When was the vendor business founded? How has the business grown? – By organic growth, or by merging with or taking over other businesses? Has it been the subject of takeovers itself? If so, are the original founders / team still involved and what has happened to the original software range(s)?
Current business structure
What is the current ownership of the vendor business? – Is it an independent company or part of a larger group? If so, do they have a justification for this?
Have you reviewed / analysed the vendor’s published annual accounts – for the current and previous few years? Do the accounts provide a clear explanation of what’s going on in the business?
For instance - what is the annual revenue (turnover) for the latest year / latest quarter and for previous years? What % of revenue is from software versus services? What are the revenue trends – growing, stable or shrinking?
Similarly, what is the annual expenditure for the latest and previous years? How much expenditure was spent on support, research & development, marketing and administration ($ and % mix)? And how does this compare with other vendors? What are the expenditure trends / issues?
How profitable is the vendor – and what is the trend for the last few years?
Does the balance sheet indicate excessive borrowing or cash flow issues? What do the trends and financial ratios from the annual accounts tell you? Is the vendor business financially sound and stable, or is it struggling?
Does each set of accounts have a ‘clean audit’?
How many employees does the vendor have? And how many are working in support, research & development versus sales, marketing and administration? Do one or more areas appear to be over or under resourced?
Are there any trends, such as staff numbers increasing or reducing, and if so, in which areas? What is the staff turnover?
What mention of employee qualifications, skills, experience, training is made by the vendor?
How many sales and support staff are employed in your geographical location?
Who are the vendor’s customers? What industries are they in? How many customers does the vendor have in your industry? What is the average or range of customer size? How many software users do they each have, typically?
How many customers does the vendor have in total? How many new customers did the vendor have in the last year?
What modules have customers taken? How many are on the latest software version? How many are upgrading?
How many customers are willing to provide references, or respond to enquiries, or even host a site visit for potential new customers?
What is the vendor reputation and track record within the industry? How do the analysts rate the vendor, software and services?
What is being said about the vendors, their software and services? What do published articles or reviews (either online or off line) say? Are there useful case studies eg on the vendor or other websites?
What information is being published about the vendor on social networks eg Facebook, LinkedIn, Twitter? Have you posted a question and awaited feedback? Have you searched the major search engines with terms such as: vendor name or software, plus ‘is’ or ‘problem’ or your concern?
Quality standards and accreditations
What quality standards and accreditations has the vendor has achieved eg ISO 9001:2000? Has the vendor won any business or software awards eg software of the year?
Strengths and weaknesses
What are the vendor’s strengths and weaknesses from your point of view? How do they compare with their competitors? And how do the vendors view their strengths and weaknesses?
What are the vendor’s future business and software plans and direction? Where is it heading? And is this in line with where you want your business to go?
Do the annual accounts indicate, or have other investigations identified future potential developments? For example, are there any potential litigation actions? Is the vendor planning to grow with further business acquisitions? Is a business restructuring planned, or rationalisation of services or products?
If the vendor (in the future) was to merge or be taken over by another organisation, what safeguards would there be for existing customers? Would there be a guarantee to continue to support or develop the present software for a number of years? Or software escrow, or upgrade paths to the new software?
Once you have answers to these questions, you will have a lot better understanding of the vendor, their business and be in a stronger position to consider their software.
For more system selection information visit: Where to find vendors / Vendor selection process - shortlisting / Vendor selection check sheet / Vendor meeting / Software quality checklist