Software buying decisions are among the most important decisions affecting internal processes in business today. A good software purchase can lover costs, increase efficiency and help employees become more productive. A bad purchase can affect production and morale, lead to a costly fix and ultimately damage careers.
In all likelihood, your company makes software buying decisions by committee, giving all relevant experts and stakeholders a say. If you are one of the leaders of that committee, though, the spotlight will be on you if the decision comes under question. With that in mind, here are a few things to remember when buying enterprise software.
1. Start With The Basics
The first thing to focus on is functionality. There is no software that will meet 100 percent of your requirements, but you have to get the best that you can out of the purchase. Look at the implementation schedule and the complexity. If the software is too complex, even out of the box, then you have to take a step back and say, “This will take me x man-hours.” Should you give up on complexity and get a little less functionality in order to reduce the cost of ownership? This is sometimes a key question.
Also, be sure to look for other, less obvious costs. Do you have the infrastructure to run the software? Make sure the skill set exists internally or that you have an alternate means of running it. The learning curve that users will go through also is a major factor. Ideally, you don’t have to retrain that much, but, in general, 10 to 20 percent of total implementation time is a good benchmark for training time.
Always get the users to buy in during the very early stages of choosing a software package. IT should not tell people that they’ll use the software whether they like it or not. It is important to proactively work with the eventual users to get their feedback. Ultimately, these are the people who will decide the success or failure of the purchase.
2. Look at Vendor Roadmaps
The next thing to examine is the long-term business prospects of the vendor. Where does the vendor want to take its software? The software may be addressing an industry problem, but business processes change. A tool that you bought to solve your debt problem two years ago may not be enough to solve your current problem because your business has changed.
You want to make sure that the tool has flexibility and that the vendor is looking ahead to where the problems of your industry are going. Good vendors provide constant upgrades so that their tool can grow with their customers. The vendor’s roadmap, in addition to showing foresight into the future of your industry, also should be a good match for where your company is heading. You and your vendor should be growing together, not apart.
Finally, make sure your vendor is stable. If it’s a small company, make sure that they have the right backing and that they really understand the problem. Vendor aggressiveness into their market space is a good indicator. Remember, if the vendor goes out of business, you will not get any support and will have to look for another vendor.
3. Assess The Relationship
Having a good relationship with your vendor is vital to getting the most from your purchase. The vendor has to understand your pain points. Besides the technology and the tools, you have to consider whether or not you can work with the vendor, because a lot of things are done based on relationships. If you’re having problems you can go to the service level agreement and say, “This is what you agreement calls for.” But there are situations where you really need the vendor to help you.
You should be willing to call the vendor and tell them that you have a problem, and the vendor should be willing to solve some of those problems, not for financial gain but because he or she wants to have a happy customer. Those aren’t situations you face every day, but you still should make sure that you have that kind of relationship with your vendor or that the vendor is open to those kinds of relationships. That is something that you don’t want to be unsure of at the pressure-packed moment you’re calling your vendor on the phone when something is going wrong.
When meeting vendors you should be thinking about whether you want to work with them for the next three to five years. A vendor can have the best product in the world and the lowest cost, but if you don’t want to work with the vendor, don’t buy the product.
4. Perform Due Diligence
Always call the vendor’s references. Most of your questions when you call customer references should have to do with ease of doing business. When the reference calls the vendor does their customer support person or sales rep always pick up the phone, or is the call always sent to voice mail? If they are sent to voice mail, how long does it take to hear back?
It’s also worth asking about the commitment of the vendor. If the reference went live on the product overnight, did the vendor’s engineers stay up late to make sure things were done right? Or did they fly out of the door at 5 o’clock? Questions like those can be very telling.
It’s also a good idea to meet with the executive staff of the vendor you’re considering. You should be an important customer to the vendor, and the vendor should demonstrate this. If the vendor doesn’t feel you’re important, the relationship won’t be good. If the vendor thinks your account is important, they will build that relationship. Even when dealing with big companies, it’s good to get an idea of what the vendor thinks of you.
5. Time For The Negotiating Table
Within a couple of meetings, you’ll get a feel for whether the vendor will meet your cost wishes or not. There are a lot of objectives at work at the negotiating table. The main question is where to strike a balance between the needs of both parties so that it’s a win-win situation.
It’s possible to get everything you want at the negotiating table, but then after implementation find that you get poor support because you negotiated the vendor down so hard you’re a hated customer. It’s a delicate balancing act to know where to draw the line and say enough’s enough. Three years ago, vendors were getting everything they wanted, but today the tables have turned.
The process of buying software is never simple, even if done right. There always are speed bumps to make your life a little more interesting. With some prudence and attention to the details listed above, though, your end users and executives alike will thank you down the road.
Ayay Birla is CIO of the Technology Solutions Business Unit of the Solectron Corporation (www.solectron.com), a provider of electronics manufacturing and supply-chan management services.
Veena Gundavelli is president and CEO of the Emagia Corporation (www.emagia.com) a cash flow management software company.
