A quantitative decision matrix for increasing value for both buyers and sellers: LESSONS LEARNED

With hindsight, the quantitative matrix worked very well. There are, however, two key lessons learned throughout this process. First, each vendor showed great strengths in each different area. However, once the final selection decision was made, the key criterion that seemed to be the greatest differentiator was the chemistry between the vendor and the organisation. Therefore, it would seem reasonable to place a greater weighting on the chemistry criterion in the future. Interestingly, as shown in Figure 2, ‘chemistry’ was indicated as a key criterion requiring a minimum rating, but was assigned a medium weighting. This may be an indication that all key criteria should be assigned a high weighting.

The second lesson from this process reinforced the need for managerial judgment and sensitivity to organisational realities. While the model provides an objective and quantitative decision-making tool to help cut through to the important decision-making elements of vendor selection, it is not a crutch on which the selection team can lean. Involving key stakeholders in sales, marketing and distribution is an important process for enhancing organisational readiness and buy-in.

INDUSTRY IMPLICATIONS

This model was developed and used in a consulting assignment for a Canadian financial services company whose products and services span insurance, banking and investment management offerings. While the model and its associated criteria have not yet been replicated in other Canadian or global financial service organisations, the authors believe that the unique generality of the model and its adaptability in criteria and criteria weighting makes it a feasible research vendor selection tool for any financial service organisation in the industry today. Furthermore, although further testing has not been done, it is quite possible that this tool could reach beyond the financial industry and into other industries requiring quantitative decision-making tools.

IMPLICATIONS FOR FURTHER RESEARCH

There are several key implications for further research into the quantitative approach to decision making that became evident during this process.
— Was the process responsible in a positive manner for the common criteria understanding and similar distribution of individual criteria values or did the model taint the process in that it created pressure on the team to think in a predefined capacity and thus biased the decision making?
— With a subjective methodology for determining the evaluation criteria and their associated weighting, were the right criteria chosen and/or were the appropriate weightings assigned?
— Is a quantitative process suitable for group decisions where the dynamics and experience of the group foster a combination of quantitative- and qualitative-oriented individuals?

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