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Future plans and strategy of the company.
Geographical expansion.
Does the company plan to go for more locations/markets? Will it have a greater expansion in the region? If the customer is based out of Poland, it will be wise to know, if the vendor has any future plans for setting up its office in Poland OR build its presence in the Eastern Europe.
Product portfolio expansion
- For Example- You are buying a enterprise reporting package from a vendor who is focusing only on this category of application. You might be interested to note, if the vendor is planning to expand its portfolio to business analytics and business performance management. This will indicate the strategic future of your vendor and also its survival, where comprehensive solution sets are getting higher preference (due to integration and general desire of engaging with lesser number of vendors)
Mergers/acquisitions:
This again shares the strategic future of the Vendor. If the Vendor plans to complement its portfolio by M&A, it is positive news, but the transition time could be a relative riskier window of engagement.
Future plans & strategy specifically to for the products/location
Business projections for given location
Every market and location keeps on changing its strategic value in the board-rooms. Customer should be diligent in understanding the Vendors commitment to the market. Check out on the future plans in terms of team size, governance model, support structure etc. for customer’s market.
Product enhancement road-map
Have you ever faced a situation , when you bought a car just one month before company declared it being phased out?
We do face situations, where a COBOL based product was sold two months before the n-tier open architecture based on new generation languages was launched and the support for the old product is limited to next two years and up-gradation to the new product will cost you a ton.
Apart from understanding the future launches to ensure that you don’t end up buying an obsolete product, there are other reasons to understand the future road-map. No software is perfect and your strategic decision is based upon the enhancements planned in the future and level of confidence on that road-map. There are times, when you buy a lesser product given your high degree of trust on the vendor to deliver upgrades down the road.
Stakes of business for the given context/location.
Share of the company business for the given product
Irrespective of all the sales pitch by the Vendor, a smart customer is able to see through the strategic stakes on the given product. This applies on the vendor as well as the reseller & support service provider (in-case vendor does not have a presence).
For Example- if a product is having say less than 2 % share in the overall revenue of the Vendor, one needs to be careful.
Another Example- Take a software company operating in Insurance domain, sells group insurance product, which forms 2% of the overall revenue. This indicates a low focus. Along with that, if the company has not brought in any new upgrade over last 2 years (say) and has no defined future road-map, it may further reinforce your apprehension.
These kinds of situations occur, when a company takes over another company, where it acquires a product portfolio including products which no longer make sense for the merged entity.
Share of the company business for given location:
If you are a customer based in India, you will be keen on knowing the current and future share of revenue, which is linked to India and Asia market. If the hard facts don’t support, the soft assessment comes into play, where you have to look for indirect indication and read between the lines on what Vendor is projecting.
Strategic alignment
Strategic alignment in terms of product portfolio.
A company dealing in banking space selling a group insurance package (which it inherited from a company it took over) is not a strategic fit. Most of the misaligned offerings are due to:
- Mergers & acquisition leftovers
- Un-successful product experiments refusing to be terminated
- Companies taking short-term punts on a market opportunity.
For Example - A company dealing in inventory management systems, offering a collaboration system.
Strategic alignment in terms of geographical expansion.
Let’s take a company, which is mainly domestic (within US) and promises to expand majorly to Asia markets.
Get a sensing on how your market and region fits into the strategic plans for the Vendor. Is the Vendor serious in truly globalizing its business? Is the vendor fine-tuning its products to serve these markets in terms of region/market specific regulations and other localized features? Is the Vendor hiring in these markets? Has the Vendor applied for setting up its offices in these locations?
PLEASE REFER VENDOR EVALUATION MATRIX to enable an effective Vendor Evaluation.
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