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Phase 5 – Software Decision

Now that you have narrowed your software vendor options down to 1 or 2 vendors, it is time to do your final due diligence and gather the additional information you need to make a final decision. We have found there are six key software evaluation criteria that drive an organization’s software decision.

Software Decision Driver #1 – Functionality

Functionality is the most important criteria to evaluate as you consider your software options. We recommend that you review the Differentiating Criteria again and re-focus your decision on those key requirements.

Software Decision Driver #2 – Technology

The technology that the software vendor uses must be a match for your situation (or future direction) and the expertise of the IT staff that you have in-house. Remember that you should have a forward looking technology that has momentum for the future.

Software Decision Driver #3 – Software Vendor

You are not just buying a static software solution, you are actually buying a relationship with the software vendor you select who will continue to support and enhance the system for your benefit. You will be paying annual maintenance or an annual license fee for Cloud solutions to that vendor so they will continue to develop, enhance, and improve the product. You should know the direction that the software vendor is going – Does it fit your vision? Will they be making new enhancements that you are interested in?

There have also been a lot of mergers and acquisitions in the software market. Is your vendor a strong vendor that even if they get acquired, there is enough momentum that the acquiring vendor will maintain the software?

Software Decision Driver #4 – Implementation Vendor/VAR

Getting the right implementation vendor is just as critical as finding the right functional product. They will be your partners in implementing the system. They need to have experience with the software product that you are implementing and the industry that you are in. In fact, we have eliminated software solutions for a client when we found that there was not a qualified implementation partner for that software. (See evaluating software implementation partners)

Many of the mid-market software solutions such as Microsoft, and Sage sell exclusively through a Value Added Reseller (VAR) or partner channel. This means that you need to select the VAR before you actually evaluate the software product. If you are a tier 1 or tier 2 (see software market overview) organization you will select the implementation partner after selection of the software vendor.

Software Decision Driver #5 – Maintenance & Support

You can expect to either pay between 18-25% of the then current license cost for maintenance or an annual license fee for Cloud solutions. This entitles you to upgrades and some level of support. Make sure that this investment you will be making on an annual basis is appropriate. Reference checks are a great way to make sure that the vendor’s current customers are satisfied with the development and support of the software.

Software Decision Driver #6 – Total Cost of Ownership

Consider the total cost of ownership of the software solution and not just the big discount that the vendor may be offering for the up-front license cost. There are 3 main components of out-of-pocket cost that should be considered. The software license (or Service Level Agreement for Cloud solutions), software maintenance, and implementation services. You should look at the cost for the next 5-7 years in order to understand the long term cost of the solution. This analysis is especially important for Cloud solutions as the annual cost over multiple years can add up.

How to Get the Information You Need to Make the Final Software Decision

There are many different ways to get the information you need for the 6 key decision drivers. In fact, every company we have worked with approaches this phase differently. Here are some of the common tasks that may be helpful to you.

Software Decision Task #1 – Follow Up Demos

Follow up demos allow you to take a more detailed look at functionality and capabilities of certain aspects of the software. The initial general software demo should have given you a good overview of the capabilities of the system. There may be certain groups or areas of functionality that you will want the vendor to show you. This may be on-site or via internet demos, and should be focused only on areas of functionality critical to the decision.

Software Decision Task #2 – User Reference Visits/Calls

User reference calls are very important part of the evaluation process. At a minimum, you should talk to 3 similar organizations that implemented the software you are considering. Even better, if you can actually do an on-site visit, you will learn much more about the implementation, the challenges they faced during the implementation process, and their take on the software vendor. You will be surprised how honest the references will be. This is one of the most important tasks of the software evaluation process.

Software Decision Task #3 – Headquarters Visits

HQ visits are a great way to meet the vendor’s executive team, assess their product development and product support, and get a general feel for the vendor’s operation and culture fit. Keep in mind that the willingness of the vendor to provide an HQ visit will depend on the size of the vendor, the size of your organization, and the vendor’s interest in winning your business. If the software is being sold through a Value Added Reseller (VAR) channel, you may want to visit the VAR offices.

Software Decision Task #4 – Additional Due Diligence

This includes additional due diligence such as follow up questions, additional discussion with the vendor, analysis of the vendor’s financial strength, etc.

Software Decision Task #5 – Initial Proposal Review

After the demos, the vendor should have a better idea of your requirements to create an initial proposal that is much more detailed than the original estimates they gave you. This will need to be reviewed and discussed. Pay particular attention to the implementation team that will be assigned to the project and their experience.

Software Decision Task #6 – Making the Final Decision

After you have gathered and summarized the information you need for your decision, you should meet with the project team, review the materials, discuss the strengths and weaknesses of the vendors and make a decision. When we help our clients through this process, we list out the key areas of consideration and rank the vendors together as a group. This is a great way to build consensus and we find it amazing how this process brings people together on the decision.

As we mentioned above, every organization has a different method for gathering the information they need to make a final decision. Consider the tasks that will be helpful for your organization.

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