The 10 Things to Consider When Choosing an Outsourced Vendor
Patrick Kelly;  June 27, 2005

• Consideration 1: Understanding the Power of Team

• Consideration 2: What is the Vendor’s Core Competency?

• Consideration 3: Do You Know the Total Cost?

• Consideration 4: Are You Really Hiring Experts?

• Consideration 5: Does the Vendor Have Sufficient Project Management Experience?

• Consideration 6: How Does the Vendor Ensure Scalability?

• Consideration 7: Can the Vendor Commit to a Schedule?

• Consideration 8: How Stable is the Vendor?

• Consideration 9: Will Your Company Own the Source Code?

• Consideration 10: What is the Vendor’s Overall Reputation?

Consideration 2:   What is the Vendor’s Core Competency?

If you look around at service company websites, you’ll see that most companies claim to be experts at everything. But, as we all know, it is impossible to focus on everything. For that reason, most of these companies become "jack-of-all-trades, master-of-none".

At LabVIEWexpert.com, we made a conscious decision to focus on a narrow market. Namely, we focus on automation software, using PC’s with instrumentation, sensors, and databases, typically running LabVIEW and/or TestStand. This is our core competency, and our narrow focus helps us to be a world-class provider for these types of solutions.

Our experience in this area is very strong, and the testimonials on our website are the best proof. We cover a number of industries, but our focus stays the same. For example, in the telecom industry, we build PC-based automation solutions which use instrumentation such as Vector Signal Analyzers, Call Boxes, SMIQ’s, etc. In the Biotech industry, the instrumentation is often spectrometers, machine vision, motion control, and RS-232 controlled devices. In the Automotive and Aerospace industries, we use Data Acquisition cards and Signal Conditioning modules, with sensors such as thermocouples, strain gauges, accelerometers, humidity sensors, etc. Our solutions span different industries, but the only aspect that changes is the instrumentation and unit under test. All of the other software development principles stay the same.

Because our core competency is software management and development focused on automation software, we can build solutions across a wide range of industries.

Consideration Two reminds you to make sure that you understand the core competency of any vendor you are considering.

Consideration 3:   Do You Know the Total Cost?

When looking at outsourced vendors, many managers make the mistake of focusing on hourly rates, rather than the total cost. This process is analogous to shopping for a new car and focusing only on the monthly payment instead of the sticker price. The salesperson may want you to do this, but you’d be much better off focusing on the big picture.

So, what is the big picture? Our answer would be the following: Total Cost. The next question is: How do I best determine the total costs associated with a given outsourced vendor? Our answer is a four-step solution.

1. It is not realistic to get a total cost quotation if there are not documented requirements. The better the requirements document, the better an estimate you can get on total cost. So, make sure that you have done a thorough job of documenting requirements. If necessary, have vendors bid on a first phase where the requirements document (and other appropriate documents) will be written. Once this phase is complete, you can move to step two.
    

2. The proposal from the vendor should read like a restaurant menu, showing you the costs for specific features and linking features to requirements. This approach will allow you to best choose the feature set desired, given your budget.
    

3. The vendor should be clear with you about how scope changes will be handled. Software scope changes are a part of life, and you should discuss up front how they will be dealt with.
    

4. Once you have all of this information, you can assess the costs for each feature, and choose how to move forward. Remember, you want to be thinking "total cost" and not "price per hour". This paradigm of thinking will ensure that you know the total costs before you get started.

Consideration 4:   Are You Really Hiring Experts?

We live in a specialized world, and software is exploding with specialization. One person may be great at networking computers, another at writing web pages, another at databases, another at embedded software, etc.
It has been said that "when your only tool is a hammer, everything looks like a nail." As an engineering manager, you need to know when your project requires a screwdriver, and you have to make sure that you don’t hire the "hammer" guy.

But how can you know? We offer these three suggestions.

1. Are you hiring a team? As we discussed earlier, it is difficult to find one person who can be an expert at everything. Hiring a team lowers your risk, especially when you have access to a strong software architect. The software architect can help you see which problems are screws requiring a screwdriver, and which are nails requiring a hammer.
    

2. Is the vendor certified? For example, National Instruments offers certification for users of LabVIEW. If your project uses LabVIEW, you’ll want to make sure that the company you work with has certified developers, architects, and instructors.
    

3. Has the vendor done similar projects? This is the time to really probe and ask detailed questions. While some aspects of a previous project may be confidential, the vendor should be able to dazzle you with his knowledge of the subject.

The goal of these three questions is to help ensure that you really, truly, get experts for your project.

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Email: Patrick@LabVIEWexpert.com

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