1. C U R C I O  W E B B Conducting a Vendor Search Presented by Brian Dennen Curcio Webb, LLC August 25, 2010

2. 1 Copyright © 2010 Curcio Webb, LLC About the Presenter Brian Dennen  Curcio Webb’s Retirement Administration Practice Leader  Performing independent HR consulting since 1998  Regularly helps companies from strategy through implementation  Has led over fifty vendor selection projects

3. 2 Copyright © 2010 Curcio Webb, LLC About Curcio Webb  Founded in 1997 – one of the largest independent consulting firm performing HR and benefit administration-related consulting  Dedicated to objective human resource, benefits administration, and investment consulting  No alliances with administration vendors or products  Don’t work for or accept compensation from vendors or investment managers – all revenues generated from clients  Conduct vendor selection projects for various sized organizations in a wide variety of industries – including the selection of administration vendors, actuaries, health care consultants, and executive compensation consultants

4. 3 Copyright © 2010 Curcio Webb, LLC Topics for Today  Vendor selection planning  How to pick vendors to include in your process  Key aspects of the search process  Elements of a Request for Proposal (RFP)  Ideas for decision-making  What to do once you select a vendor

5. 4 Copyright © 2010 Curcio Webb, LLC Before You Start…  Question if you should even undergo this project  Line-up internal support - get senior management buy-in, determine who will make decisions, and identify a passionate project sponsor  Determine need for outside support  Assess internal resource availability  Assess internal expertise  Select vendor selection team  HR/benefits/compensation  Procurement/purchasing  Legal  IT  Tax/accounting/treasury

6. 5 Copyright © 2010 Curcio Webb, LLC Create Your Strategy…  Do you have a need to reduce the number of vendors you manage?  What issues are deal-breakers?  What might cause you to cancel the project?  Do you need to prove the likelihood of meeting financial objectives before starting a vendor selection process (business case)?  What is your governance structure?  What are your vendor performance expectations?  What change management would be required to manage various project outcomes? Answers to these questions will determine your key selection criteria

7. 6 Copyright © 2010 Curcio Webb, LLC Proposed Approach Step 1: Kick-off Step 2: Perform fact-finding Step 3: Create and distribute RFP Step 4: Assess proposals Step 5: Meet with finalists/conduct site visits Step 6: Conduct final selection activities Step 7: Select vendor

8. 7 Copyright © 2010 Curcio Webb, LLC Step 1: Project Kick-Off  Create project team  Review potential delivery models  Determine project scope  It’s ok to not completely know scope/delivery model  Is important to know what to ask for  Create key selection criteria  Select vendors to solicit  Confirm project timeline  Think about change management – how will new vendor be managed, who will manage the implementation, and what resources are needed and for how long

9. 8 Copyright © 2010 Curcio Webb, LLC Determining vendors  Talk to peers about vendors they use  Determine service expectations/fee tolerance  If unsure, talk to vendor first  Don’t solicit more than 6 vendors per service area  Learn about marketplace changes – vendor consolidations, new entrants, changes in ownership structure

10. 9 Copyright © 2010 Curcio Webb, LLC Step 2: Perform Fact-Finding  Ensure plan materials are up-to-date (if not, document variances)  Gather characteristics that make your organization and plans unique  Document potential changes to your environment – plans, systems, organizational, geographical  Gather internal and current vendor costs This is the opportunity to benchmark your services. However, sometimes benchmarking (with strong contract negotiation) is sufficient to achieve desired outcomes.

11. 10 Copyright © 2010 Curcio Webb, LLC Step 3: Create RFP  Key elements of the RFP  Describe project scope/rationale for project  Provide a project timeline  List your key selection criteria (as discussed earlier)  Document unique characteristics/absolute requirements  Describe contract provision expectations  Outline “meaningful” performance expectations  Collect fees in consistent manner  Ask pointed questions to identify differences between vendors Get to key selection criteria Process oriented We see little value in RFIs

12. 11 Copyright © 2010 Curcio Webb, LLC Before Proposals are Due  There will be a need to respond to vendor questions – uniformly across all bidders  Create methodology for “scoring” proposals  Base your scoring on your key selection criteria  Allow for some subjectivity  Begin total cost assessment

13. 12 Copyright © 2010 Curcio Webb, LLC Step 4: Assess Proposals  Score proposals  Identify proposal issues  Don’t place too much emphasis on fees  Narrow down list of vendors to a “manageable” number

14. 13 Copyright © 2010 Curcio Webb, LLC Step 5: Meet with Finalists  Host vendor meetings or conduct on-site visits  Ask vendors to respond to service issues  Keep meeting topics and times consistent across vendors  Meeting dos:  Meet your team  View technology/supporting applications, and how they will work with your complexities  Understand implementation timelines/resources  Meeting don’ts:  Discuss fees and contract terms  Make comments about other vendors  Conduct more meetings than necessary  Re-score the finalists

15. 14 Copyright © 2010 Curcio Webb, LLC Step 6: Final Negotiations CC heck references!!! FF inalize scope UU nderstand out-of scope items and fees CC onfirm fees, contract terms, and performance standards UU nderstand fee offsets BB e willing to give a little to gain a lot!

16. 15 Copyright © 2010 Curcio Webb, LLC Step 7: Select vendor  Present solid business case  Award business  Agree on timetable to complete contract  Plan for project kick-off  Notify organizations not selected

17. 16 Copyright © 2010 Curcio Webb, LLC Now What?  Assign key roles  Project sponsor  Vendor manager  Project manager  Start to build internal project plan  Review internal organizational structure  Create project governance structure  Initiate transition communications  Develop plan to retain staff (if outsourcing) Don’t underestimate project management requirements

18. 17 Copyright © 2010 Curcio Webb, LLC Common Pitfalls  Not obtaining senior management buy-in  Lack of implementation planning  Project governance is addressed after vendor is selected  Change management needs are ignored  Decisions are solely made based on cost – with little consideration to value  Failure to set performance expectations  Trying to negotiate contracts based on other standard internal contracts

19. 18 Copyright © 2010 Curcio Webb, LLC Recap  Vendor selection project planning  How to pick vendors to include in your process  Key aspects of the search process  Elements of the RFP  Ideas for decision-making  What to do once you select a vendor

20. 19 Copyright © 2010 Curcio Webb, LLC Questions