Choose and manage your IT supplier

To get significant benefits from IT, you need to be able to trust your IT systems. This means having confidence in the company supplying, managing and maintaining them. Choosing the right IT supplier is therefore an essential part of selecting an effective IT solution.

If you rely on IT for your day-to-day activities you need to have a successful working relationship with your IT supplier. A good relationship with your supplier can help ensure your existing systems run smoothly and also help you identify and develop new applications.

This guide will help you to select a suitable IT supplier and ensure you take full account of the support and maintenance issues that are an integral part of the procurement decision. It will also provide practical guidance on how to develop and manage a successful relationship with the supplier.

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The different types of IT suppliers

Though most IT suppliers can provide a comprehensive range of hardware, software and services, there are some differences between them. For example:

• resellers act as agents for hardware manufacturers, but can also offer software and a wide range of IT services and support
• system integrators select the appropriate hardware and software for your specific needs and deliver an integrated, working system
• specialist suppliers have expertise in one specific area, such as customer-relationship management systems
• consultants may just provide consultancy, with no hardware, software or maintenance services
• retail, mail order and online suppliers may be appropriate if you’re confident you don’t need advice and simply need someone to supply the IT system

Size of supplier

IT suppliers range from small local outfits to global organisations. Even the largest suppliers can provide systems, services and consultancy to small businesses.

You may rely on your supplier for a system that’s central to your business success. You need complete confidence in them. A local business, or a larger company with a local office, can be a reassuring presence.

Single source or multiple suppliers

Unless you have extensive IT expertise in-house, it’s generally best to use a single supplier for all hardware, software, services and support.

If you buy from multiple suppliers, you’ll have to decide which one is responsible when there’s a problem – unless you have a service provider prepared to support your whole system.

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Identifying and contacting potential IT suppliers

At the outset of any IT system procurement exercise you should establish and document your requirements. You can provide potential suppliers with these details. It will also provide a framework to compare the different quotations you may receive.

The next stage is to research the potential solutions and suppliers. Try to identify three to five suppliers who are able to propose a solution for the budget you have set. Sources of information include:

• the internet, including the suppliers’ own websites and sites offering independent guidance
• recommendations from trusted colleagues
• recommendations from trading and business partners
• IT seminars and conferences
• computer trade magazines
• advice from relevant trade associations and professional bodies
• IT exhibitions

This research may highlight further options which should be reflected in your statement of requirements.

Having identified the potential suppliers, you can contact them. Two commonly used approaches are a request for proposal (RFP) or a request for quotation (RFQ).

The RFP asks for suppliers to submit formal proposals. This is usually followed by a shortlisting of candidates who are required to provide a series of presentations and/or demonstrations. The RFP should include:

• the agreed statement of requirements
• an indication of what format the proposal should follow
• an indication of the level of detail required in the proposal
• the timescales within which the proposal should be submitted
• the procedure for obtaining any further information from you should the suppliers have any queries

The RFQ asks for potential suppliers to competitively provide a cost for the product or service in question. A customer sends solicitations to possible suppliers containing a list of requirements. These can include:

• part descriptions, specifications or numbers
• quantities or volumes
• a description or drawings of the product needed
• personnel skills or competencies for the product or service
• terms and conditions
• term of the contract
• any other value-added requirements or terms
• delivery requirements
• a draft contract

Read information about requests for procurement processes on the Negotiations website.

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Selecting the right IT supplier

The actual process of selecting a supplier will normally follow on from a request for a number of suppliers to submit proposals.

Review the proposals you have received in detail and come up with a shortlist.

Compare proposals on a like-for-like basis. Take into account:

• financial viability
• implementation track record
• quality and relevance of reference sites
• project management capability
• ability to understand your business at both the strategic and process levels
• technical knowledge and expertise
• confidence that the supplier will be able to provide the solution into the foreseeable future
• the cost of the proposed solution

Throughout the evaluation process, rank the suppliers and eliminate those that do not meet your technical requirements or fall outside your agreed budget.

This process should usually include a demonstration of their proposed offering by each of the suppliers. This gives you the opportunity to evaluate the system being proposed and the supplier.

Invite the potential suppliers to visit your company. Do they understand your business needs and have experience of your industry? Do you feel comfortable dealing with them?

Ensure that the shortlisted suppliers provide references and contact them as part of the evaluation process. Try to obtain references from businesses similar to your own as this is a useful way to assess the system and the supplier.

You should then be in a position to come up with a single preferred supplier. Consider carrying out further testing of the proposed solution, particularly if the system is going to be critical to your business.

If you are happy with the proposed solution of the preferred supplier, you can move to the contract stage. You will need to formally agree on factors such as the levels of system maintenance and support, as well as the overall cost of the proposed solution.

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IT system maintenance

Your IT supplier will probably offer you a range of hardware-maintenance contracts – perhaps as part of an overall support contract.

Hardware failure is just one of many problems that could occur and you need to consider a range of potential risks carefully before making a decision. These include:

• theft of hardware
• physical damage
• intellectual property loss from hacking or human error
• system failure

You can also assess and minimise the IT risks facing your business with our IT risk assessment tool.

System maintenance and management are essential parts of managing these risks. Many IT suppliers can monitor problems remotely and take action to prevent a system failure.

Many different types of maintenance contract are available. Most are on-site contracts where an engineer comes to your premises to fix the problem. However, some contracts still operate on a return-to-depot basis where you are required to return the equipment for repair. Costs vary considerably depending on the minimum response time and working hours you need.

Contracts may seem expensive, particularly for standard PCs and peripherals with extended on-site warranties. After assessing the risks, you may decide not to get a maintenance contract and simply hold spares or purchase new parts when necessary.

However, the value of a contract is that someone else takes the responsibility for system maintenance but some suppliers may be reluctant to offer helpdesk, software support and other services unless they’re also maintaining the hardware.

Software maintenance contracts

You should ensure any new software purchases are compatible with your existing equipment and operating system.

Many IT software suppliers offer maintenance contracts when you purchase their products. These can include recurring licensing fees, product upgrades, new versions, and patches and bug fixes. Some vendors charge for these, while others will include them for free with your purchase. You should also look for a supplier who gives you the original disks and licences if your software is coming pre-installed.

If you don’t have in-house experience, then look for a supplier that offers maintenance. Costs will vary depending on the type of software you’re using, but the general rule of thumb is to have costs below 15 per cent of the purchase price. If using cloud computing, maintenance and other upgrades will be managed ‘off site’ by the service provider. For more information see our guide on cloud computing.

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IT support services

Consider carefully exactly how much IT support you need. This depends on how much IT expertise you have in-house, how important it is to keep systems running smoothly, and how much you can sensibly afford for a support contract.

Services to consider include:

• Installation and configuration – will you need the supplier to install and configure hardware and software so that it’s fully functioning and ready to use?
• Training – will your staff require training?
• Telephone support – will your staff require telephone support, and during what hours? Does the supplier provide a helpdesk? Do they have a guaranteed response time? Will you be paying per call, or a fixed sum? Are you restricted to a single caller, or will they accept calls from different members of staff? What percentage of problems does the supplier resolve on the first call – a first-time fix? Is this support provided from the UK or overseas? If it is overseas-based – does this impact upon when it is available because of time differences?
• Email support – will email support be adequate for some or all of your needs? What’s the supplier’s guaranteed response time for email messages?
• Online support – does the supplier offer real-time online chat or other support technology? Is there a peer support forum where other users can suggest fixes?
• Site visits – does the supplier provide on-site support? If so, how much does it cost?

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IT system cost evaluation

System management is usually the biggest cost over the lifetime of an IT system. It includes installation, upgrades, expansion, maintenance, support, training and the time your staff spend dealing with system problems.

So it’s essential to consider full system lifecycle costs. Saving on purchase costs could result in significant additional costs on an ongoing basis, while cutting back on services could waste a fortune in staff time or lost business.

Initial costs could include:

• consultancy
• hardware costs
• software licence fees
• software configuration and customisation work
• installation
• staff training
• providing necessary infrastructure such as network cabling or an electricity supply
• compliance with health and safety law relating to computer use

Ongoing IT management costs could include:

• software support contracts – fees for licence renewals and upgrades
• hardware upgrades
• expansion of memory, disk size, communications capacity
• support – telephone, email, online, on site
• maintenance and replacements
• compliance with health and safety legislation relating to computer use
• staff training
• costs of consumables, such as printer cartridges, ink and paper
• communications charges – telephone costs, internet access and subscription charges

Agreeing a budget and contract with a supplier can be a lengthy process. You need to specify every aspect of the project in as much detail as possible. This will help to control costs and highlight any problems you encounter during the project.

When you negotiate a contract for IT systems or services with your supplier, they will usually expect payment upon delivery of the system. However, it is worthwhile seeking to extend the payment period until the system is actually installed and working to your satisfaction.

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Negotiating the contract for your IT system

Make sure you’re completely clear about exactly what the contract with your supplier includes. Hidden extras can be expensive.

Check whether you’ll receive:

• on-site service calls – a certain number may be included or charged at a reduced rate
• preventative maintenance, eg the use and regular updating of anti-virus software and firewalls to protect your system
• remote monitoring and diagnosis of system problems – if included, check whether you will have to purchase any extra equipment or communication links
• telephone support – there may be a limit on the number or length of telephone calls
• warranties – check what warranties, if any, are included
• software upgrades – check if upgrades are free, or whether you have to purchase new versions as they are released or pay an annual software subscription
• software support – the ability for you to report problems and receive help, patches and bug fixes
• user training – some suppliers include a limited amount of training in the system’s purchase price, but others will charge extra
• manuals – you may need them if you end the relationship with your supplier in future

When purchasing IT services, you should draw up a service-level agreement (SLA) with the supplier, which specifies precisely what you expect from the supplier. A typical SLA should cover:

• scope – details of the hardware and software that is to be covered
• range of services – the services that the supplier will be required to provide
• service availability – when the service should be available
• response times – an important aspect of the SLA – usually the faster the response times, the greater the cost
• escalation procedures – an agreed series of actions used to ensure problems are dealt with quickly: responses are intensified until the problem is resolved – eg moving from off-site diagnosis through to on-site support
• record keeping – problems and solutions must be properly documented, and records maintained for dispute resolution
• performance review – to maintain acceptable levels of service over time
• supplier obligations – such as the provision of spare parts, the qualifications of support staff and the need to meet response times
• customer obligations – your responsibilities, eg providing information about changes that affect the scope of the contract, and the cooperation of staff with the supplier
• termination of agreement – a formal process which defines the specific terms and conditions under which the contract may be terminated

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Benefits of an effective IT supplier relationship

Building a successful relationship with your IT supplier is essential to your system’s success.

Trying to purchase IT systems and services at the lowest possible cost – with no regard to your business goals for the project or the overall cost of ownership – is likely to lead to a strained relationship with your supplier and cause both system and business problems.

Ideally, your supplier should have a clear view of your business goals and the role of IT in achieving these. This will help you build a relationship that can deliver a number of benefits including:

• ensuring service-level agreements are met and that system availability is high
• speedy resolution of problems or queries
• valuable guidance from the supplier on your business’ future IT direction through their knowledge of your industry sector and the latest IT developments
• delivery of the anticipated business benefits

To build a successful relationship with any IT supplier you should be clear from the outset about what you both expect from the arrangement. Make sure:

• you both have clear expectations of exactly what you’ll get in terms of hardware, software and services
• the business relationship is mutually beneficial – your supplier will have no interest in whether you achieve your business goals if you just want goods as cheaply as possible
• there are specific targets to be reached at set dates representing what your business gets out of its IT systems – not the delivery of boxes and cables
• the supplier provides regular reports of progress towards the agreed business objectives for the system
• you hold regular reviews with your supplier to see how things are going
• you have enough flexibility to accommodate change – whether this is through new technologies, the business environment or refined business goals
• you have a signed contract which you both agree to, that includes details of each party’s obligations and what should happen in the event of a disagreement or dispute

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Checklist: choosing an IT supplier

As a new IT system can be a significant investment, it’s important to choose the right system and supplier. Before you choose an IT supplier you should:

• Find out whether the supplier can provide all the hardware, software, licences, services, support and maintenance you need.
• Check whether the supplier intends to use subcontractors for any part of the supply (eg, installation, cabling or manning a helpdesk). If they do, make sure the subcontractors have the right kind of expertise for your system.
• Check whether they will install and configure your system so it’s fully operational.
• Ask whether they will train your staff.
• Confirm what frontline support they can provide – eg a telephone helpdesk.
• Ask whether they will take responsibility for system components purchased elsewhere.
• Investigate what sort of maintenance contracts they provide.
• Get details of what exactly is included in their supply contract.
• Find out what sort of warranty they provide.
• Confirm whether they will continue to provide support if you take responsibility for replacing faulty hardware yourself.
• Find out if they will accept payment for the system only when it is installed and working to your satisfaction.
• Check what is and isn’t included in the price – ask whether upgrades and fixes to software are included.
• Ask them to provide references from other, similar companies they’ve helped in the past.
• Ask whether they will provide you with written documentation, such as training manuals, that will help you understand your system.
• Decide whether you feel they understand your business needs.
• Ask about any experience they may have in your industry.
• Ask whether they are happy for you to test the proposed system, perhaps under a non-disclosure agreement.
• Find out whether they are financially viable and able to meet your requirements in the foreseeable future.