The Credit Crunch and IWMS
I have recieved quite some questions from our readers to what extend vendors of Integrated Workplace Management Systems have been suffering from the Credit Crunch. Although I have already written a post about this subject the questions increasingly deal with the financial status of the vendors themselves.
One of those questions was:
Dear Steven,
I am responsible for a systems evaluation and selection for an Integrated Workplace Management System. After the initial presentations I have shortlisted vendors x, y and z but a colleague of mine indicated that vendor x experiences massive financial problems. What should I do now?
I’m looking forward to your reply.
Best Regards,
Troubled Mind (this is obviously private)
Guidelines for (financial) evaluation
For all you troubled minds out there here are four guidelines that you could use for financial evaluation of the vendor:
- Corporate Age
Although this might seem a bit strange in a financial evaluation actually it is not. The age of the company is a good indication for its capability to handle crises. Since all crises occur periodically companies that have been around for quite some time have experienced more crises than the Credit Crunch of lately. Please remember the massive crisis at the beginning of this century when the Internet Bubble bursted or even further back the crisis in the early nineties.
As a rule of thumb:
Corporate age indicates an organizations capability to adapt itself to changing circumstances and thus the older the company the more likely it will be able to withstand the Credit Crunch.
- Financial Statements
Another method for evaluating the financial stability of a vendor is to request for Financial Statements of the vendor. A good indication here is to what extend the sales rep is willing to hand these financial details over to you. Sales reps tend not to be willing to provide this data when figures are not that good.
As a rule of thumb:
The more willing the sales rep is to provide financial statements the more likely it is that the company is financially profitable (or at least financially healthy).
- Investors
One of the questions you should ask yourself here is to what extend is the company funded and held. The Credit Crunch forces investors to re-evaluate their investment portfolio. IWMS vendors who primarily rely on investors for capital are in trouble now.
As a rule of thumb:
The more depending the vendor is on investors, the more likely the vendor is suffering from the Credit Crunch.
- Demographics / Geographic Location
As a fourth guideline you demographics and geographic location play an important role. Does the vendor under evaluation spread its risks demographically (all verticals, functions) and geographically (Globally)? Or is your vendor depending on a specific vertical (such as government) and geograhical location (only the United States)?
As a rule of thumb:
The more risk both demographically and geographically is spread, the more likely the vendor will be able to withstand the Credit Crunch.
These guidelines should help you in evaluating the financial situation of an IWMS vendor. I am really looking forward to what financial evaluation criteria you would advice.
Yours sincerely,
Steven Hanks.
