Vendor risk during software development
1. Functional gaps open up
You review a system that meets most of your requirements and rates well against competitors. Should you acquire it?
Most product evaluation methodologies only evaluate the fit of the current product against current business requirements. An underlying risk when acquiring technology products is that the successor product may be less well aligned with emerging business requirements. This has most to do with the vendor’s capability and product development track record but is unfortunately often overlooked when an out-of-the-box solution appears to offer a fast track to the desired (short-term) solution goal.
Over time as functional gaps open up, greater effort needs to be ploughed into modifying or working around the solution. The paradox is that with every modification you further commit to the increasingly ill-fitting system.
2. Aggressive upgrade cycles
When you are changing software because your vendor has released a new version (and withdrawn an old one) and not because you perceive any great advantage from moving, you are in the upgrade cycle. When you are changing hardware because your new software won’t run on the old hardware, you are in the upgrade cycle.
If it sounds like the setting on a washing machine it can feel like one too. The main risk is that this upgrade cycle becomes an end in itself and locks out the pursuit of value-adding opportunities to enhance IT systems.
3. Proprietary solution lock-in
Most vendors claim their products are ‘open’. Most, however, also deliberately construct their products to be differentiated from others! It is important to look beyond the veneer of openness to the underlying proprietary features and potential risks.
For example: will the data be locked into a vendor-defined world view that no others share – thus limiting opportunities for potential future migration? Are the interfaces restricted or limited so that data will not easily flow to and from other systems? Will any customizations become tightly bound into the product and impede potential upgrades? Are compatibilities assured with only a limited range of (mostly vendor produced) other products?
Committing to a ‘box set’ or ‘stack’ of related IT products is not necessarily a bad thing – particularly if the alternative is a hodge-podge of components wired up together. However, overcommitment to proprietary solutions will make you more vulnerable to an individual service provider failure or inadequacy.
4. Unfulfilled promises
‘Vapourware’ is IT terminology for a solution that doesn’t appear in the promised form. Pre-emptive and premature product announcements are often made to draw the market away from a competitor offer.
The latest is always the greatest, particularly in the IT world, but this might not be the best for you. It is important first to ascertain whether you really require the features that may require you to wait and second look at the vendor’s track record and discount future promises accordingly.