The key job of the CTO: How to choose and contract Digital Transformation service provider for your company.

For a Chief Technology Officer (CTO), this task takes on even greater importance, as technology services are fundamental to the organisation's operation and innovation.

On this occasion, we are going to review the entire process that a CTO must follow when selecting Digital Transformation services for his or her company, from the definition of needs to implementation and monitoring.

1. Definition of needs and objectives.

Before embarking on the search for service providers, it is essential that the CTO conducts a thorough analysis to identify the specific needs of the company. 

At this point, we tend to find two different ways of managing software.

In the first case, we find companies that prioritise smooth operation, i.e., like when you turn on the tap and water comes out without thinking about how it works.

In the second case, we find other companies for whom software is the key that helps them to be better than other companies at what they do.

What is the best way to manage software? The answer is that it depends on the type of business.

For example, if the company needs a basic service that is necessary for everyone, such as an invoicing tool, the priority may simply be that it works reliably.

However, if the company seeks to differentiate itself from the competition through innovation or efficiency, such as in the automation of industrial processes, then the software becomes a strategic component that must be optimised and it is necessary to ensure that it is the best possible.

In the first case, where basic functionality is sufficient, certain points need to be taken into account when implementing software solutions:

• It does not make layers of difference compared to the competition, as other companies will have similar functionalities.
• If your company has specific problems to solve, standard software will probably not meet the needs and is unlikely to fit into the company's workflow.
• Over time, maintenance can become costly due to dependency and the costs of long-term customisations and adaptations.

In the second case, where the software is strategic and forms a key part of the company's business, it is important to consider the benefits that the implemented solution should bring:

• It allows you to differentiate yourself from the competition and, in addition, to anticipate the race to act before the others.
• It allows the automation of processes, carrying out work more quickly and efficiently.
• It is possible to adapt the software and tools, both to the market and to the different situations and needs of the moment.
• It does not require dependence on external suppliers or partners, who are often unresponsive to changes in their products, which gives autonomy.
• It is possible to improve the service in the long term, which greatly reduces the costs of change.

This initial phase is critical to ensure that the investment in a new service is strategic and leads to business success. 

To this end, there are a number of key considerations for the CTO to take into account:

Identify challenges and opportunities:

The CTO must delve into the current challenges facing the company and the areas where opportunities for improvement can be found. This involves not only understanding the obvious problems, but also spotting potential future obstacles that may arise due to company growth, market changes or technological advances.

Define clear goals and objectives:

Once the challenges and opportunities have been identified, it is crucial to set clear and measurable goals and objectives for the implementation of the new service. These objectives should be specific, achievable, relevant and time-bound (SMART).

Assess the impact on all areas of the company:

The CTO must consider how the implementation of the new service will affect all areas of the business. It is critical to take into account the needs and concerns of all relevant stakeholders to ensure successful adoption of the service and maximise its impact across the organisation.

Prioritise and rank needs:

Once all needs have been identified and clear objectives have been set, the CTO should prioritise and rank these needs according to their importance and urgency. This will help focus sourcing efforts on critical areas that will generate the most value for the company in the short and long term.

By conducting this thorough process of defining needs and objectives, the CTO will be better prepared to begin the vendor selection and evaluation process with a clear and complete understanding of what the business needs and seeks to achieve with the implementation of the new service.

In addition, it is crucial to consider the alignment of the services with the company's overall strategy and long-term vision.

2. Research and evaluation of suppliers.

Once the company's needs and objectives have been clearly defined, the next crucial step for a CTO is to identify and evaluate potential service providers.

This research and evaluation process is critical to ensure that the right provider is chosen who can meet the specific demands of the business effectively and efficiently. Keeping the following points in mind will help in the selection process:

• Conduct an online research.
• Ask for references.
• Participate in professional networks.
• Attend industry events.

In order to organise all information on potential suppliers, it is important to establish clear evaluation criteria to compare and rank them. Among the key points to consider when evaluating suppliers:

• Assess the supplier's reputation: Research the supplier's reputation in the industry and among its customers. Look for information that supports their experience and credibility.
• Check their sector experience: Assess the supplier's experience in your company's specific sector. Do they have a proven track record of success working with companies similar to yours?
• Identify the quality of services: Investigate the quality of services offered by the provider - do they meet your standards of quality and excellence, do they offer innovative and up-to-date solutions, and do they have a proven track record of success working with companies similar to yours?
• Know their prices: Compare the prices offered by different providers and make sure you fully understand the pricing structure and associated additional costs.
• Flexibility: Evaluate the supplier's ability to adapt to your changing business needs - are they flexible enough to adjust to your specific requirements and scale as needed?

By following this strategic approach to researching and evaluating service providers, CTOs can make informed and informed decisions that maximise the value and impact of service investment for their company.

3. Selection process and decision-making.

Once a number of potential suppliers have been identified, it is crucial to establish a clear and structured selection process. This may involve setting up a selection committee that includes all relevant stakeholders. 

Evaluation tools and matrices can be used to compare and rank suppliers according to previously established criteria. 

In addition, it is advisable to conduct pilot tests or demos before committing to a long-term supplier.

4. Negotiation and contracting.

Once you have selected a supplier to work with, it is important to negotiate terms and conditions that are favourable to your company. This may include discussions about pricing, delivery times, service levels (SLAs) and termination clauses.

In any case, it is critical to ensure that you fully understand the contractual arrangements before signing any documents. 

In addition, clear and agreed performance metrics should be established to evaluate the success of the service provided.

5. Implementation and monitoring.

Once the contract has been signed, it is time to plan the implementation of the service. It is essential to ensure that the transition is as smooth as possible and to assign responsible parties to oversee the implementation of the service and compliance with the agreements. 

An ongoing monitoring process should be put in place to evaluate the provider's performance and make adjustments if necessary. This may involve regular review meetings and gathering feedback from end-users.

Implementation planning:

Before starting the implementation of the service, thorough planning is essential to ensure that all aspects are adequately addressed and risks are minimised. This may include allocating resources, defining roles and responsibilities, creating a detailed timeline and communicating clear expectations to both the internal team and the supplier.

Execution of the service:

During the implementation of the service, it is important to ensure that the terms and conditions of the contract are adhered to and that open and fluid communication with the supplier is maintained. 

Regular follow-up meetings to review progress, address any problems or challenges that arise and make adjustments as necessary are important to ensure the success of the project.

In conclusion, as can be seen, the role of the CTO today is no simple task. The success of any company depends on the decisions that are made, even more so when technological services are fundamental to the operation and innovation of the organisation.

From defining needs to implementation and monitoring, the process of selecting services for Digital Transformation is complex and requires careful attention at every stage.

The selected supplier plays a key role and has a significant impact on the direction and competitiveness of the company.

Long-term collaboration with a supplier that not only offers technical solutions, but also understands the specific needs and is committed to a solid and transparent relationship, becomes a determining factor for the company's success and innovation in an increasingly competitive and technologically advanced world.

Choosing the best supplier, the one that not only offers technical solutions, but also understands the needs and takes care of the relationship with its customers.