How to Evaluate a Custom Software Development Company

Why Most Companies Choose the Wrong Software Partner

Choosing a custom software development partner is the highest-value decision a business can make. The right choice will provide you with a powerful tool for growth and will allow you to realize your company’s true potential. The wrong choice will lead to delays, over-budget projects, technical debt and missed opportunities.

Companies often use criteria that are not the best indicators of delivery success, such as:

• Hourly Rates
• Sales Presentations
• Certifications
• Glossy Case Studies

These criteria do not correlate with delivery success.

In this guide, we will explain how to evaluate custom software development companies based on practical, outcome-based criteria that correlate with long-term success, particularly for startups, SaaS providers and growing enterprises.

Step 1: Clarify What You Are Purchasing

Before reviewing vendors, it is important to clarify what you need from the vendor.

Custom software development is much more than “writing code.”It involves:

• Architectural decisions
• Decisions regarding speed and scalability
• Security and compliance planning
• Long-term maintenance
• Prioritization of product strategy.

If you view a software vendor as a commodity, you will receive commodity results.

Step 2: Evaluate Delivery Model as Well as Skills

Why Evaluate Delivery Model?

Two vendors may have similar technical capabilities, yet use completely different delivery models. Therefore, the resulting products could be vastly different.

When evaluating the vendor’s delivery model, ask:

Does the vendor provide dedicated software teams, or are they primarily focused on delivering projects?

How will the vendor handle evolving requirements?

Who will be responsible for ensuring successful delivery?Custom software development companies that are successful take pride in accountability and ownership over the development of a system(s) rather than simply completing assigned tasks.

Step 3: Assess the Technical Strength of Each Vendor Using Specific Questions (and Not Just Buzz Words).

Most vendors have similar tech technology stacks such as:

• React
• Node.js
• Python
• AWS
• Kubernetes

While these “buzzword” technology stacks do indicate that vendors are using popular technologies, they don’t provide much insight into the technical capabilities of each vendor. What matters is:

How did the vendor design its architecture?

How does the vendor handle performance bottlenecks?

How does the vendor manage technical debt over time?

Is the vendor clear when discussing trade-offs?

When evaluating your vendors, it is more important to assess the vendor’s architectural reasonings than it is to evaluate the vendor’s specific technology stack.

Step 4: Perform Case Study Reviews Correctly

Many case studies are examples of vendors’ marketing materials rather than examples of vendor capabilities. Therefore, when reviewing case studies as part of your custom software development vetting process, be on the lookout for the following:

The vendor’s stated problem

Any stated constraints and/or trade-offs

What measurable outcomes (i.e. cost, time, or performance) were realized

Any future implication of the project (in other words, was the project’s impact limited to the launch phase)

Red flag: Any case studies that only focus on the features delivered rather than the outcomes achieved.

Step 5: Determine a Vendor’s Product, Business Knowledge, and Understanding of Your Business

Successful software project teams will understand the context of your business goals.

Questions to ask include:

• How does the vendor translate your business goals into technical decisions?
• Does the vendor challenge your assumptions or does the vendor blindly implement your requirements?
• Is the vendor able to intelligently discuss workflows and user experiences?
• A strong development partner will provide constructive feedback, particularly on decisions that seem incorrect.

Step 6: Evaluate Communication and Transparency

Often, the quality of communication in regards to developing a project is more important to the success of the project than the vendor’s technical skill.

When selecting a vendor, look for:

• Clear risk discussion
• Honest assessment of any uncertainly about a project
• Periodical project demonstrations and updates
• Willingness to communicate bad news in a timely manner
• You should avoid vendors who provide unrealistic timelines or assure perfection.

Step 7: Understand The Engineering Process

Inquire about the Engineering Process used by the Software Development Company:

• Sprint Planning or Backlog Grooming
• Code Review Strategies and Quality Standards
• Testing Strategy (Unit Testing, Integration Testing, Regression Testing)
• The Process for Releasing and Deploying Software.

A Company that specializes in Commerical Software Development should have a Repetitive, Consistent Engineering Process – Not “hero-based” Delivery.

Step 8: Assess Team Stability & Retention of Talent

High Turnover will wipe out Software Development Projects.

• What is the Average Tenure of the Development Staff?
• What Mechanisms are used to Retain Senior Engineers?
• Will the same Team remain throughout the duration of the Development Project?

Frequent Changes in the Development Staff will cause Loss of Knowledge, Delays in Progress, and Inconsistent Quality of the Final Product.

Step 9: Are They Aware of Security & Compliance?

Security is not an Optional Feature.

Determine:

• A Company’s Secure Coding Practices
• Access Control Measures They Will Use and How They Will Handle Data
• The Company’s Experience Dealing with Compliance Issues (SOC 2, HIPAA, GDPR, etc.)
• The Company’s Incident Response Policy

If Security is Considered and Handled as an Afterthought, It is Better to Look for Other Options.

Step 10: Evaluate Pricing Models Carefully

Typical Pricing Models

• Fixed Price
• Labor and Materials
• Dedicated Team Monthly Retainer

A Low Price is Usually Indicative of:

• Entry-Level Development Staff
• Missing Scope
• Change Request Traps

Instead of Asking: “How Inexpensive Is It?”, Inquire About:

• Total Cost of Ownership
• How Is Cost Escalation Managed?
• How Is Productivity Measured?

Step 11: Be Aware of Common Red Flags

Avoid Companies Who:

• Promise Exact Timelines Without a Discovery Phase
• Agree To Everything Without Questioning
• Push Fixed Scope on Complex Products
• Hide Engineers Behind Account Managers
• Do Not Discuss Failures or Lessons Learned

Confidence Without Transparency is a Major RedQuestions that can indicate whether or not a custom software development company is right for you:

Step 12: Formulating the Right Evaluation Questions

When evaluating potential custom software development companies, focus on the following high-signal evaluation questions:

• How do you handle continuously evolving project requirements?
• How do you maintain the balance of providing fast delivery while producing quality code?
• What happens if you miss an expected project deadline?
• How do you determine project success?
• What processes exist after the initial launch of a project?

Responses to these high-signal evaluation questions can say much more about the overall value of the software development company than anything presented in the initial proposal.

Step 13: Evaluate Partners Based on Their Long-Term Fit, Not Rarely Just The Project Fit

Generally speaking, custom software development does not finish. Thus, when evaluating a potential partner, think about:

• Will they continue to support your ability to grow in volume?
• Can they continue to keep the systems developed on a sustainable architecture?
• Do they allocate resources for continuous process improvement?

Excellent software development partners think about development of long-term growth, not simply on a ‘sprint’ basis.

Step 14: Focus on the Process, Not The Promises

It is easy to make great sales pitches when presenting information about a custom software development company. However, the execution of a development company will be much more difficult to achieve.

The largest indicators of the quality of a custom software development partner are:

• A clearly defined and repeatable development process.
• Transparency between the organisation and the client.
• High quality engineering leadership.
• Total accountability for the results produced.

Everything else will be secondary to these key factors.

Final Thoughts: Take Time to Review All Companies That You Are Considering Selecting For Custom Software Development Projects.

As reviewing potential candidates for custom software development projects is about finding a partner, the provider that you work with should be one that has:

• A thorough understanding of your business requirements.
• Acceptance of their responsibility for results in producing the custom software.
• Some sense that the software that they produce will be sustainable for your business.
• Support for your business’s growth.

In deciding on a custom software partner, select the company that has a verified, proven track record of success with the three key indicators listed above.

Often, this type of evaluation on a vendor is focused on their claimed technical capabilities, yet it can be more revealing as to why a vendor has achieved success.

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