Selecting a software vendor: 4 critical considerations

By Michael Slemmer | 18 May 2018

Determining what matters most when choosing a software vendor for your project is like asking what matters most when buying a new car. The answer is likely to be, “it depends.” It depends on whom you ask. It depends on budget, needs, goals and sensibilities. So, where do you begin and what are the most important considerations?

First things first

Before embarking on any project set goals based on strategic initiatives as well as input from both senior management and users. Having specific, articulated goals is the best blueprint for success. Goals will drive priorities, which will help to differentiate “want” from “need,” keep the decision process focused, and ensure the project stays within budget.

Once goals and priorities are established, the top four considerations in the vendor selection process are: functionality, price, customer service/support and vendor background.

Let functionality drive the long list

Start with a wide funnel. Consider the universe of providers based solely on the functionality they offer. Be sure the software solution can do what you want and provide the productivity or other efficiencies you expect. To assess functionality, request a demo, ask the right questions, read client case studies and arrange for a proof of concept, if available, to kick the tires and give the software a test drive.  

While no vendor is likely to meet 100% of your requirements out of the box, if a vendor cannot support at least the basics, they don’t belong on the long list – and certainly not the short list. But don’t immediately shy away from a vendor if they can’t accommodate all of your needs. Take into consideration their willingness to work together to develop missing functionality, interfaces or other custom solutions. Just be certain they have your required functionality in the product plan and can commit to having everything ready prior to implementation.

Winnow down vendors by price

Once you’re confident the vendor can deliver on functionality, price is the next most impactful consideration. Price drives decisions regardless of whether a company is spending $50,000 or $5m on a new system. There is nothing like a strict budget to force you to come to terms with wants vs needs vs the cherry-on-top bells and whistles. 

When comparing price, be wary of budget creep from hidden costs. Factor in up-front, one-time costs as well as ongoing maintenance. Understand how training, bug fixes, upgrades, reports and custom development are handled to arrive at a total cost of ownership. Remember to balance costs against savings from new efficiencies. Remember too that price is a one-time thing, but cost goes on forever. Be sure to factor in all related costs so that a low-price option remains lower over the long-term.

Look under the hood at service

When you finally snag the car you always wanted at a great price, there’s nothing worse than having something go wrong – except discovering that customer service at the dealer is non-existent. Selecting a software provider is no different. As you sift the number of vendors, service and support should be the next consideration. 

To avoid unwanted surprises after the deal is signed, do your homework up front. Speak to references, read industry and consultant reviews, and ask questions. Is support available in your time zone? What is the process for problem resolution and how long does it take? Is the firm responsive? Reliable? Polite? Are the customer service reps not only knowledgeable about the software, but do they have the right domain expertise to understand your business issues?

No one likes to run into problems with software, but some questions and minor glitches are inevitable. It’s crucial to select a vendor with excellent customer service and support. If not, the “perfect” project can quickly turn into a nightmare.

Vet background carefully before committing

Once a deal is signed, that’s where the relationship begins, not ends, so be sure to do a thorough background check as a final step in the vendor review process.

A background check includes assessing the vendor’s financial health, stability, overall reputation, track record and commitment to the product and market. Do they have a history of discontinuing products? Are they an acquisition target? Do they dedicate adequate resources to product development?

Implementing a new system is time consuming, expensive and a long-term commitment for most companies. Vendors that pass the background check are most likely to be around for the long haul and able to meet their obligations now and in the future.

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