6%, namely a miss by a whopping 40%.

Specifications are very difficult or impossible in very few cases. A good example is improving the usability of a software interface. Users complain about the complicated operation of in-house software. You have set up a project to make this application more user-friendly. But how do you measure usability? Be creative, because in such a case you can agree on figures with the service provider. One possibility would be making an internal company questionnaire to be filled in by the users two months after the rollout. If a certain value is reached through these questions, the project or the milestone can be considered successfully completed.

8.2. Recognize Potential

One recognizes areas that need further improvement in the course of the project. A great idea would be making a list of your ideas for future optimization. This way you won’t forget anything and will have material for further steps. Because if the project does not have the desired results, good ideas are worth gold. You and the service provider can discuss the ideas that have the greatest potential. This can possibly save a project that faces failure.

Of course, you can’t expect miracles from this list of potentials. If the savings or optimization opportunities had been so obvious, you would have already identified them. The list can help if only a few percent or Euro stand between the project and success.

8.3. Demand Results

Don’t try to forget the fiasco as quickly as (and if at all) possible and move on to the next item on your agenda if the results emerge to be disappointing at the end of the project. It is clear that the failure is not only yours – your service provider has also missed his targets. This should also be recognized and expressed. No provider is happy with failure. However, the competition is huge and dissatisfied clients can have a noticeable negative impact thanks to the many new ways and means of communication on the Internet (you should not immediately threaten him to go public though). Request an improvement, and insist where necessary.

It is twice as important to define and quantify the project goals if you have failed. If measurable targets were not achieved, the contract was violated and in many cases you are legally authorized to make a claim. Even if you no longer want to work with this partner, you have a good chance of bringing a successful claim or reducing the agreed remuneration. A few providers offer satisfaction guarantees (BrainHive-Ethical-Marketing.com is incidentally one of them).
 

 

9. The End of a Game is The Start of a New One

9.1. Building Knowledge

Not only the legendary Sepp Herberger knew the referee’s whistle was the beginning of a new game. The stage of learning now begins for most of the staff – namely those who were not involved in the project. The new application has to be mastered, its irks and quirks explored. The potential of the new solution can be grasped in its entirety only after full implementation.

Don’t expect productivity to skyrocket with project completion. The opposite is more likely. This is completely normal and will change very quickly. The longer your employees work with the new system, the more effectively they will start using it.

9.2. Go Public

You think the project was a huge success and the service provider asked to list you as a reference client? Take the offer, because there is a backlink for your search engine ranking and it is a good business relationship. Create a testimonial, put together a case study or success story. You could even add a link to the provider’s site on your company website (be sure you don’t set it to NoFollow because this ruins the SEO value).

If you praise the provider after a successful project, he will aim to deliver an excellent performance again in case of a follow-up project. He knows you are giving him a positive review, which is helping him convince potential clients of his skills.

9.3. Follow Up On Your Cooperation

The implementation is now fact, everything works and your employees are quickly getting used to the new application or the new process. Now is the time to consider the next step. The service provider knows your business. His software and the custom-made solution are part and parcel of day-to-day business.

If you start discussing the next steps with the partner company, he will naturally try to get another order or a recommendation of a provider in his network. Go for it, because you have already had a positive experience. Either way, you’ll always be on the safe side following the advice in this guide.

Good Luck With Your Projects!

Taking our tips and hints may require some reconsideration on your part. You might have worked completely differently before with a “purveyor” who took over everything. It’s often a long way to the best solution.

Perhaps you are thinking about contracting a professional to help you choose a service provider? A professional with in-depth market knowledge and a lot of experience in IT projects can give you the best service and support at any stage of your project. Come to us – we’d be happy to help you out. You can reach us at 01573 926 162 8 or by email at info@brainhive.de.