No manufacturer should seek an outside vendor for its development projects without first doing a lot of homework.
The CFO wants his back-end billing system improved. You're looking for a customer relationship management (CRM) solution. Maybe your supply chain management system needs upgrading.
There are a number of options to these challenges.
Your in-house development staff can build these solutions and save money, or you can buy them off the shelf. But, to be certain the new systems work (and to assure you have the necessary support if they don't), you may need to turn to an outside vendor. Finding the right vendor can make the difference between success and failure in new development projects.
The operative phrase here, of course, is "the right vendor." How do you know which vendor is the best? You can gauge this based on public reputation, or you can ask for a recommendation. Both are valid approaches. Only if you do your homework and establish standards for your investigation can you be certain to find the best vendor for the job.
Before considering a vendor, you must conduct a thorough internal business analysis. Companies with successful development projects can spend up to 10 percent of a project's budget on this part of the process alone. A proper analysis results in a documented list of the business processes within your company, an important tool to help measure a vendor's capability.
Next, develop a plan that monitors the quality, objectives and timelines for your development project. Consider employing processes such as workflow analysis and job combination to reduce the project's cost.
Once these two things are completed, you are ready to interview vendors. Every manufacturer should get answers to these questions before signing a vendor contract:
- What is the vendor's general vision for the manufacturing market, and specifically for your particular segment? Does the vendor know manufacturing and does it know the trends and issues that affect your business?
- Where does the vendor stand in the market? Has it been a leader in developing solutions or has it piggybacked on others' work?
- Has the vendor demonstrated success in your particular business segment? Are there relevant success stories or case studies available for you to review?
- Is the vendor's proposed solution scalable to allow for future growth, or will you need to install another system in a few years?
- Does the vendor provide support after the install, or will you have to contract with a different vendor for support services?
- Does the vendor have a strong reputation for customer service? Can you obtain a suitable service-level agreement to support your business needs?
- Will the solution offered by the vendor integrate with your legacy systems, or will you have to patch it into your existing applications?
- How flexible is the solution? Can you apply it to more than one business problem?
- Does the vendor meet deadlines? Many vendors make promises they cannot meet, yet managers sign contracts after hearing the vendor say, "Sure, no problem, we can do it." Make the vendor prove it can do what you need. And when you sign the contract, include a timeline for deliverables, scheduling dates, and penalties.
- Does the vendor meet budget projections? Check with other customers to see if they encountered cost overruns.
- Are other customers satisfied? Can you obtain customer references?
- Watch out for the vendors who exhibit poor analysis prior to issuing a price quote. For instance, if the vendor fails to factor in training, support, and future growth, its price quote might be lower than others, but cost you more in the long run.
- Are you choosing the right vendor for the right reasons? Don't buy based on demonstrations that stress only the product's bells and whistles. A good presentation doesn't mean the vendor has the proper expertise.
- Is the cost of the vendor's solution competitive? Purchasing officers often make a misstep, especially in tough economic times, are tempted to develop their own solutions, or choose the vendor with the cheapest bid or product. But that shortsighted view will ultimately cost the company more money. Patchwork in-house systems are often inefficient or fail altogether, as do cheap products, and when that happens, a CEO has to replace systems.
Remember: Your business may be to provide services or products to other clients, but in this case, you are the customer. Be as diligent selecting a vendor as you want your customers to be with you.
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No More Headaches
Ever get a headache listening to vendor sales pitches? Nearly every week, vendors have a new product or an improved version of the old. They tell you that if your company is to stay ahead of the competition, you've got to buy the new and/or improved version—now.
Maybe your company is in the market for a new enterprise solution, maybe not. And if you do need a new solution, the question is this: Will it work with your existing systems?
"CIOs grapple with that question every day," says Jonathan Schwartz, executive vice president of software at Sun Microsystems. "And it's not just the number of software components—operating systems, portals, app servers, directories, identity systems, security, mail, streaming media, calendars, clustering—that has them buying the big bottles of headache medicine. Or even the per-CPU, per-entry, per-mailbox, per-stream, per-node licensing madness. It's the unpredictability of it all."
That's why Sun has come up with a better way of doing things. Project Orion will simplify the acquisition, deployment, and operation of all Sun's enterprise infrastructure software. The effort aligns the integration, testing, and release of Sun's software products and pricing models, helping customers more easily deploy a fully pre-integrated software system or selected components of the system, with dramatic reductions in cost and complexity.
» Interested? Want to reduce those headaches? Read more about Project Orion.
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