How to Create Successful Outcomes through the "Quoting Process"
Posted on Tue, Oct 25, 2011
By James Whitehouse, ASG's QRT Manager
Managers who are responsible for security budgets are often asked to acquire pricing for the installation of security equipment and software. Sometimes these requests will be from you or from any department head in your organization with the authority to issue a purchase order 
against a budget. In this post I will explain the different types of pricing approaches that are available to you, how you can use them to save yourself and your department time, money and frustration and what to you should be asking your internal customers before you contact your systems integrator.
There are 3 essential questions that you should ask yourself that will determine the way you approach pricing.
1. Do we need a quick, inexpensive estimated cost so we can start our overall budget (so we can include some wish list items early)?
2. Do we need a firm budget number to include in next year’s budget?
3. Are we ready to buy and need a firm quote to start our internal purchase order process?
A brief explanation of each question follows:
1. Do we need an estimated cost to start the budget process?
An estimated cost quote is usually called a ROM or Rough Order of Magnitude. When a budget or a project is started and requirements are not specified in great detail, the exact project or budget cannot be calculated without mistakes. Concrete numbers in this stage will lead to an ineffective situation in which you or your integrator may experience loss.
To avoid the possibility of such an ineffective situation, we often suggest a Rough Order of Magnitude (ROM) estimate of costs and time when requirements are not specified or vetted in the early stages of the budget or project. The ROM Estimate is based on either a ball park estimate from the experience of similar projects provided to the client or from similar engagements the integrator has performed. Or, it may be derived from the results of a Professional Services engagement.
ROMs are usually communicated in writing but can also be the result of a discussion between you and your integrator. ROMs should be converted into a formal quote based on a true assessment of your needs before proceeding to a formal budget or project launch.
2. Do we need a firm budget number to include in next year’s budget?
This question centers on approach and confidence. Your company’s budget is a serious matter. ROM stands for Rough Order of Magnitude - which means it is a first draft, a "loose" quote. It would be quite reasonable for this to be off by a degree of margin low or high. However, it is fast, cheap, and provides good situational guidance.
On the other hand, a budgetary quote would be much more detailed and accurate - to the point that you could rely on it when budgeted for the cost of the expenditure.
Many times, for a budgetary quote, the integrator’s approach should be to take a look at your site and review the performance you are seeking out of the new purchase and the impact it will have on your previously installed software and equipment. For example: your integrator should ask for any previous drawings you have of your buildings or sites. This information will be invaluable to your engineering team to make sure your budget number is as accurate as possible. These quotes will generally have everything needed to install the system. However, it is still not a ‘quote’. Budgetary processes may take time, creating opportunities for the product lifecycles to change which can affect pricing and the ultimate performance of your solution. At ASG, we generally make allowances for fluctuations in prices of everything involved with your project and final engineering so that you can move forward in the budget process with confidence.
3. Are we ready to buy and need a firm quote to start our internal purchase order process?
A quote is a ‘document’ and should be taken seriously. It should cover the entire scope of the project. It has been fully engineered and it will list out everyone’s responsibilities to make sure that the project is successful. It will also list the function of the equipment and how you should expect it to work when the installation is complete. When you receive this document from your Account Executive, they will want you to take some time to verify that you agree with the entire scope of the project and the responsibility matrix. Many times your Account Executive will convene a meeting with your key people to review. By doing this, great integrators create the context and framework for success. This document will list the location and function of every device and its impact on the system. If you or we find a discrepancy, now is the time to bring it up. Fixing it at this time is much easier than waiting until the installation is in process or, worse, finished. By taking this approach you now have a hard number with perceived expectations on time, schedule, and benefits. This is what we refer to as a “hard number”, as long as you don’t change the scope of the project, the integrator should not change the price.
At ASG, we like to say ‘security is knowing it works’. The more you know about your systems and how to get the installations successfully deployed, the better you will look to your internal customers and the more secure your company will be.