Assess App Vendor Viability with Financial Ratio Analysis

When a company acquires an enterprise application, it usually makes a long-term commitment with the vendor that owns the technology. If the vendor fails, the future support, maintenance, and evolution of the application are compromised. This introduces serious risks to the business operation of the enterprise, especially if the application is considered as mission critical. 

To mitigate the risk described above, IT managers must assess the financial viability of vendors before purchasing an enterprise application. To do so, they can use the financial ratio analysis section of the Small Business Knowledge Base Web site. This resource provides a definition of the most important financial ratios and guidelines to interpret the results of the calculation. IT managers must also get support from the finance department to interpret the vendor's financial figures.