IT Vendor Management: 3 Key Practices To Effectively Evaluate Software Vendors

It is now more common for organisations to outsource parts or all of their software development needs, instead of hiring internally in order to reduce resources used in the hiring process

There are two main reasons many organisations will outsource software development; for access to a broader level of expertise and reduce cost. A Statistics Brain survey into the benefits of outsourcing observed that in the United States 43% of companies are outsourcing IT jobs; 34% of these organisations do so for access to a larger pool of IT talent. Also, 59% of organisations report the use of outsourcing to reduce their business expenses. 

To help meet this capacity, more focus is placed on outsourcing parts or all software development needs to IT outsourcing companies. Softelligence points out that in the upcoming year of 2021, software development is the area where most companies expect to place focus. According to a CompTIA trends report, the organisations surveyed will put a 57% focus on software development. 

A successful collaboration with a credible IT outsourcing company can improve the capabilities of internal software development teams to allow for innovation. While collaboration is the goal for an effective vendor management process; without visibility and control into the relationship with the outsourced development team, an organisation can succumb to an outsourcing failure. Dun & Bradstreet’s Barometer of Global Outsourcing states that 20 to 25% of all outsourcing relationships fail within two years, and 50% fail within five. 

Currently, organisations use screening CVs and vendor recommendations to verify the credibility of vendors ahead of onboarding them. However, this approach to vendor evaluation is problematic as it does not confirm that deliverables will meet quality requirements once onboarded. 

An organisation’s IT vendor management team needs a source and screening tool to find the right outsourced software development talent. Vendor management teams need a practical evaluation of outsourced development teams. They need to be sure vendors provide teams that can positively contribute to the organisation’s development and deliver on projects that adhere to industry standards. 

This article discusses the best practices for a successful vendor relationship and managing software projects.

3 Best Practices For A Successful Collaborative Vendor Engagement Process

1. Assess the capabilities of individual software developer skills to ensure access to adequate levels of technical expertise

Most organisations’ approach towards gaining the most effective use of resources is a competitive preferred supplier list. Conversely, a select supplier list may not always ensure that an organisation has access to the right level of technical expertise and the correct number of qualified developers. 

Vendor management teams run the risk of not thoroughly screening vendors. During the evaluation process, a vendor could offer a development team that is highly productive and collaborative. Still, if an organisation pays on a per developer basis, these individual software developer’s skills must be equally sufficient. 

With the help of BlueOptima, vendor management teams can evaluate whether the chosen shortlist has the right software developer skills for a project’s needs. It produces analytical data based on the assessment of the developers’ approach to problem-solving; therefore building a profile of individual developers’ problem-solving ability and compatibility with an organisation’s software development practice. 

Furthermore, this level of insight can make sure that vendors are thoroughly screened. Vendor management teams can have input to ensure that the vendor will select the right software developers that are able to deliver the correct solutions based on accurate KPIs and metrics.

2. Determine whether the vendor’s code quality standards are aligned with industry and the organisation’s standards

It is essential to understand the expertise level of software developers; it is also vital to evaluate and ensure the vendor has built a team of software developers that can maintain high code quality standards and safely contribute into an organisation’s software development codebase. 

Each vendor will adhere differently to industry standards and best practices; the vendor evolution process must identify what the best practices outsourced development team follows, and it adheres to industry level code quality standards. 

It is equally important that the process should evaluate that those standards align with the organisation’s software development standards. A potential misalignment on software development standards can result in solutions that negatively impact an organisation’s technology stack, the maintainability of the codebase and internal engineering teams output. 

For example, if the vendor’s development team is keen to show their productivity but are not aligned with the internal engineering team’s best practices. The outsourced development team can be disruptive by contributing code to the organisation’s codebase that causes it to become out of shape. This creates technical debt for internal engineering teams because they have to dedicate time to correct the problem. 

BlueOptima has observed from client and vendor collaboration history the impact this misalignment has on the productivity of an organisation’s internal engineering teams. Situations such as clients having onboarded an outsourced development team using advanced techniques that provide useful functionality, but the solutions are far off the coding standards of the client’s organisation. Consequently, the client’s internal engineering teams are not able to follow up on the vendor’s work. 

3. Closer collaborate with IT outsourcing companies for greater transparency

IBEF reports that India accounts for one of the largest software vendors in the world, with 75% global digital talent is present in the country. EquityMaster’s research reveals a similar outcome, with India accounting for 55% market share of the US$185-190 billion global sourcing business. 

A challenge most organisations face with an outsourced engineering team is ineffective collaboration. As a result, a communication barrier can potentially lead to an organisational software development culture clash. 

How do vendor managers make sure outsourced development teams will be productive and collaborate effectively with internal engineering teams? 

For example, BlueOptima has clients who have outsourced large portions of their software development to India. With our help, they have been able to identify where underperforming teams are experiencing blockers and provide straightforward solutions to overcome these issues to encourage effective collaboration. Often the cause is a lack of proper communication that leads to ineffective collaboration. 

To have effective collaboration between internal engineering teams and outsourced development teams, senior managers must work together with vendors to set expectations across projects. It is crucial to outline the roles of outsourced development teams and encourage the use of communication tools (such as Slack, Happeo, Asana, Google Hangouts, Microsoft Teams) across both internal and external teams.

Industry leaders with established best practices are gaining a competitive advantage. Successful vendor evaluation processes are helping organisations to faster achieve their business goals by providing added flexibility and filling a skills gap.

The vendor evaluation process needs to find the balance between the right set of skills that will deliver value for money and creating a lasting collaborative engagement. This value for money is not merely finding the most affordable vendor, but it depends on the quality of work offered.

Discover Global Insights into the Software Development Industry

At BlueOptima, one of our primary goals is to provide the data your business needs to achieve success. That’s why we publish our Global Benchmark Report. It’s a comprehensive look at the industry, including data from hundreds of thousands of software developers in over 30 countries.

Prevention is crucial to software estates, otherwise catastrophic damage can be caused. This is why we provide the Global Benchmark Report which helps business leaders identify red flags or aspects of failing projects early. The report’s information helps to provide transparency and an objective measurement of performance of a businesses outsourced teams. Why not maximise the effectiveness of your technology investments within your teams, locations and projects today?

To learn more about the BlueOptima Global Benchmark Report, ​​click here.