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Are your clients costing you?

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In a cutthroat business environment, it can be extremely tough simply to get in the door of potential new clients, writes Bob Hall, executive director at redPanda Software.
New business development is a hard slog for any company, and if all goes well, it carries with it the potential of ongoing work. In the world of enterprise software development, however, not all new business is made equal. Indeed, there are some clients that can end up proving to be more trouble than they are worth – and ultimately end up being costly to your business.
So how does a software development company avoid this sticky scenario?

Do your homework …
To begin with, you need to gain insight into the client’s business. What are their values? How does their operating model really work? Do they understand how to collaborate, and critically, do they understand that IT is a strategic asset and not a commodity?
Essentially, you need to get under the skin of the business by talking to the right people, and then use this insight to determine whether they will make a good fit or not.
This should involve talking to various people in the business – from executive level managers to the warehouse guy.

Set the tone from the start
If you made it past the ‘dating phase’ and there is intent to work together, it is critical to set the tone for the partnership right from the get go. We like to immediately put in place a schedule of regular meetings between the client and our business analysts and project managers.
These meetings should always take place, and the client should be aware that successful software development will require their regular input and feedback. It is never a case of simply handing the specifications over to the developer and walking away.
From the outset, both parties need to recognise and respect that constant communication and input is required.

Define the expectations
In addition to the usual contracts that seek to protect both parties, there should be clearly defined steps within the development process, and an understanding that to proceed to the next step, client input will be needed.
We follow the Agile approach to software development, which helps us to respond to and mitigate unpredictability and major changes through incremental, iterative work cadences and ongoing feedback. Critically, the client should understand this approach and what it requires from their team.

Learn to identify red flags
Over time, software development companies should learn to quickly identify the red flags that warn of a potentially costly new client.
For example, when you encounter a company that started life with a tiny IT system, relying on one or two people to run, and now that company has far outgrown its IT setup.
In these cases, it can be a veritable nightmare, and costly, for a software company to attempt to develop new code by sorting through the legacy IT system with all of its creaky nuance. Better to start a fresh, however to get the company to understand and accept this is very usually very difficult.
Again, in cases where the client clearly doesn’t recognise that IT is a strategic asset that needs ongoing investment, it can be time consuming, frustrating and costly exercise for you to attempt to change this mindset and put a proper solution in place.
While new business is essential to the growth and development of any company, it is worth being particular about which new business to take on. From frustrated and unhappy teams to reputational damage and burned bridges, the stakes are always high.