February 8, 2021

Successful Outsourcing: How to Select B2B Vendors (Part 4)

This is the fourth installment in a series outlining practical criteria for evaluating B2B service providers. Be sure to read:

When you outsource a critical function or invest in a product, you’ll sleep better at night if you know the vendor is constantly working to make it better. It pays to look for providers with a proven track record of continuous improvement and a commitment to R&D. They should also be able to demonstrate how innovation leads to measurable value.

For example, at InCloudCounsel, we’re focused on how quickly we can turn contracts around and how we can deliver features that will shorten that turnaround time. Both can have a real impact on our customers’ businesses, getting them faster access to critical information in time-sensitive transactional situations. 

Here are some ways to evaluate a vendor’s commitment to innovation.

  1. Dive into their investment in their team. Is the founding team—the original leaders who are passionate about the business problem—still with the company? If so, they’re probably driving the vision and therefore driving innovation. Once a company gets bought by a larger enterprise or a private equity firm, innovation often slows or stops as the new owners focus on margins and cash flow.
  1. Walk you through the product roadmap. Have the vendor explain their vision not only for the technology but the industry. The provider should have the team and the capital to achieve that vision; if they do, they’ll keep innovating.
  1. Learn how the roadmap results in tangible value to customers. Products shouldn’t just look or sound “cool.” For example, many companies claim to offer AI tools, but when you test these tools in real-life situations, they don’t work that well or even create much value. If a provider claims that they’re investing in AI and machine learning (ML), find out who’s on that team and how those investments create measurable value for customers.
  1. Investigate the size of the product and engineering teams working on the product you’re considering. Growth in these functions indicates that the provider will keep innovating and isn’t content to simply milk existing products for profits. Ask whether those teams are full-time or outsourced contractors. Software development doesn’t always lend itself to successful outsourcing.

Questions to Ask

  • What’s your product vision? What will your product look like two years from now? Five years?
  • What are the key value metrics you’re focused on right now? How do you define the value that you deliver to customers? How will your roadmap influence those metrics?
  • Is your founding team still with you?
  • Who is your CTO? Who is your VP of Product? When can I talk to them?
  • How big are the product and engineering teams working on this product or service? Are you hiring, and if so, at what rate?
  • What portion of your software development team are full-time employees? What portion are outsourced contractors?
  • Who does quality assurance (QA) on your software?
  • If the service provider claims they’re investing in AI or offer AI tools, ask: Who’s on that team? What value are those features creating for customers?

Click here to download “Successful Outsourcing: An Evaluation Guide for Selecting B2B Vendors” for a full list of our vendor selection criteria.