Why it’s Critical to Right-size your Technology Provider

One of the most critical questions when choosing an enterprise technology provider is “will we be a good match?” This isn’t just in terms of the vendor’s solution, and how its solution integrates with your infrastructure, but also if the two organizations mesh well together.

Given that software vendor relationships will typically run at least a few years, and the solution will take a considerable amount of unwinding from your other technology environment if it doesn’t work out, the decision needs to address a wide variety of factors beyond “can it do what we need it to do?” and “does it offer good value?” You also need to consider factors ranging from cultural fit to where you are size-wise on your vendor’s customer roster.

The Goldilocks Factor

Working with the vendor that suits your requirements size-wise is critical for a successful long-term relationship, so you should see where you fit within prospective vendors' customer bases (both in terms of how many customers they have, as well as where you would be in terms of revenues). There’s not necessarily a right or wrong answer for choosing a larger or smaller technology provider, so in your decision process, you should assess which factors are important to you.

Too small: Being a big fish in a small pond can certainly have its benefits – you’ll always get plenty of attention, and they’ll certainly try hard to keep you happy and retain your business. However, this also comes with potential challenges. Choose a vendor that’s too small, and they may have troubles scaling to work with you. This could mean both in terms of the technology being able to cope with the increased transaction volume (particularly for a cloud solution), as well as the solution simply not having the level of sophisticated features and capabilities for your requirements, either now or as you evolve. Cute little gimmicks may be nice and sound great in the sales pitch, but as a technology buyer or solution administrator, robust back-end capabilities may even be more critical in the long run.

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Too big: At the other end of the spectrum is working with a large vendor. In a way, this offers a safe choice (aka nobody ever got fired for buying IBM), as you know they’ve probably worked with a company like yours before and will have the scale to handle your volume. You also have the kudos of working with the big guy in the field, with all of the positive associations that this brings.

The negative aspect of this kind of relationship is less likely to be a technical one but more of an operational one. First, as one of several thousand customers, you’re likely to be more of a number in their accounting system than a customer (especially if you’re on the lower end of the scale of their customers by revenue). This often leads to a lower level of customer care, and also less of a say in the direction of the product roadmap.

Working with a large vendor can also offer challenges relating to its own agility. Larger companies are less likely to be as nimble in their approach to handling change, and may have lower ability to deliver innovation as quickly. This could lead to you being tied into a solution which doesn’t evolve with the changing nature of your own organization or its employees.

Related: 9 Signs it’s Time to Switch Expense Management Systems

Just right: So how do you know when you’ve hit the sweet-spot with your provider – the porridge that’s neither too hot nor too cold? There is no hard and fast rule for working this out, and it also depends on where your own organization is in its evolution. Your priorities if you are more of an early-stage, rapid-growth company will likely be different to that if you are a more established and mature organization. Some of the attributes that could suggest that you and your technology vendor are a good match include:

• Size. Being in a vendor’s customer “sweet spot” eliminates a lot of risk. If you’re too big for them (particularly if your business represents more than 5-10 percent of their overall revenue), they may not be able to cope, and if you’re too small, you may not get the attention or responsiveness you deserve. 
• Mutual scalability. Being able to scale goes both way ways. First, your vendor can grow with you as your company moves into new territories, Second, its technology offering will be able to accommodate you as your processes become more complex (more of this below).
• Culture. While culture may seem less important when choosing a software vendor than, say, a PR or advertising agency, you should see what kind of fit there is with your own organization. Smaller vendors can often have that coolness and edginess that start-ups like, but this may not always work for more established, highly process-driven organizations. Conversely, it can be difficult for an organization to maintain a customer and innovation-focused culture if it gets large, especially if it goes public or gets acquired, which can often lead to a cultural shift.

Growing up together

Working with the right partner doesn’t just mean finding the vendor that works now, but one that can work with you as you continue to grow. Just because it offers you the functionality and global reach that you require now doesn’t mean that it will work for you in one, two or five years. On the other end of the spectrum, you don’t necessarily need to be alarmed if a solution has way more functionality than you currently need. This is particularly true for many cloud solutions, which have the flexibility to turn on front-end functionality and back-end configurability as your needs require, not to mention the model provides continual delivery of new features.

It’s also worthwhile considering what kind of growth strategy this has, and how it ties in with your own organization’s plans. This doesn’t just mean if it will grow, but how. If your vendor tends to grow and evolve through acquisition instead of organically, this could mean needing to integrate new companies and technology, so your experience in different countries or product areas may differ considerably to what you’ve come to expect. While for some organizations this may not present a major issue, for others it could prove to be a stumbling block.

Related: 5 Things to Consider When Choosing a Global Expense Management Solution

Selecting the software solution that works best for your organization is still as much an art as a science. However, by taking a holistic view, you can certainly load the dice in favor of choosing a provider that works for you on every level, and will be your trusted partner for many years to come.