How to Choose the Right Software Vendor for your Business? The Dos and Don’ts Explained

Nov 13, 2018 posted by Nitin Verma under Outsourcing

How to choose the right software vendor

It takes a wealth of experience to fine-tune the skills required for identifying the right software vendor for your business. It’s important to get it spot on at the first attempt itself as the selection is utterly crucial both for your company and career.
 
Since, for a CEO or a project owner a lot is at stake while making this choice, the dos and don’ts need to be outrightly understood and the right framework developed to streamline the software vendor selection process.

A lot has been spoken and written on the subject over the years resulting in the emergence of numerous prototype strategies. However, while some have worked flawlessly, there are ample examples of software vendor selection strategies falling flat at the outset.
 
Although it’s no rocket science to zero-in-on the right software vendor; owing to my personal experience of having been through the learning process, I can safely say that it isn’t child’s play either. Ideally, the process of hiring the services of a software vendor should commence by shortlisting the business goals and requirements. The software vendor selection process should further move on by carrying out a thorough Vendor Portfolio Analysis.

Here are my software vendor selection criteria:

Technology Matters Most

The first and foremost aspect to look for in a software vendor’s profile is how ahead the service provider is in terms of technology. Most enterprises prefer to hire software vendors who offer a variety of technology stacks to choose from. The right technology stack must be selected to ensure scalability and security of the mobile or web application. An experienced software vendor with a lengthy portfolio of successful implementations using the latest technology is always the ideal choice.

Another important technology-related factor is the adeptness of your software vendor in providing support, training, and maintenance. In today’s dynamic business environment, change is the only constant. Always remember that your software is not static. Advancements in technology have become so fast-paced that today’s relevant technology might become irrelevant or obsolete tomorrow. So, it’s advisable to select a software vendor who can keep your mobile or web application on the latest version indefinitely.

Size Definitely Matters

One of the biggest dilemmas while choosing a software vendor is whether to select a large enterprise or a small company. My advice would be to avoid both and opt for a mid-sized software vendor instead.

The main reason behind not selecting a large corporation as your software vendor is that big companies lack agility and move with their own inertia. Getting the project completed on time always remains an issue with large enterprises. A Minimum Viable Product (MVP) should be delivered by your software vendor in no more than 12 weeks so that the project can move on to the testing phase. Lack of innovation in big companies is also a well-documented and highly debated topic, something that shouldn’t be ignored.

On the other hand, the problem with selecting a small software vendor or startup is the lack of reliability. Unlike big companies like Microsoft and IBM, there’s a huge risk of a small software vendor going out of business.
 
Sometimes software vendors misrepresent facts. Go through their client testimonials carefully. Verify the physical location of the vendor on Google Maps along with checking out the social media posts of the software vendor firm on Facebook, Twitter and LinkedIn. These checks will help you in ascertaining how reputable the software vendor is.

However, according to me, a mid-sized enterprise that is stable, agile and nimble should fit the bill perfectly.
 
Is your Software Vendor Asking the Right Questions?
choosing right software vendor

Most enterprises give preference to software vendors who have prior experience of working in the same domain. However, this should not be the criterion for rejecting a software vendor as domain experience might not necessarily translate into a success story. What should be instead observed is, whether your software vendor is asking you the right questions. Has the vendor completely grasped your idea? If yes, then you are most probably on the correct path. However, if your software vendor is asking non-specific and irrelevant questions, reject that vendor outrightly as it’s a disaster in the making.

Your Software Vendor Should Double Up as a Partner
 

It is extremely important that your software vendor should double up as your strategic partner, whose sole focus is on the software development process. Your software vendor should be a problem solver and not just a seller.

Partnership is never one-way-traffic. Only those partnerships are sustainable where both partners are able to extract equal value. Mutual trust is what drives partnerships over the long term. Vendor relationship management skills must be put to efficient use for integrating and engaging with vendors.

Much unlike startups where there are no legacy systems, the role of a sound technical partner assumes even more significance when large volumes of data need to be migrated to the new system.

Every Penny Counts, But Not Literally!

From a financial point of view, the budget for software development should be allocated upfront. The allocated budget should account for not just the development cost but also the cost of maintenance and time-to-time upgrades.
 
Next comes whether to choose a software vendor who is cheap or to go for a more expensive option. Although every company wants to minimize the costs while hiring a software vendor, cheap doesn’t necessarily mean good. An inferior quality software application that has been poorly built could be detrimental for your business.
 
Check whether the software vendor quoting a much cheaper price will be providing documentation along with the software. We often tend to ignore the significance of documentation accompanying the software like validation documents, training material, procedural templates, etc. while selecting a software vendor. It is something that should be totally avoided as documentation is crucial for training your team for the new system.
 
The pricing of software development is largely influenced by the model of development that you choose. An ideal software vendor should be able to offer you all three primary development models, namely onshore, offshore and hybrid.
 
While onshore software development is expensive, it gives you more control. On the other hand, though offshore software development is cost-effective, small businesses often struggle with issues like managing operations in offshore locations and communication gap. A hybrid software development model, which is a combination of onshore and offshore, is a good option as it offers the best of both worlds.
 
Another monetary aspect that has to be considered is whether to opt for a fixed price model or time-and-material model (T&M). Although traditionally most IT software companies have been working around the fixed price model, in recent years, T&M model has become highly popular.
 
In the fixed price model a service provider receives one-time payment for completing the software development project in the agreed time frame. This model is suitable in cases where the outcomes and requirements are predefined and the possibilities of cost escalation are negligible.
 
In the time and material payment model, the software vendor charges the client according to the hours spent on the project along with the cost of materials used. The T&M model offers more flexibility of adjusting requirements and improving features of the application in sync with the latest technology. This model is most suitable for big and long-term projects with dynamic requirements.

 
Is your Software Vendor CMMI Level 5 Compliant?

The Capability Maturity Model (CMM) is a benchmark or rating system used for developing and refining an organization’s software development process. The motive behind starting the CMM Integration project was to achieve standardization by doing away with multiple CMMs. The highest level 5 is an assurance of high quality and timely delivery, virtually guaranteeing you the best possible ROI. 

Reaching CMMI Level 5 is a difficult and evolutionary process and indicates that the software vendor has the ability to continuously drive improvement. It will definitely pay in the long term if your software vendor is CMMI Level 5 compliant.  

And The Bottom Line is…

The bottom line is that while hunting for a suitable SaaS-based software vendor an open-minded approach must be adopted. As long as you do your homework well keeping your goals in mind, selecting an affordable and skilled software vendor shouldn’t be a problem. Partnering with the right vendor is absolutely necessary as in today’s times a business is only as strong as the software behind it.

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