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Vendor risk: The tables have turned

I was speaking to a software vendor last night who recently had a big project go live at one of the UK's largest banks. When the project was first signed, the vendor was quite a small company (though it has since been acquired).

Because of its size, they had to jump through all sorts of hoops to get the deal done, with the bank quite sensibly wanting to check out the vendor's financial strength and balance sheet to make sure they would be around to see the deal through.

Ironically its now the bank that has well publicised balance sheet problems, something that the vendor likes to remind them of occasionally. I guess it's funny as long as their bills are still being paid.

This got me wondering. With business conditions as they are, are vendors - large and small - now doing due diligence on the financial strength of their potential bank customers before they sign a deal?

Thinking back, you wouldn't want to have gone through a lengthy sales cycle to close a new IT deal with Lehmans or Merrill Lynch in August this year.

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