One of the factors I consider is capacity – does the vendor have the bandwidth and talent and structure to do this particular project well?
Vendors have a hard time saying “No” to clients even when they know they’re about to overload their capacity – it stems from a fear of both losing face, and losing business. But this is where high-risk-of-failure starts to enter into the equation.
I encourage vendor/partners, particularly those with whom I do a Clarity Therapy session, to target their business development efforts at their capacity sweet spot. For instance, one of my partners is a great choice for niche product launches – but would be overwhelmed by a large launch. So, it doesn’t make sense for them to target those opportunities. Some of my solo consultant partners stand a much better chance at succeeding with emerging biotechs than trying to compete on a very un-level playing field with bigger providers for the business of Top 5 Pharma companies.
Here are some capacity questions to consider:
1. How much of this work will need to be outsourced to others? Outsourcing isn’t always bad – in many cases where specific domains of expertise are needed, it’s unavoidable – but a complex and multi-faceted project may demand a supplier with a higher internal staffing level just to manage the many moving parts. On the other hand, for more limited projects, that may be unnecessary overhead.
2. Does this project require dedicated staff from the vendor (especially dedicated project management)? Some work can be juggled successfully without a more focused team, but some projects require a fixed amount of ongoing bandwidth. Find out in advance if that is the case.
3. Does this vendor have the capacity NOW for this project? Last year’s success with a similar project does not guarantee this year’s success if the vendor is already loaded up with other work.
4. Am I giving this vendor too much work? One client can overload a vendor such that their performance degrades – and, can put that vendor in a dangerous position of being too dependent on a single client for their financial health. I have seen this latter scenario play out time and again – no vendor should have a single client providing more than a third of their revenue.
5. Is this the right KIND of vendor for this project? A marketing agency may not be a great choice for a given training project, because their staffing and processes doesn’t match up to the requirements. A training agency doesn’t always have the bandwidth and expertise to develop software well. A consultant may do a fine job on a curriculum map, but may be the wrong choice for a courseware build-out. Both sides have to be realistic about where the sweet spot is – and isn’t.
What has been your experience (both good and bad) with vendor capacity?