IT Employment

Disappearing software vendors: What's your plan of action?

Is your software vendor at risk of shutting down? What would you do if your vendor closed its doors on your organization? Here are some tips to help you plan for the worst-case vendor scenario.

By Vyom Bhuta

Let's paint a picture: It's late, and you are in the office looking back to a point in time in the last three years when you were visited by several software vendors who promised you the world. They had a story scripted to perfection about how their software would revolutionize the way business is done. They were referred to as upstarts that had millions in venture capital funding. You purchased and implemented the software from one promising vendor. You were among the visionaries to use innovative technology to solve real business problems, and you received kudos from executive leadership.

Suddenly, you are interrupted, reality hits, and you are back to the present. The tech and dot-com bust has hit the IT industry hard. Venture capital funding has dried up and upstart software vendors seem to be disappearing due to losses and falling stock prices. Software vendors are "disappearing" in several ways: buyouts and mergers, change in corporate focus resulting in discontinuation of product and/or services, and the vendor closing its business.
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With this harsh reality, you are concerned that the vendor you went with is exposed to similar risks. In addition, there are other projects that could be impacted as well. What do you do? What's your plan of action?

Here are a few suggestions:
  • Contact the vendor.
    Contact the highest authorities if you have to. Demand an answer and make sure that they can provide you with enough security related to the viability of the company.
  • Stop or renegotiate payment terms.
    This is tough to pull off, but it's worth a try. Talk to the vendor and renegotiate the terms of the maintenance contract. After all, you are paying about 12 percent to 25 percent of the software list price in maintenance fees. Is it worth it if the company is not going to be around six or 12 months from now?
  • Obtain source code.
    First, check your contract to see if you own the code. If you do, just ask the vendor for it. If you don't, then start negotiating. You need this to gain control of the software while you find a replacement.
  • Recruit people that are knowledgeable about the product.
    Make sure you have staff with adequate product knowledge. If you do not, then either bring in experienced and proficient consultants/contractors or hire them as permanent staff.
  • Find a substitute software package.
    This is a given; however, it is important to find software that will have minimal impact on the current architecture, such as hardware, database platform, etc. Also, ensure that the software can, at a minimum, maintain similar functionality. (See gantthead's Tools section for suggestions.)
  • Stabilize the current environment.
    If you find that the software in question is critical to other projects, freeze them! It is likely that other projects could impact the current environment. Adding unknowns has a potential to cause more problems.
  • Communicate your plan of action to your company's leadership and IT staff.
    Make sure that that your plan for dealing with this situation is crystal clear and go over the plan with executive leadership and with the IT organization.

If you are not in the thick of it yet, the best thing you can do is to be proactive. For the people who are currently combating this problem, hold your head up high, fight it, and make sure you file it under lessons learned.

Tell us about it
Has a vendor shut its doors while you were implementing its software? Did a vendor close up shop right after you began using its tools? If so, drop us a line. We want to hear your story.

 
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