A new relationship is on the anvil for you. One that will transform your life. Yeah, alright that sounded like a ‘fortune cookie’ speaking.
But if you pause to think, there may be something to that prediction and it has to do with why you are viewing this post.
Purpose of this Visit: A quick lesson on vendor evaluation criteria.
A relationship that may change your ‘fortunes’ forever
Makes more sense now?
Maybe landing on this page is a sign too? That you are embarking on making a series of right choices that will steer you to success!
First, give yourself a pat on the back! Why? Cos, instead of going by peer recommendations, you are looking for proper evaluation metrics.
Why Outsourced Product Development (OPD) is Here to Stay?
- Increasing competition
- The need for fast time-to-market
Why are product companies engaging in outsourcing relationships?
- Non-availability of in-house and/ local talent at competitive costs.
- OPD helps product companies to tap the product-building expertise of global talent pools.
What do you GAIN?
- Requisition necessary expertise
- Build additional resources
- Minimise development costs
- Boost bottom lines by focusing on new competencies.
How important is it to find the right OPD?
The success of an organisation depends on finding the right OPD. Because it is simple to decide what and how much of a company’s product development services should be outsourced, but it’s hard to decide to whom it should be outsourced.
Wrong OPD Partner => Fail even before you launch
Massive time and cost overruns + Poor Quality = Project is ‘Unviable’
To avoid such a scenario bring some careful thought to vendor selection.
We have put together a ‘Quick’ yet ‘effective’ criteria list to assist product companies:
Vendor Evaluation criteria list
Of the numerous factors that influence vendor choice we have chosen a few critical ones and categorised them under three broad themes – People, Process and Technology
- Company Vision and Direction Significance * * * * *
- Outsourcing signals the start of a long-term results-oriented relationship between two organisations.
- This relationship demands that the vision and philosophy of the two partners be mutually aligned.
- Analyse the vision of the OPD partner.
- What does the vendor’s mission statement say?
- Is OPD their core focus?
- Answers will help you determine the key focus of the vendor.
2. Stability and Investment Significance * * * * *
- The OPD vendor being evaluated should meet the standards and expertise required for software product development.
- Commitment– OPD is risky. Hence select a vendor who is highly committed to customer satisfaction and who has excellent business skills.
- Experience-Check whether the provider is experienced in OPD. This helps in determining the capacity of the vendor to execute on time and at cost.
- Customer relationships– Check the clientele and get a clear picture about vendor’s past relationships with clients.
- Company growth– Stability of the company is important to know when deciding on a vendor.
- Financial stability- Vendor should be self-sufficient with respect to cash flow. Cash-strapped companies may find it difficult to retain quality talent.
3. Size of the company Significance **
- It is an essential factor in evaluating an OPD vendor.
- Bigger size vendors may not give your project necessary attention
- Smaller size vendors may delay project delivery.
- One must strike the right balance size-wise.
- Relative size– Look for vendors that match the size of your company. Vendors may pay sufficient attention only if your project cost amounts to at least 3-5% of their revenue.
- Required team size– If you want 5 people then go for companies with the size of 20-30 people
4. Location of the OPD facility Significance ***
- It plays a huge role when you decide to go offshore.
- Outsourcing laws vary from country to country.
- Country– Choose an OPD vendor from an experienced country. Infrastructure should be checked.
- Language– Common language to communicate is another important factor for a successful outsourcing relationship.
5. Infrastructure Significance * * * *
- Vendor’s infrastructure set-up must be analysed. Things like server specifications, telecom bandwidth, secure network facilities for unhampered interaction, backup facilities, and Internet connectivity should be robust enough to meet the needs.
- Power backup -Power shortage is an issue. OPDs must ensure that proper power supply is available.
- Internet/Communication-You need to ensure that the vendor has sufficient Internet bandwidth to facilitate such transactions.
- Networking infrastructure– You need to understand the network environment in your vendor’s organisation.
- Software/Hardware Infrastructure– Check for the availability of the required software and hardware environment necessary to execute your project
6. Security Significance *****
- IP issues are important especially if you are contracting an offshore vendor.
- Analyse the measures taken by the OPD vendor to safeguard your sensitive and confidential information
- Intellectual Property Security (IP) – Your IP should be secure. You need to ensure that the vendor does not duplicate or misuse your product information. Agreements should take place between you and vendor.
- Physical security– The security system must be thoroughly scrutinised. You need to talk to the vendor-side systems manager to understand if they have proper hardware / software firewalls installed on their network.
7. Skillsets Significance * * * *
- OPD companies should provide a broad choice in the selection of team members.
- Well rounded team– Examine the skillset available with the OPD vendor. Check if the resources assigned to work on your project have the knowledge and experience in developing software products by scheduling interviews.
- Team/Knowledge continuity– Challenges may arise regarding team continuity. Check whether the vendor has a process to ensure knowledge continuity in case of attrition or team change.
- Training– Examine whether the vendor has strong training programs that transform software developers to product engineers.
8. People quality Significance ****
- Vendors should have excellent engineering skills apart from experience.
- There have been many disasters in outsourcing relationships due to lack of quality skills.
- Quality programmers-Analyze the quality of people assigned to you by the OPD vendor. Schedule an interview with the technical team of the vendor. Check the competency of the team members
- Hiring policy-Ask about how programmers are selected and what criteria are considered – like education, aptitude / technical tests, interviews, etc.
- Experience-Ensure whether the average years of experience of the development staff is at least three years.
9. Process Significance * * *
- Technical expertise is a crucial skill an OPD vendor must excel in. Technology keeps changing from time to time. It is better to know the technical skills of OPD firms
- Domain expertise-Find out if the offshore firm has domain expertise in your technology areas.
- Adaptability-Find whether people have a foundation in the necessary technology
- Security– IP and data security become vital in a software product. Evaluate the measures taken by the OPD vendor to protect your data.
- Sustainable Architecture-Ensure that the OPD vendor’s team comply with the architecture standards.
10. Software development process Significance ***
- A well-defined and adaptable process reduces the risk inherent in software development. The software product development process adopted by the OPD firm bears a lot of significance in vendor choice
- Certification– Check whether certifications like ISO 9000 and CMM have been awarded to the company.
- Flexible process-They should be flexible enough to put up any changes in their process to ensure that you are comfortable.
Finally, if you have special requirements like the ability to work using newer development paradigms like agile/lean/DevOps or, capacity to work with microservices architecture model, add those to the list.
The final choice will make or break the success of your product. Choose wisely!
To know more about How products get built, The methodologies, the stages and best practices involved in developing products for our times, download this free e-book: