The financial and operational strength of a software vendor has far-reaching implications. This is true for any provider of software applications you'll be using for business concerns, and especially true when the software you license is delivered as SaaS (Software as a Service) and will be housing your business-critical, highly confidential guide assets, product approvals, and even contractual information. The software vendor needs to be responsible for ensuring your data is protected and available to you at any time.
Simply stated, it is essential that any vendor you select can demonstrate it has the financial and operational strength to warrant your trust as the custodian of your intellectual property (digital assets, product approvals and contractual terms).
A financially and operationally stable SaaS vendor should demonstrate moderate to strong capability with most of the following:
- Ensure there are enough financial resources (cash) to pay third-party vendors such as co-location facilities, software license renewals, hardware upgrades, maintenance, payroll, office rental, and overhead costs even if customer payments are late to arrive.
- Recruit the best local software development talent, rather than outsource to lower-paid developers in questionable, high-risk countries, who will have access to your confidential data from abroad.
- Afford the optimal hardware and software needed to build a custom-build infrastructure and solution for the licensing process, rather than renting a generic, turnkey cloud solution from Amazon or the like, where your particular needs are not relevant.
- Invest in infrastructure and digital media specialists who have a deep understanding of digital media and the technologies needed to properly handle rich media assets.
- Invest capital toward evolving the applications to better meet the needs of your business over time and address bugs quickly and efficiently.
When a software provider's financial and operational position is precarious, where a few lost customers or one unforeseen major expense is all that stands between their ability to “keep the lights on” and an inability to pay the bills, you are taking a huge gamble by working with that technology vendor. Can the vendor demonstrate its ability to weather the unexpected?
Here are examples of some revealing questions to ask any vendor – questions whose answers will help you objectively assess their financial and operational strengths:
- Is there a reasonable level of transparency about the vendor's level of financial strength and ability to pay bills on time?
- Does the vendor have substantial Commercial and General Liability, Cyber Liability, E&O and Workers Compensation Insurance, and will they name you as additional insured?
- Does this vendor provide own their hardware and software in a private cloud, customized for licensing and with full control, or is it outsourced to a third party?
- Since developers are the single biggest cost for any software business, are their developers located in-house (locally) or is the work outsourced to third parties? Are their staff “offshored” and located in higher-risk, low-cost countries to fit the vendor’s financial limitations?
- Where are the vendor’s offices located? Can you visit their headquarters?
- What is the vendor’s headcount and how is that headcount broken out across developers, infrastructure, support, sales, marketing, and corporate staff?
- How is their credit rating with Dunn & Bradstreet (DnB)? Do they have credit references?
Getting reasonable answers to these and other questions early in the process will help shield your team from suddenly being negatively affected by another business's potential or actual financial and operational weaknesses in the future.
MyMediabox is a leading provider of SaaS hosted applications for digital asset management and style guide delivery (Mediabox-DAM), product approvals and other creative workflows (Mediabox-PA) and deal memo management (Mediabox-DM). For more information visit us at www.mymediabox.com
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