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Why Does the Procurement of Individual Software Need New Criteria for Supplier Qualification?

Volatile product specifications in procurement require that code architecture remains future-proof. New acceptance criteria and quality metrics are needed.


Digitalization leads to volatile product specifications in purchasing. Code quality and architecture must remain future-proof. New acceptance criteria and quality metrics are needed.

The omnipresent trend toward digitalization stems from the desire for intelligent automation of processes and services. Intelligence in this sense is the ability to independently adapt these processes and services through the use of suitable technologies. The backbone of this capability is always software that processes this information and process data (such as in IoT applications) and derives and outputs corresponding change impulses using suitable algorithms.

The trend toward large-scale digitalization means that many companies have to deal intensively with the topic of software development. Even if one relies on building up one's own software engineering competence, the dynamics of digitalization are so high that often additional specialized suppliers must be used for software development. Due to the special characteristics of software, with regard to the specification of its properties as well as with regard to acceptance, this is a particular challenge for a procurement department and the stakeholders involved.

When procuring software developed according to your own specifications, the following aspects must be taken into account:

  • Product specifications can, must and will change in the course of the development period. In the course of this, the initially clear demarcations of responsibility between supplier and customer can also become increasingly blurred.

  • This means that any proprietary software has a volatile character and must be constantly developed further. The code base and the supplier relationship must be designed with this in mind.

  • It is difficult for the client to determine whether the software development is on schedule without access to the internals of the supplier's development (including the code).

  • Whether the quality and architecture is sustainable is generally difficult to determine even with subject matter expertise without appropriate tools.

  • There are special software-based tools such as DETANGLE® that enable a minimally invasive analysis of these complex issues and provide the necessary insights and answers.

This in turn gives rise to further questions:

  • How do you ensure that a supplier adapts its software to future requirements over many years and with normal effort? This is not only a technical challenge, but also one in contract design.

  • What are the acceptance criteria and what metrics are used to estimate effort so that further developments do not become a quality and cost trap? And does a supplier accept these criteria and metrics as part of the contract?

  • What consequences can and should be drawn in the case of problematic performance?

Der Einkauf benötigt bei Software-Dienstleistern neue ganzheitliche Konzepte für den gesamten Lieferanten-LifecycleFigure 1: Individual software is a fluid product with volatile requirements. Procurement needs new holistic concepts for the entire supplier lifecycle for software service providers

Figure 1 shows an example of how internal stakeholders (e.g. development, procurement, and quality management) can work together with an external software analysis specialist in the procurement process and throughout the entire supplier life cycle when awarding contracts for software services.

We strongly recommend that procurement departments equip themselves with software analysis expertise, at least in companies with a clear digitalization roadmap. It cannot be ruled out that a promising digitalization strategy will fail solely due to the procurement of important software developments from an unsuitable service provider.

In our next blog (Which Metrics Best Describe the Quality of Software Service Providers?), we will highlight some of the technological and organizational criteria that provide greater assurance when procuring software developed to specification, so that you actually get from your supplier what you intended when you placed the order.

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