Question

Based upon the content you've reviewed (as well as what you already may know) please answer the following:

Summarize the process for selecting a vendor that your company uses for procuring (buying) IT assets.

For these 3 categories (Kickoff & Selection, Implementation, and Post-Implementation), pick one of the costs associated with each of those categories and explain its importance.

In terms of pricing regarding software packages, what are the two factors that determine price?

Answer 1

Process for selecting a vendor

(step 1.) Identify all the vendors available locally or out of state as per your requirement. Help of personal reference or from online available information can be taken. In some special cases , development of the vendor can be possible. It is required only for customized items which are different from the other standardised items available in the market.

(step 2.) Asking the vendors for quoting the rate, period of availability and other terms and conditions of the item related with the indent given by the concerned department. There is need to mention the product specification required and price range affordable.

(step 3) After receiving the all quotations, make a comparative statements regarding the price, quality, time period of availability and other factors (guarantee and warrantee) of the product. After sale service is the important factor to be considered. Quality is directly related with the price of the item. Therefore it is necessary to first identify the degree of quality required. In some cases lower level of quality is viable for a project. Thus cost of the related project can be reduced significantly. Further advance needed to be given to the vendor and later on the full and final payment terms should be compared. In general best condition is where you have to make the lesser advance payment to vendor and later on full and final payment on satisfactory installation of the assets.

If the product is software package, it all depends upon whether it cater the company needs or not. A bigger company with many branches or an MNC can go for implementation of reputated software like SAP software package or Oracle whereas the small regional based company can fulfil its requirement with the local software company like tally, busy or Logic. It depends upon the factor of requirement of the company, quality of the product and after sales services provide.

During selection and kick off the vendor of software, the most important activity is exploring the market for vendors and cost is time involved and personal cost of staff and admin. The time consumed bears the cost of losing the chance of early starting the project and thus converting the time into the profit.

As the vendor selected after kicking many various vendors, implementation as soon as possible as again all the cost is to be capitalised during this period. Direct cost of the software, training of the company staff to acquaint with the software, admin cost, travelling cost etc are the cost involved in this period

After implementation of the project and there is need of after sale services about the software working. Company needs to take the annual maintenance charges contract. Any software updation or service regarding any problem is solved through AMC contract. After sale services is very important because in many of cases after go live of the project, company fail to carry over the project and thus all the capital outlay go failure.