Besides developing software, our company Farata Systems works on all kinds of consulting projects for large and small enterprises. At this point you may think that I “ll start bragging about how great we are, and that you should hire us. On the contrary, I “ll tell you about our failures and the lesson learned.
During the last year our company have lost the bids on a couple of consulting projects, and we “ve noticed the same pattern. Here “s one of these cases.
A large company approached us asking to bid on a project. We knew how to do the job, we “ve estimated the time and resources and came out with the numbers: $200K over 6 months. In about two weeks we were notified that they “ve decided to go with a different vendor that offered them to do this job for $60K. We shrugged and moved on with our business.
Six month later, we “ve got a call from the same client asking if we could help with that project. By that time they paid already $300K to the vendor-winner, and the project was not finished yet.
Since we “ve seen similar scenarios in the past, it seems that we are dealing with a sales pattern here ndash; some vendors are giving unrealistically low estimates just to get the foot in the door. Then, little by little they present valid reasons that require additional budget, the client is on the hook, someone “s career is at stake, and they have no choice but sign the next invoice and keep dragging the project until it comes to a full stop.
A little lie during the job estimates seems to be a trick of the trade of any salesman from construction to timeshare business.
When an Enterprise IT department gets the budget for a new software development project, pretty often they ask several vendors to bid on the project. Some of them will come up with beautiful PowerPoint presentations showing where you are now – the current state assessment, the future state assessment, and a roadmap to this bright future, which can be fairly technical. More agile vendors hate this stupid paperwork – they will present you a two-page write-up with technical solution addressing your functional specification. The third type of vendors is prevalent and they will present a decent diagram and some technical meat.
Then the cost comes into picture. Vendors ” marketing people will estimate the cost of the resources. If you are a newcomer in the enterprise software world, you might not know that “resources rdquo; are actually people. Salesmen do not call software developers people, they call them resources. In one of the corporate meetings, I ‘ve heard an account manger saying, “A father of one of my resources died so this resource will not be available for a week “. Could it get any worse? Actually it could, for example, “An ancestor of one of my resources died so this resource temporarily will not perform its functions “.
Getting back to the main subject, if you see a cost estimate of one vendor substantially lower then the others, most likely that they “ll be using dirt cheap resources.
So how you, the enterprise development manager can pick the right vendor that will deliver the project in time (or at least without substantial delays)? Here “s a solution: give each vendor two weeks and ask them to come back with a working prototype of the system to be developed. Important: you have to pay for this two-week job to each vendor.
I want to make it crystal clear ndash; they should come back not with a UML diagram of the system, not with wire frames created in some third-party tool, but with a working application that is built using the software approved for the real project. Of course, this application won “t be fully functional, it “ll run locally on a laptop with lots of dummy pieces of code, but IT HAS TO WORK.
Say you have five vendors bidding on your project. The odds are that after such an offer two of them will quietly withdraw their proposals. One of the remaining three will ask for another week. This is not a good sign and this vendor should be out. The remaining two will present their working prototypes on time and you “ll be surprised to find out that the job of picking the right vendor became extremely easy. Yes, it “s cost you a little bit of money, but it was the money well spent.
This was our lesson learned ndash; if we have to bid on a decent size project, we offer the client to try us on this mini two-week project. It “s fair to our clients, and fair to us.