How to Choose Your Tech Vendor: The Insider Guide

Whether you plan to outsource IT projects entirely or partially, scale your business, or create a digital product to launch a startup — you need to find a service provider. It’s easy to get some tips on how to choose the right custom software development company. Most sources will provide you with a relatively standard checklist that includes exploring a candidate company’s reputation, ratings, and portfolio. 

However, there’s more to it. The Rocketech experts prepared our insider guide on how to choose an IT vendor effectively, approach this essential task strategically, and eventually select a long-term trustworthy tech partner.

Roles

Often, a company delegating its IT tasks and projects is imagined as a mythical “client” who gives the tech vendor money in exchange for services. While it’s not far from the truth, the journey begins with defining who is the actual customer and which role this executive has in the company. The client’s role determines the communication’s begin and impacts the entire collaboration dynamics from day one. Here are the two most common scenarios.

Founders and Product Owners

Both founders and product owners dive deep into the project. They understand the product and have the necessary market expertise to make informed business decisions. 

The product Owner (PO) is the product development and management specialist in digital projects responsible for the end product’s vision and value to the user. POs act simultaneously as entrepreneurs and managers: they generate and test hypotheses and take risks while guiding the development team. 

While the contracts are signed with founders, POs often take over most of the responsibilities of the project from the client’s side, from allocating budget and monitoring business processes to market expertise, customer testing, and sales. 

Other Stakeholders

It’s also not uncommon for other stakeholders — often investors — to become clients. There’s usually no total immersion in the project and a lack of tech expertise. Investors also tend to spend a lot of time establishing business tasks and reduce everything to fixed-scope and fixed-cost contracts. However, while set price collaboration may be effective in some situations, it’s the riskiest way to outsource long projects.

When you are ready to initiate the first contact with the tech company, you should build the communication based on your own role in the company and the future venture: your market knowledge, understanding of the product and experience in tech projects.

Approach

The task may seem simple: you have a product idea, choose from the top IT vendors and discuss the terms and conditions. However, first, you need to specify your business approach as it directly impacts the development process and determines what you expect from the service provider.

There are two approaches to handling business, and they apply to the development process. In the end, it is the product that underlies the enterprise.

• You see your development project as an investment.

Such projects usually start with developing an MVP — a minimum viable product with basic functionality yet ready for market launch. It’s hypothesis testing on the go. By using real-user feedback, you look for new features and ways to develop your idea into a fully functioning business. However, investing time and resources in these projects is associated with certain risks. Some products just don’t take off.

• You need the product for launching a fully operational business.

In this case, you should already have the results of customer and hypothesis testing, a feasible business model, and a solid understanding of the market you are to conquer. While in the first approach, you can adjust your goals to user feedback, here you need to know your customers’ pains and needs before the project starts. In these cases, the development itself becomes almost a “secondary issue”.

Choose your tech partner according to their knowledge and expertise in the approach you pick for your business. Some software development companies may have trouble developing full-fledged products from scratch. Others don’t have enough experience with market testing.

Resources

Knowing how to select a technology vendor is understanding the multifaceted nature of “resources”. Experienced software development houses provide dedicated teams engaged only in your project. In this case, you don’t have to worry about human resources — recruiting, hiring, training, and subcontracting are done by the vendor.

Paradoxically, money is the most insignificant resource in the software vendor selection process. Clients, of course, have budgets and financial limitations. But with the right approach, money is a secondary parameter. Here’s why.

The most expensive resource in this adventure is market expertise. And ideally, client company founders and POs should already have it. Otherwise, they will have to spend a lot of other resources (time and money) to gain it through market research and hypothesis testing.

Partnership

A custom software development company for startup founders is, first and foremost, a partner. Certainly, you can hire a couple of freelancers from different parts of the world. But will you be sure they have your back?

Effective partnership is based on complementation. You don’t look for a partner to tell you what you already know. It’s one of the biggest misconceptions in the software vendor evaluation process. Often startup founders (unless it’s a tech startup) don’t have the necessary technological expertise. That’s why collaboration with a trustworthy tech company becomes crucial.

Naturally, be ready for differences in approaches, capabilities, and opinions. It takes time to get used to each other and set up a mutually beneficial process. However, a high-potential partner demonstrates the tech market expertise already at the first meeting and complements your company’s ability and resources.

It’s good to start with a short T&M contract to see how the tech vendor works: transparency, communication, professionalism and focus. Either you pay per hour or project, you need to get value from the work done. A successful short-term contract is a safe and proven way to a long-term partnership. 

Industry Expertise

Today, a tech vendor for startup digital products must have a relevant portfolio. Fintech solutions and corporate websites, for example, have totally different logic. Developing additional features is not the same as the product’s market launch. And the list of these examples is endless.

A jack-of-all-trades agency claiming that they can develop any product of any complexity in any industry is rather a red flag. Pay attention to a carefully crafted portfolio and well-structured services page on the tech vendor’s website.

Expertise is not only about frameworks, programming languages, and product types the tech vendor works with but also the quality of all internal processes: communication, development processes, onboarding, training, and much more. Companies having problems communicating and sloppy coding standards often fail to show satisfying results. If the provider doesn’t have clear guidelines for every aspect mentioned above, you risk being left with a mediocre product and poor service.

At Rocketech, we specialize in fifteen industry-agnostic domains covering approximately 80% of the market. Instead of working with all possible tech stacks, we carefully chose these twelve domains to base our expertise on and keep perfecting with every project. Besides, we have mastered process building. Following the Scrum best practices, we ensure that every iteration brings value to the client.

Our Approach

At Rocketech, we establish long-term relationships with our Partners. We always take time to navigate the waters and base all our internal processes on transparency and trust. With our flexible approach, we focus on guiding tech startups throughout the entire journey — from a product idea to MVP and further scaling.

We believe it’s crucial to see how both parties work at the very beginning to minimize misunderstandings and possible pitfalls of future collaboration. We don’t do the minimum to get paid according to the contract but share our business experience and apply our tech expertise to achieve the best results. We succeed with our Partners. If you want to learn more about our approach, contact us directly.