In this post we will talk about another key component in the software evaluation process - the software vendor. There are 2 main considerations when looking at the vendor: 1) vendor and software viability and 2) vendor direction.

Vendor Viability - The first consideration is fairly straightforward. Is the software vendor financially solvent? Will they be around for the long term? What is the risk and consequence of the vendor going out of business? Nowadays, the real question is not so much - will the software vendor go out of business, but rather - will the software vendor be acquired and if it is acquired, what will become of the software product that you bought?

Software vendor acquisitions are impossible to predict. Who would have thought that JD Edwards would be acquired by PeopleSoft and then that PeopleSoft would be acquired by Oracle? These acquisitions have been happening very frequently over the past few years so you should protect yourself. Look at the financial statements of the company. If they are public, get the latest 10-K, if they are private and you are seriously considering them, ask them for their financial statements with a non-disclosure. Ask them how long they have been in business and understand the genealogy of the software that you are purchasing. Was it developed in-house or acquired? Pay particular attention to how many customers are using the software you are looking to select. The larger the install base, the better your chances for software longevity because the install base equals maintenance revenue and maintenance revenue to a software vendor means continued software life.

Vendor Direction - The other main criteria you need to consider when looking at the software vendor is the strategic direction of the vendor. You want to purchase from a software vendor that is going to be developing new functionality that is important to you as an organization. You will be paying a lot of money in maintenance fees over the years and you want that money to go to development of technology and functionality that will be helpful for your organization. This means that sometimes small niche vendors that focus on your industry may be a better solution for you than some of the larger more general software vendors like Sage, Oracle, Microsoft, etc.

The main idea is to select a software solution from a vendor that will take you where you want to go for the long term. You are not just buying a product off the shelf to install and then forget about. You are buying a relationship with a software vendor for the next 7-12 years. Make sure they are a good match!

Posted by: Spencer Arnesen

I would like to share a checklist of sorts with anyone who is currently selecting new software. I call it the “eight decision criteria” checklist and would encourage you to consider each of these criteria as a way to organize the information you have gathered during the evaluation of your software options and to help you confirm the final decision you will ultimately be making. These 8 criteria include: 1) Software Functionality, 2) Software Technology, 3) Software Vendor, 4) Implementation Vendor, 5) Training, Support & Maintenance, 6) Project Timing, 7) Organizational Compatibility, and 8) Total Cost of Ownership.

Over the coming weeks, we will examine each of these areas in this blog to provide additional information as you move through the software selection process.

Software Functionality

One of the most important decision points in the software selection process is the software’s functional fit to your requirements. If the software does not fit your functional requirements, it is a complete waste of money! The following are some key points to consider as you evaluate software functionality:

• Focus on Your Most Important Requirements – Make sure that you focus on the most important requirements – what we at SoftResources call Key Differentiators. Some organizations have a tendency to create a very long requirements document that makes it difficult to focus on the criteria that will make the most difference to your organization. Make sure you understand what your critical requirements are and then you can make the decision based on those needs.
• Ask the Second Question – As you review your software options you should be considering how well each application supports your organization’s requirements. Too many times a software vendor will say “yes” to a requirement. But what does “yes” really mean? It could mean that the functionality is currently available, or it could mean that it is in the next release, or that it could be customized to fit that requirement. Make sure that you ask the second question and understand not only “if” the software can handle your needs, but “how” it can do what you need it to do!
• Consider Niche Software Solutions - Make sure that you consider niche software solutions developed specifically for your industry as well as general software packages that are implemented in many industries. Every industry has unique requirements. Some of the niche software solutions offer superior capabilities for a particular industry. That is why many of the more general ERP software vendors have developed industry specific focused solutions so they can more productively compete in a particular industry.
• Future Modules - Consider the modules you may implement in the future. Even if you don’t actually buy and implement those modules today, you can reduce work in the future (and save money) by having the option to implement add-on modules later. You can also take advantage of your contract negotiation power before you sign the contract to lock in favorable pricing.
• Don’t Overbuy Software - Many companies like to purchase systems that have all of the bells and whistles. But if you select a system that is too complex for your situation, you will often find that you never even use all of the capabilities of the system. To make matters worse, you will have likely spent more money on the software than you needed and end up with a system that is overly complex for your situation. This causes users to work outside the system as they develop spreadsheet workarounds which defeats the whole purpose of an integrated solution in the first place.

As you evaluate the functionality of a software solution, you should consider asking the following questions: 1) Does the software offer the functionality I require? 2) What workarounds, customizations, or modifications will be required? 3) What functional areas seem to be a perfect fit, 4) What modules can I lock in for future use? 5) Is the software usable or overly complex for my needs?

We will discuss technology issues to consider in our next post!

Posted By: Spencer Arnesen

Most people have heard the sage advice given by Benjamin Franklin more than 220 years ago, “in this world nothing is certain but death and taxes?” This statement is still applicable today, but I would like to add the phrase, “and new software.” At some point your current software will need to be replaced. But when is it right for your organization to move to a new system? After working with hundreds of organizations through the software selection process, we have found four main reasons that companies select and implement software.

• Growth - Companies are constantly growing and evolving, but older software systems may become inflexible and constrictive. A key indicator the software is limiting your growth is if the users have developed many work arounds and sophisticated spreadsheets. So, take a walk around your office and see how much work is done in Excel spreadsheets instead of your business software. That will be a good indicator that it might be time for a change.
• Technology - Take a look at how your organization is taking advantage of e-commerce, the internet, social networking, and other technologies to advance your business. If your systems do not allow you to take strategic advantage of the latest technologies, a new system may be warranted.
• Software Vendor - You pay annual maintenance or a monthly hosting fee (for a Software as a Service or SaaS solution) so the software vendor should continually update the software and add features that you are interested in. Sometimes the software vendor shifts their focus (especially after an acquisition). Make sure that your software solution is being actively sold by the software vendor or sooner or later, you will need to move to a new system as development of your software solution gradually slows over time.
• Reporting - One of the biggest reasons we see organizations make a move to select a new system is reporting. Older systems contain information that cannot be accessed without significant time, energy, and effort. One of the main reasons you put information into the system is to get good, user friendly reports to make timely business decisions.

While these are not the only reasons companies go through a software selection process, we have found that at least one of these drivers are factors in almost every organization’s decision to select and implement a new system.

Posted By: Spencer Arnesen

We have noticed that activity in the software market has increased significantly the past few months. That is a good thing because it means that the recession is ending. The bad news is that the great software deals that were available last year, may not be available now as the software vendors get busier. This also means that you need to manage the software vendors that you are considering in your software selection process.

You might ask - Why do I need to manage the software vendors? Aren't they the ones trying to sell their software to me? The short answer is yes - they are trying to sell their software to you, but now that they are busier, they can afford to choose the opportunities they pursue. Couple that with the fact that they laid off many of their salespeople during the downturn which means they have fewer resources to go after sales. In fact, a company recently came to us and said that a software vendor declined to participate in their software demos even after they had gone through the process to get on their short list of 3 finalist solutions! 

Here are some tips to keep in mind to make sure that your vendor options remain open to you:

• Make sure the vendors understand that you have a level playing field and you do not favor one vendor over another. Software vendors have no time to be "cannon fodder" and if they feel they do not have a good shot, they will pull out of the process.
• Maintain good communication with the software vendors throughout the selection process.
• Move expeditiously through the selection process.
• Provide the information the vendor needs to determine if they are a good fit for your organization.
• Understand internal software vendor pressure.
• Treat vendors with respect as they will be your partner for at least the next 5-10 years.
• Be honest and tell them why they were selected or eliminated - especially when you get down to the final decision.

The software evaluation process can be very expensive for the software vendors. The vendors expect to pay between $10K and $25K for mid-market opportunities while larger deals may cost $50K - $100K just for the sales effort.

We are not saying that you should bend over backwards for the software vendors, we are just suggesting that you treat software vendors with respect and a level playing field. This will allow you to have a successful software evaluation process with many software vendor options to consider.

Posted by: Spencer Arnesen

The use of a formalized Request for Proposal (RFP) document as a means to gather knowledge and evaluate software providers is one that has been in practice for years. Used correctly, it can be an efficient and effective way to encourage vendors to respond and make it easier for your project team to evaluate. Used incorrectly, your RFP will become a "Request for Punishment!"

Here are a few recommendations to help streamline your RFP process! 

• Make it easy for vendors or service providers to read and understand. Clearly define project scope, your current environment, and your desired environment and objectives including the type of vendor you are interested in or are not interested in.
• Use a structured proposal format. Tell vendors how to successfully respond.
• Provide information about your company, the selection timeline, and your evaluation process. Also include budgetary information for the project.
• Keep requirements list concise – focus on filtering needs to key selection criteria.
• Provide a template in electronic format for vendor responses to your functional and technical requirements so you can craft a side-by-side vendor comparison.
• Create a focused list of vendors to issue the RFP to. This targeted approach helps with responsiveness.
• Invite vendors to list out exceptions to the RFP. Provide a place in the proposal response format to capture this information.
• Provide the right balance for vendors, e.g. consider the amount of work for the vendor to respond to the RFP versus the total value of the project to the vendor and craft the RFP accordingly.
• If using a consultant, focus on unbiased process and approach, not consultants whose primary revenue stream are implementation services. This will help ensure objectivity in their recommendations.

By keeping these points in mind, you will craft a better RFP and garner responsiveness in any competitive market, regardless of economic times.

Posted by: Pamela Ettien