In the businesses I have run, that provided custom software of some sort, it has always been best to avoid intermediaries. Intermediaries come in many forms and might call themselves PR agencies, marketing agencies, advertising agencies, web development companies or software development houses. They masquerade as doing the work themselves but pass the custom development to your company.
These organisations have received queries from their clients (or potential clients) wanting to create software. They have taken it on themselves to own the customer and just re-subcontract the work. I have worked on a projects like this and have also received many leads from these kinds of companies. Here are some observations…
- Usually there’s either a disconnect between the person doing the work and the end client or three-way working.
- When there’s a disconnect, the project often suffers due to lack of communication.
- When there’s a disconnect, the person doing the work often can’t mention the end client in their PR and marketing (the intermediary want’s the keep this secret – under NDA). I know at least two small software houses that got caught up in this and ended up having few/no projects to show. One of these development companies had no proof of capability and ended up disbanding due to lack of visible credibility even though they had some successful apps on the App Store.
- Where there’s open three way working, things can get complicated due to too many partners.
- An intermediary usually also needs to be paid and this increases the overall cost.
- Developers usually pre-qualify/do due diligence on potential clients. While it’s possible to do this on the intermediary, it’s the end client that really needs to be assessed.
- Leading on from problems of due diligence, it’s sometimes the case that the developer only gets paid after the end client has paid. If the intermediary is poor at managing the end client and/or poor at collecting payments then the developer can end up waiting a long time.
- The intermediary sometimes wants to mitigate the risk so they try to impose realistic technical, planning or financial demands that are beyond those required by the end client.
- The intermediary expects the developer to contribute a disproportionate amount of free work on intermediary bids/proposals as the work hasn’t yet been won.
- In a few cases I have been in the position where there’s more than one intermediary bidding and I received more than one invitation to quote!
- Some intermediaries, particularly some newer media and PR agencies tend to work under chaotic, naive business processes that unreasonably push resultant problems to their suppliers.
In summary, if you are an end client, make sure you know who will actually be doing the work. If it’s being subcontracted you might lose some valuable communication and costs are likely to be higher than they need to be. If your contractor is subcontracting, at least ensure they are adding significant value.
If you are the end-developer you should question whether you really need this kind of work. However, you should assess each opportunity on a case by case basis as some types of intermediary can become valuable partners.