Outsourcing is now the new norm for many companies. In this arrangement, software development vendors help businesses increase their efficiency at affordable costs. However, the benefits this model presents are outweighed if there’s a lack of vendor accountability.
By outsourcing software development, organizations get to focus on core business tasks, enjoy reduced time to market, save time and money throughout development, and access a global talent pool. But this is only true if the vendor manages to deliver a high-quality user experience, meeting the needs and requirements of their client. This is why vendor accountability is so important.
The Importance of Vendor Management & Accountability
Vendor management and accountability are very important aspects of a partnership for a variety of reasons.
Quality Assurance and Project Success
Vendor accountability is a measure that businesses use to ensure their partners remain responsible for their performance and results. They should take responsibility for every decision, action, and result.
Accountability and transparency are crucial practices that increase the likelihood of fully benefiting from working with a certain IT vendor. Being clear about ownership, expectations, and commitment greatly impacts quality assurance and project success.
To ensure vendor accountability, organizations should take the time to find the right vendor that possesses the necessary experience and expertise. They should also work closely with their providers to define a clear scope of work, project timelines, deliverables, and quality standards.
Trust and Transparency
Continued cooperation requires trust between the client company and its provider – but even then, businesses must continue to monitor performance. Companies should try finding a partner that matches their standards and openly communicates with them. Only this way can businesses fully trust their vendors’ expertise.
Vendor accountability relies on being transparent and honest about any issues that might occur during development. To help achieve that, business leaders must clearly define what they want and need from their vendor and then create a framework for oversight of the outsourced project.
Risk Mitigation and Issue Resolution
There are a lot of risks associated with working with a third party vendor. Not only does this demand strong vendor accountability but also a great deal of attention from the client side, which should also be prepared for worst-case scenarios. It’s a shared responsibility.
The main risks associated with outsourcing software development include data security, payments, and compliance. Both parties need to know how to identify the risks, evaluate their potential impact on the project, and plan mitigation measures.
As the engagement between a client and a vendor progresses, the risk profile will likely change over time. Both parties should reevaluate risk throughout development, if necessary, and adjust the established risk assessment and mitigation plan accordingly.
Selecting a Reputable Software Development Vendor
Outsourced software development vendor evaluation and the establishment of a successful partnership is essential to long-term success. Businesses must complete their own due diligence and preparation.
Evaluating Vendor Reputation and Track Record
Business leaders should verify their competence and validity before engaging with a provider. The first steps include researching the vendor’s website, reviewing their portfolios, and checking for testimonials on directories.
Looking at the vendor’s case studies, checking for reviews, and contacting former clients are also great ways to determine their credibility in the market. An additional criterion to help businesses evaluate vendor reputation is to check for formal supplier evaluations.
Assessing Vendor Certifications and Industry Standards
Good vendors have accreditations and certifications according to field standards. Checking for these is essential during the screening process to assure security measures, quality standards, privacy, and overall vendor accountability.
Vendors should have accreditations with institutions like the International Organization for Standardization (ISO) and possess certifications such as ISO 9001 and ISO 27001. The last one covers data and system security, which is important.
It’s even better if businesses can find third-party services with Business Process Outsourcing (BPO) credentials and references. These include business licenses that allow them to operate within certain jurisdictions and business certifications that reflect how they live up to industry standards as proof of their credibility and reliability as providers.
Companies with BPO awards, accolades, and credentials have a better way of ensuring legal compliance, no potential shutdowns, and continuous business operations.
Conducting Thorough Due Diligence
Conducting thorough due diligence in your business processes involves a complete legal inspection of the vendor organizations you intend to engage with. This business process is a very disciplined, vital step to ensure success. Here are a few tips to follow when incorporating due diligence into your business process:
- Creating a Request for Proposal (RFP) for the service provider – A good RFP allows businesses to discard providers that don’t fulfill the business and legal requirements. The RFP reply should include a complete description of services offered, proof of financial stability, a description of the teams, tech stack, and the legal background of the company.
- Checking the vendor’s pedigree and portfolio – To avoid working with fraudulent IT vendors, businesses should review the history of the company, its foundation, years of service, and types of engagement. Additional important information includes the longevity of the provider, level of experience and expertise in a particular niche, and project portfolio for past projects.
- Analyzing infrastructural and IT capabilities – Good providers have a stronghold on the latest technologies. Companies should conduct a stringent review of the vendor’s IT staffing services compatibilities and technology stack and look for integration with state-of-the-art tech, a good tech management program, integration capabilities, and the ability to customize updated tech.
- Understanding legal agreements and contract obligations – Companies should always consider the legalities and contractual obligations surrounding the project into consideration. A thorough due diligence process includes checking the existence of outsourcing licenses, compliance with applicable law, the possibility of non-disclosure and non-compete agreements and research into the different types of outsourced development contracts.
Implementing Accountability Measures
Companies set themselves and their outsourcing partner up for success by implementing necessary measures to hold everyone accountable.
Service Level Agreements (SLAs)
A Service Level Agreement (SLA) is an agreement signed between a client company and a provider that defines the scope of performed work, their standards, responsibilities, and conditions. It is another great way to implement vendor accountability.
An SLA sums up the company’s goals and expectations, secures the delivery of services, guarantees the protection of both parties, and ensures satisfactory cooperation. By referring to it, providers deliver more accurately and efficiently.
Basic elements present in SLAs include an agreement overview, the scope of the delivered work, and a description of services. Other important clauses in an SLA might include:
- Metrics – These determine the evaluation and monitoring of the quality of the performed services and are important when it comes to assessing performance in key areas. Specific metrics can include service availability, defect rates, security standards, and business results.
- Remedies for breach – SLAs need to establish the consequences of breaches, especially regarding organization-critical services.
- Additional costs – Both parties need to determine who’ll take responsibility for covering any extra costs that exceed the budget stated in the original agreement.
- Bonus – Bonuses are a great way to reward a provider should their performance exceed the client’s expectations. Both parties can prepare an SLA clause for this particular circumstance.
Regular Reporting and Performance Reviews
Vendors must identify all errors regarding deliverables and system functionality, log them, and manage them. The best way to do so is to implement a problem-reporting system in which the vendor regularly reports to the client company about the status of occurring issues and their expected resolution dates.
The best reporting systems are expansive, covering a wide variety of details regarding the development process and allowing for tighter control. Leaders need to determine the amount of information they need for optimal management and, from there on, both parties need to agree on a report submission schedule and medium (some clients might want to discuss reports through a video call while others prefer analyzing spreadsheets and summaries).
Effective Communication and Feedback Channels
Communication is crucial as it helps to prevent unexpected issues and improve the quality of the final product. It increases trust between the client company and the provider and helps ensure vendor accountability.
Leaders should openly and frequently communicate their concerns with the team and they should clearly communicate any risks and issues back to their clients.
To facilitate communication while outsourcing organizations should try overlapping hours for meetings, use project management software, schedule video conferences, write detailed notes, and use appropriate communication channels. There are many communication tools to choose from. However, organizations should refrain from using too many. If there are more communication channels than necessary, information tends to get lost along the way.
An example of a good combination of communication platforms might include using Zoom for video conferences and meetings, Slack for everyday communication, and Jira for project management.
Monitoring and Enforcing Vendor Accountability in Your Software Development Project
Many organizations find themselves asking how to monitor and manage outsourced development vendor accountability when outsourcing a software development project.
Utilizing Project Management Tools
Using project management software allows the outsourced team to track their tasks, check on project progress, communicate effectively, and highlight important details to convey to the client company. These are great for monitoring performance and ensuring vendor accountability in software outsourcing.
Popular project management platforms like Jira, Basecamp, Trello, and Confluence are popular among Agile teams. They’re great for task delegation and facilitate the interactions between the clients and the outsourced developers.
Escalation Procedures and Issue Resolution
Issues with the vendor may arise during the project. These should be promptly handled to guarantee the project stays on track. Both parties should establish a process for resolving these types of problems that involves identifying the issue, discussing it, and developing a plan to solve it. If they can’t solve the problem through regular channels, they should work together to establish clear escalation procedures.
Escalation protocols are systems, strategies, and processes used to respond to difficult customer service situations, as they organize and enable the smooth transition of a client’s complaint or request to an appropriate level of resolution. They help prioritize client inquiries based on their importance and urgency.
When working with a provider, clients will find inevitable sources of friction like contractual ambiguity, scope creep, missed service levels and deadlines, and changes in market conditions. The best course of action is to establish guidelines that can help businesses resolve disputes, even before they happen.
To do so, business leaders should:
- Negotiate a comprehensive and transparent agreement
- Define a custom dispute resolution process
- Put everything in writing and designate a common storage space for important documentation
- Collect and redeem IOUs
- Maintain a clear delegation of authority
- Include an accelerated dispute resolution clause in the contract
Ongoing Evaluation and Continuous Improvement
Ongoing monitoring and evaluation help ensure vendor accountability and guarantee they meet the client’s expectations throughout development. This involves evaluating performance regarding measurable objectives like quantity goals, quality control, and delivery dates for continuous improvement.
Client businesses should manage the vendor’s performance by monitoring their progress, tracking deliverables, and ensuring they meet the project’s timelines and quality standards. To do so, they should establish a monitoring system that also identifies potential issues that might arise.
Business leaders should conduct regular meetings with the provider to discuss progress and assess concerns. An ongoing evaluation of the vendor’s performance ensures the client receives high-quality work within the agreed timeline.
Conclusion
Both businesses and providers benefit from vendor accountability practices when working on a software project. While the foundation of any solid outsourcing arrangement is the procuring of a reputable provider, businesses should also implement accountability measures for both sides to achieve success.
FAQs
Why is vendor accountability important in software outsourcing?
Vendor accountability is important in software outsourcing as it ensures that outsourcing vendors take responsibility for their performance(measured via KPIs) and results. This increases the chances of clients fully benefiting from working with their vendors and has a great impact on quality assurance and project success.
How can clients ensure vendor accountability when working with an outsourcing company?
To ensure vendor accountability when working with an outsourcing firm, vendors should evaluate vendor reputation and track record, assess vendor certifications and determine if they meet industry standards, and conduct due diligence.
One of the main priorities for businesses should be performing a thorough legal inspection of outsourcing vendor companies. Additional priorities should include creating an RFP for the outsourcing provider, checking the vendor’s pedigree and portfolio, analyzing infrastructural and IT capabilities, and understanding established legal agreements and contract obligations.
What tools and processes can help enforce vendor accountability in software outsourcing?
To help enforce vendor accountability in software outsourcing companies can use project management platforms such as Jira, Basecamp, Trello, and Confluence.
Businesses can leverage vendor accountability software outsourcing to monitor their vendors. This software can assess performance metrics such as quality control, quantity goals, and delivery dates. Furthermore, it establishes a robust monitoring system that identifies issues, tracks deliverables, and guarantees vendors adhere to project timelines and quality standards.
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