Choosing a System Integrator - Follow the money

There are several aspect to choosing a good system integrator for your next corporate solution. Evaluators look at:

  • number of experts
  • references
  • prior work
  • years in the field
  • price of solution
But the most overlooked and very important criteria is the financial strength of an integrator.

While this may not seem relevant at first glance, let's review the following scenario:

  1. A corporation orders a large server and storage system, in the price range of several millions of dollars. Naturally, payment is mostly upon delivery, with meager 30% upon contract signing.
  2. The integrator orders the solution from the manufacturer, pays for the transport logistics, insurance, and ofcourse, receives an invoice from the manufacturer, to be paid within 30 days.
  3. The corporation delays the implementation of the system due to internal reorganization by 2 months. To compensate, they agree to pay another 30% of the contract price to the integrator.
  4. At this point, the integrator has received 60% of the contract price, and needs to settle his invoice toward the manufacturer. Additionally, the integrator needs to cover storage and insurance expenses for the customer. In the cutthroat business of IT integration and RFP's, no integrator works with a total margin of more then 15%-20%.
  5. Therefore, the integrator will be in debt once it settles the manufacturer's invoice.
If the integrator does not have the financial backing to survive such a situation, it will go broke in a hurry.

The customer will be left with a heap of non-functional hardware, and since it must use the purchased hardware, the next integrator who will be called in to fix things will be in a position to dictate the price
.

Conclusion
Apart from choosing an integrator with good experts, which is a must, do not forget to verify that the integrator has the financial strength to carry the burden of the project, with all it's possible problems.

Talkback and comments are most welcome

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Software vendor relationship - can you make it better?
3 rules to keep attention to detail in Software Development
8 Golden Rules of Change Management

3 comments:

artofreed said...

Good Info, Good post !
I was here ! Thank you for your post and broadcast

Techoncez said...

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Marc said...

yeah, integration can be the most difficult of tasks, especially with legacy systems.


why does everything have to be sooo different??? :(

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