Choosing a supplier

questions to ask to help make the right choice

So you have decided that you need a bespoke system written specifically for you and you have found a few suppliers that all claim they can do the job. How do you choose?

There is no cast-iron way to guarantee that you make the right choice - even big organisations with millions to spend and with teams of professionals analysing the pros and cons of different suppliers' proposals have made some spectacular mistakes. However, what I've tried to do below is offer some thought provoking questions which you could use to help 'get a feel' for whether or not a supplier is right for you.

  1. Track record and testimonials
    1. Does the supplier have a track record?
    2. What similar projects has the supplier completed?
    3. Are there any testimonials from clients?
    4. Can you contact any of the clients for recommendation?
  2. Truth and trust
    1. Is the supplier honest enough to admit that some parts of your project are new to them?
    2. No supplier has done everything before or knows immediately how to solve every business requirement - this is a sure sign of "hot air".
  3. Technology is not a panacea!
    1. What technologies does the supplier propose to use?
    2. Is it an obsolete technology or, conversely, is it so new it's still being developed?
    3. Is it a technology in common use - it is often hard to find replacement suppliers who can work with obscure technologies.
    4. Notwithstanding these questions, remember it's not the technology that will solve your business problem - that is only the vehicle. The true solution lies in the skill and expertise applied to the understanding and analysis of the problem requirements and the resulting design of a system to meet them.
  4. Flexibility of the supplier's proposed solution
    1. How much of the operation of the new system will YOU be able to alter, or will you have to go back to the supplier for almost everything?
    2. In other words, once the new system is up and running, how self-sufficient will you be, or conversely, how dependent will you be on the supplier to make adjustments?
    3. How easy will it be to implement software upgrades throughout your organisation or will it give you an IT headache?
    4. If you decide you need a new report from the system is it going to be a 5 day turn-around job or can it be written and installed in a few hours. The costs for such an enhancement are likely to be closely related to the time it takes.
  5. Warranty and support
    1. Once the new system is installed and you are using it, what happens if a programming error is uncovered?
    2. Will you have to pay for it to be corrected?
    3. And after the warranty period, what arrangements are available for on-going support - technical and user?
    4. Is the supplier prepared to offer a committed support agreement for a fixed price?
    5. Does the supplier already provide other customers with support agreements or are you going to be a one-off?
  6. Pricing approaches
    This is a complex area with pros and cons but here are a few guidelines:
    1. If your project is very well defined and you know clearly what you want, you can expect a proposal on a fixed price basis. In other words, you know exactly what you will pay for the finished job. The supplier may want to split the project into 2 distinct phases and quote for the second once the first has been done. The first phase will be to understand and define the requirements of the new system. The second will be to develop and install it.
    2. If the requirements or the details are not very well understood then you may get a fixed price proposal but it will almost certainly be of the 2 phase variety. Alternately you may get a 'time & materials' proposal whereby you will be charged for the amount of work actually carried out at a stated hourly rate.
    3. A fixed price proposal may seem good from your point of view, in that you know how much it will cost you. However there are pit-falls. Firstly, the supplier will build in some contingency to the price to cater for unexpected difficulties with the development. So, if the project is estimated to take, say, 100 hours at 50 (5,000) the supplier may quote you 10%, 25% or even 50% more to cover his risk that the project may overrun. Secondly, a fixed price is based on a fixed specification. If, partway through the development, something needs to change this is likely to incur a re-costing with a consequent uplift in the final price. Watch out here - some suppliers come in with a low initial proposal to win the business and then heavily load subsequent changes. Your final cost could be dramatically higher than the initial quote.
    4. A time & materials proposal may sound like a blank cheque for the supplier but in reality it provides the best option in terms of flexibility and value for money. Firstly, there is no contingency built in. You pay for the work actually done so if the project is completed in half the time expected, then you pay half the amount. However, the converse is also true. Secondly, it is very flexible since changes to the specification do not incur a total re-costing exercise, although they may need additional work, you will only pay for that extra work. Although a time & materials proposal sounds open-ended, it should include a 'best estimate' of the amount of work required. This can be used to manage the project progress and, if it looks like exceeding the estimate, discussions can be started to look at the options and decide on the way forward.
    5. Project estimation is not an exact science consequently suppliers, when creating a proposal, need to take into account the risk that their estimate is going to be wrong. The different methods of pricing a proposal place the risk in different places: Fixed price - risk is supplier's; Time & Materials - risk is yours. If you want the supplier to carry the risk, you will have to accept that the supplier will charge you for it.
    6. Make sure you get the proposal that you prefer by asking. The first proposal offered by a supplier will simply be the one that the supplier feels most comfortable with or that is most appropriate  for the nature of the project. However suppliers will normally provide an alternative if requested.
  7. Motivation and commitment
    What if there's no clear 'winner'? Assuming that all the above objective parts of your suppliers' proposals check out, you will be left with a more subjective basis for decision making - in other words 'gut feel'. This is not entirely a bad thing but can be misleading.
    To help put a little more structure around this area, consider the following:

    Does the supplier care about what is right for your business?

    This may seem a strange question but underlying it is the supplier's basic motivation, and this can have a major impact on the software solution that you end up with.

    Certainly all suppliers exist to make money but for some there is also the drive to want to do a good job - and that doesn't simply mean writing software that works.

    An 'ordinary' software supplier will hear what you ask for and write software to carry it out.

    A good supplier with business/systems analysis skills will, from experience, be able to 'see' ways that a new system could work to improve a particular business process and will discuss this with you as an alternative approach. Then write the software according to the conclusion of the discussion. Sometimes, the 'good' approach will mean less software to be written but the improvement for the business will be much greater. This is caring about what is right for the business.

I hope that you find these ideas helpful in guiding you through the process of selecting a supplier, and of course, I hope that you choose SUMMIT.

Ian Hayes.