Software Vendor Management
Are we paying a Fair Price?
You’re paying for a system integrator or software consultancy or ERP consultant to help you build or manage a software initiative, but how do you know if you are paying a fair price? Vendor assessment is an ongoing responsibility throughout a software contract; it’s also a key component of an RFP’s responsibility.
The first time this banking client used ScopeMaster, they were able to make direct savings of $150,000. Now it’s used on ALL their outsourced projects!
The procurement team at one of our banking customers evidenced a 50% cost reduction on a single software procurement project because they were able to size the project with ScopeMaster in COSMIC function points, apply fair price benchmarking, and challenge software vendors accordingly.
ScopeMaster paid for itself several times over on just one project. That company has now adopted ScopeMaster as their gold standard for all projects, proving that our software delivers and does so consistently.
If software vendor management is a challenge that you are looking to solve, talk to us today.
Vendor Management in Practice
Two key dimensions that help you improve your software vendor management are keen awareness of functional scope and functional size. When determining what is a fair price for software delivery, knowing the functional size is probably the single most useful metric. There are many ways to estimate software, but with an estimated size in COSMIC function points, you can immediately assess a reasonable range of fair price for the development and delivery of software from a software developer or system integrator. Knowing the size drives better vendor management by agreeing on a fair cost per CFP; of course, what is fair will vary by industry, circumstances, and even the nature of the software. Typical rates range from $350—$5,000 per CFP. Other ways that ScopeMaster can add value in Vendor management include:
- Opportunity for contracts based on cost per CFP.
- Tracking progress towards a total amount of size delivered (productivity).
- Tracking quality of software delivered, assessed in defects per CFP.
- CFP provides an ungameable standard to compare vendor productivity.
- A higher standard of initial requirements, with fewer unknowns leading to better contracts.