Following a 5-step process can prove beneficial for purchasers
Before investing a company’s precious IT dollars in new technology solutions, buyers should proceed with caution and perform due diligence through a proof of concept (POC) with their vendor finalists.
By investing a little time and effort to ensure that the technology (and the vendor) will meet the company’s needs, buyers are better able to mitigate any associated risk and make the most informed decision. In addition, vendors will have the opportunity to demonstrate that what they are selling is indeed what the buyer will receive upon contract, in regard to both products and services.
Essentially, this ‘try before you buy’ POC approach enables the buyer to evaluate the technology, the solution and the ability of the vendor to partner effectively with the organization–all critical elements to a successful technology/software implementation.
When well executed, a POC is a win-win for all involved, ensuring that the right expectations are set at the onset of the client-vendor relationship, which is critically important in the long-term success of any technology initiative. Once it is determined that a POC will be part of the evaluation process, the following five steps may prove beneficial.
Step 1: Develop a manageable short list of possible vendors/solutions.
For the insurer considering a ‘buy vs. build’ approach for its software solution, working through the myriad of existing software vendors often can be overwhelming. To make the process more manageable, a laundry list of the high-level business and technical requirements should be developed. Business requirements may include such items as lines of business to support, and whether you need black box rating or full policy processing. Technical requirements may include the technical platform(s) the buyer is willing to consider, whether or not the solution needs to be Web-based, and if it needs to integrate with existing solutions.
This high-level list of requirements will assist in narrowing the vendors into a manageable list.
After the first round of eliminations, an RFI should be issued to the remaining vendors and overview product demonstrations should be scheduled. Often, the initial demonstration can be conducted via a Web-based approach, providing an informal forum where the buyer can evaluate the technology with the vendor from a remote location–a cost- and time-effective process for both.
With the RFI and overview demo completed, the buyer should have a good vendor short list to begin an in-depth evaluation and analysis.
Step 2: Define a comprehensive specification.
While the RFI may have answered general questions pertaining to the initiative, buyers should take the time to document their requirements in detail. Whether or not the buyer is considering a POC, the more specifics that can be provided to the vendor, the better the vendor can demonstrate its solution “fit” for the target environment.
Included in the detailed requirements document would be product requirements (e.g., setting up and maintaining a product, calculations, or rules) and requirements for workflow, including the workflow for different user types and product transaction behavior.
Buyers then can select a subset of the requirements to be used for the POC, making sure some of those test requirements are complex enough to validate the solution’s depth and breadth of functionality and its flexibility to support some of the more challenging scenarios. For buyers who are looking for a solution that is both tactical and strategic, they should be looking for a solution that supports a broad range of requirements (rules, lines of business).
The POC test scenarios should be provided to each vendor simultaneously, allowing an even playing field and providing the time for all vendors to review and deliver the test build.