Insights

Buying SaaS - Do you use VRIO analysis?

November 19, 2020

H&S Specialist

Choosing the right supplier can sometimes feel like deciding which paint to use. There can be too many options and deciding which one is right for you is tough.

It becomes more difficult when you throw in the speed of technology progression, and the majority of companies trying to stay competitive by embracing digitalisation. Now seems the time that people are turning to more software products to help solve their problems.

So, when considering software as a service (SaaS) to help manage your H&S responsibilities, what’s the best way to evaluate the competition? A simple, yet effective tool is the use of VRIO analysis, which identifies the best performers and the ones that are going to be best matched for you. 


What is VRIO?

VRIO is an acronym used to describe a business analysis framework, originally used for evaluating a company’s sustainable competitive advantage. The tool was designed to help highlight your own unique selling point (USP) however, the tool should also be used to help you decide which suppliers you can confidently partner with.

So let’s take a look at these 4 factors and see how it can be used when selecting suppliers.


Value 💰

What value does the supplier offer to your business? When deciding who to partner with, assess their full features and offerings. Then challenge yourself on whether the supplier is truly able to fulfil all your needs and solve the problem you are facing. 

Once you have figured out that critical elements can be addressed, start to explore what further gains such as time, money or quality the supplier can bring you. If you can’t answer any of these points, you arrive at competitive disadvantage and I would run for the hills. Otherwise move onto the next step.

Rare 💎

Are other firms offering the same solution you need? Research how many competitors in the market also offer this product or service. Now, don’t just focus on features; does the supplier offer something you don’t often see such as better sales support, customer service or have industry experience you are looking for? If you have found something unique that is rarely on offer, then you have gained the upper hand from not being a competitive parity. Start to consider how you can use this position to your advantage within the market. Could you provide greater confidence to your clients by using this supplier or showcasing them within proposals to have a better chance of winning work?  


Imitable 👀

Can this solution be easily replicated or scaled within your business? Imitation is a very interesting topic here and you need to strike a balance.  On one hand, you want the product to be able to be replicated across the business so it can be used by everyone. But on the other hand, you want it to be difficult for others to replicate so you have a temporary competitive advantage

So you need to assess whether this supplier can do both for you. When speaking to the supplier, challenge them by finding out how the product could be fully integrated into your business after you show them how your business operates. If you are satisfied, then look to see how intellectual property is managed so that your competitors can’t do the same.  


Organised

Is the supplier well organised? You need to be confident that you are in safe hands. If there are no signs of a good onboarding process, support and the sales process hasn’t been great, then chances are you will run into time consuming issues along the journey.

The final ‘pulse check’ when considering a new supplier is to understand how their internal operations tick. Will their business model and organisational culture match yours and if so, will that remain in place for the future. If you remain confident that ways of working are matched and you support their future innovations and roadmap, you have landed at sustained competitive advantage. Proceed with implementation.

 

Conclusion - indicative results 🏅

VRIO is not a full procurement process and doesn’t contain the level of detail you would see in a standard PQQ however, it does provide a useful ‘gut instinct’ for you when deciding on digital products and services. 

VRIO analysis isn’t asking you to only use this model in your decision making process. It  extends your due diligence and helps you to make a quick gauge on whether you want to invest time, money and effort into this supplier before you get in too deep. 

Done the right way, VRIO analysis provides you with a useful rationale of why you want to present a business case to your decision makers and start to explore a long term working relationship with this ‘trusted partner’.

Join our 30 minutes live demo webinar on Wednesday 31st March and use the VRIO method with HandsHQ!

Register here

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