When acquiring a new application, the vendor’s financial stability is the most critical factor to evaluate in the RFP process. Learn why this matters more than testing plans, KPIs or development methodology.
Table of Contents
Question
When reviewing the acquisition for a new application, which of the following is MOST important to ensure was included in the request for proposal (RFP) process?
A. User acceptance testing (UAT) plan
B. Vendor financial stability
C. Vendor key performance indicators (KPIs)
D. System development methodology
Answer
B. Vendor financial stability
Explanation
Vendor financial stability is crucial because it indicates whether the vendor will be able to continue supporting and maintaining the application over the long-term. An financially unstable vendor may go out of business, get acquired, or need to cut costs in ways that jeopardize product quality and support.
While things like the UAT plan, vendor KPIs, and development methodology are also important considerations, they become moot points if the vendor is not financially viable enough to deliver and support the application as promised over time. A vendor on shaky financial ground is a major risk.
In the RFP process, you should closely scrutinize the vendor’s financials, funding, profitability, cash flow, and overall fiscal health. This due diligence is essential to mitigate the risk of acquiring a critical application from a vendor that may not be around to support it in the future. The vendor’s financial stability is the foundation that everything else rests upon.
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