So, you’re buying business software? Congrats! Welcome to the world of defining hundreds (if not thousands) of requirements and combing through software selection tips left and right. The process also consists of interacting with a dozen or more people needing a say in your selection, a sea of regulatory and financial concerns, a dumbfounding array of software review/evaluation sites, very persistent vendor representatives and more. A walk in the park, right?

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Sadly, it’s not – especially if you want to select the proper software the first time. And if you’re replacing software, you want to get it right this time.

To better prepare you for this serious undertaking, we’ve outlined nine essential tips that SelectHub calls Lean Selection. The endgame of this methodology is to pick from two or three solutions that best align with your company’s needs. Study these software selection tips and check out our software selection platform to help you make use of these best practices.

1. Establish

First, a voice of reason and wisdom from technology author and expert Louis Columbus.

“It’s best to approach the process of selecting a new software application for your business like you would consider adding a new member to your senior management team. Before hiring a new C-level executive, VP or director, the focus is on how well the candidates can contribute and strengthen your company’s ability to reach its goals. There’s also the issues of cultural fit, ability to collaborate, proven track record in the industry and how quickly they can get up to speed and become a core part of your business.

“The same is true when selecting any new software application. The best selection processes are anchored in specific business goals, defining exactly what the expected contribution from the application is. Selection processes that are the most successful also evaluate how effective a proposed application is at fitting into the workflows and approaches your company does business today. Great software will not force you to change how you do business; it will have the flexibility of changing to match how you and your company work.

“Third, make sure to speak with customer references and if the application is going to be a major, or capital expense, visit references too. Just as you’d be thorough in evaluating a new senior executive, the same holds true for any enterprise software application. Finally and most important, both the new app and new member of senior management needs an executive champion, someone who can help to get roadblocks removed and provide guidance. The most software selections have all these attributes and a strong senior management champion working to make the implementation and use a success.”

There’s no sugarcoating it: your current solution or practices just aren’t cutting it anymore. You need new software, but you’re not sure how to begin the process.

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Define Your Project Scope

When beginning this software quest, there are several factors to ponder: the features and how they align with your company’s business goals. Ask the following questions and create a project charter, an in-depth to-do list:

• Why do you need a new solution?
• What’s wrong with your current operations?
• What objectives do you want to accomplish with this new software?
• Who are your primary stakeholders and collaborators?
• What’s your ideal timeline?

Cost/Benefit Analysis

Performing a cost/benefit analysis on a project, especially a software procurement project, will help you know the actual impact on the enterprise.

Author, top social CIO / CDO and digital transformation influencer Isaac Sacolick offers an extension on this idea:

“Can a select group of pilot users become productive with the software without training or reading manuals? The UX should enable people to get started and be successful right away.”

Risk Assessment Analysis

Conducting a risk assessment analysis is a responsible part of any good software move. Take a categorical approach to figure out how risk might apply to buying and implementing new technologies and assess related issues like insurance, industry compliance, and more.

Establish a Budget

Look at how much each aspect might cost (e.g., licensing, implementation fees, training, and change management) and what funds are available to pursue procurement. Knowing what you can afford ahead of time will ease many future conversations. Decide on what your expected ROI would be in both percentage improvement and time to ROI. Figuring out return on investment is a concrete way to look at the financial impact of the new service over time. Estimate what you expect for an ROI and how soon you’ll get there.

Set a Timeline and Milestones

Creating a concrete timeline and setting specific milestones within your project charter helps everything go more smoothly. These tools will also help you plan how new software will work and its impact on the business during a specific period. Timelines and milestones also help ensure that things are going as planned and are not dragging out.

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2. Collaborate

Create a Software Selection Committee

Nowadays, companies often use inside people dubbed “champions” to interact with vendors and manage the sale. However, a champion cannot go out and choose the right program alone.

We suggest you invest in a software selection team. These teams consist of the following members:

• Project Manager: Typically, an IT person, a CFO, manager, COO or someone else who assembles this team and guarantees everyone on this committee speaks their piece in what they need in a new ERP.
• Department Leaders: Gather the leaders of various departments within your company such as accounting, HR, customer relationship management (CRM), marketing and more.
• Power Users: These users are people who are currently implementing the type of software you’re considering.
• Internal Stakeholders: Typically investors, employees, patrons and vendors.
• External Stakeholders: Usually consists of customers, service providers, accountants, public groups, bankers and more.
• A Representative from the Final Decision-Makers Team: The CEO, COO, CFO of someone else in the executive board who will sign off and write the check for the solution. We strongly encourage you to have a lawyer or legal team review a vendor’s contract to get a better understanding of it or determine if it’s fishy.

HR tech selection consultant Jeremy Ames believes having an ideal selection process will ensure you have a strong program that will adhere to your company’s practices for a long time.

“The best selection processes are anchored in specific business goals, defining exactly what the expected contribution from the application is. Stretch into the future. Software development, and specifically the digitalization of the workplace, where I spend most of my time, is progressing at never-seen-before rates. Therefore, you can’t be looking for yesterday’s systems. You can’t even be looking for today’s systems only. You must be looking for systems that are well-rooted in today but with already afoot extended confidently into the future.”

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Research

Review standard feature sets for specific categories. Get insight from department leaders to assess which features are necessary. Contrast different vendor options and look carefully at what each one does and doesn’t do. You can use a handy dandy software selection platform to compare the offerings and evaluate their differences to find the best fit.

Read buyer’s guides and updated market reports on the software category you’re evaluating. Look for particular criteria that have helped other businesses make selections. Understand what’s important about the software and how the best companies put the right features into their platforms.

A buyer’s guide is like a summary: it presents the main points for you and helps you to imagine how a product might help or what might go wrong in implementation. For example, review our manufacturing product directory and buyer’s guide for the latest features, benefits, trends and selection tips.

Find out who leads the market. Look at leaderboards and analyst reports for the most popular products in the software category under assessment. Check out who’s highly rated by a mix of third-party sites (e.g., Gartner, Forrester) to guide your decisions about getting the right kinds of tools in place. Look at review scores and community ratings to determine how popular a particular platform is in its market.

Find out who best fits your specific requirements. Every product has a slightly different set of uses. Figure out which companies’ products align with your particular needs — for example, due to your business size, your sales strategy, and any online pipelines you may use for customer conversion and other purposes.

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3. Define

Now, onto arguably the most critical part of the process: gathering software requirements.

Chris Doig of Wayferry means business when it comes to garnering software requirements. He said:

“Developing the requirements specification is the most time-consuming part of the software selection process. However, a gap analysis based on a comprehensive requirements specification is essential to selecting the software that will return the greatest value to the organization. Many people don’t realize that while users know their pain points only too well, they have little idea of other requirements. One of the best ways to flesh out requirements is by examining the features of multiple software products that could be purchased and then rewriting those features as requirements.”

On-Premise or Cloud?

Know the difference between on-premise and cloud-based. Research what cloud technology can do for your business by untethering server workloads from your in-house business space and delivering functionality over the web.

Mobility

Decide how critical mobile access is to you. Mobile is not the future. It’s now. Look at what types of information and functionalities will improve business processes when you can send them to any device anywhere in the field.

Implications

Talk to IT about the implications of adding new technology to your stack. Address any potential challenges and costs of getting new platforms and tools into your IT architecture, including data migration issues, security challenges and more. Bring this information to stakeholders as necessary so everyone’s on the same page.

Customizations

Figure out whether you will have to tweak vendor solutions with customizations to make them relevant to your business and whether that might affect other variables, such as increased workloads, learning curves and costs.

Integrate with Existing Platforms

Inventory your existing related technologies to see what you may need to connect. Application programming interfaces (APIs) are helping businesses to connect different types of software into a seamless architecture. Figuring out whether you can get in-house staff or consultants to link vendor software with APIs will help you decide how to implement new services. Many business-level solutions also offer native integrations to other software categories, so find out if those options exist too.

Security

Take a closer look at security. Let’s not forget recent critical data breaches: Target, Sony and more. What security issues need to be understood, e.g., database connectivity, private customer information storage, etc.? Where are the sensitive sets of data that need to be preserved from unauthorized access to avoid serious risk — and, just as importantly, when can those sets of data be hashed, encrypted, or substituted to make their transit safe?

Address segmented security, which often starts with endpoint security. How will security be handled at the ultimate destination point: display screens on laptops or, more commonly, mobile devices? And how will the enterprise manage the risks of endpoint ports such as USB ports? Along with endpoint security, take a look at your business network and understand how data travels through various domains to monitor and improve protection for each one.

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The Development Process

Ask about the development process. Have software products been thoroughly debugged or endured beta testing? Are they still in beta? In which case have you conducted appropriate unit testing or more extensive tests? Knowing more about product testing before release will give you additional confidence that you are getting products that will work well for you.

Understand Service Level Agreements (SLA)

Know the vendor’s SLAs. It’s essential to know the scope of services, including uptime/downtime. SLAs should have concrete downtime estimates attached. For example, a 99% uptime and 1% downtime means the service can be unavailable, according to the contract, for approximately 3.5 full 24-hour periods throughout a year. Talk to vendors about when downtime will occur to handle it.

Compliances

Tune in to industry compliance. If you’re in a business even slightly related to healthcare, get serious about understanding HIPAA compliance for a new software set. If you’re in financial sectors where Basel, Sarbanes-Oxley or other standards apply, make sure the software accommodates them in terms of the entire data transit process. Go back to consultants and find the best ways to address any outstanding compliance issues.

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Documentation

Make a checklist of all the things you need to ponder as you decide on the right solution. You can use a spreadsheet, read some articles or, your best bet, use a requirements template and tool to manage your list.

Make a list of all the pains you think the software can solve. Identify any problems in core operations that new software could resolve. Knowing your pains is a primary and fundamental part of learning how to proceed with any change to a business.

Define requirements/criteria. Make any informal lists or punch lists into a formal set of requirements that you can reference further down the line.

Prepare your RFI/RFP. Do the research and delegate someone to write up a formal RFP to send to companies. Some requirements-gathering tools can also turn your requirements document into a formal request for proposal (RFP) document.

Have all stakeholders rank and prioritize the requirements you’ve defined. After identifying these requirements, it’s crucial to organize them and understand the priorities throughout the negotiation process.

Make a list of the metrics that the software aims to improve. Look at what you commonly benchmark, or what you might benchmark, to establish how well the business is doing and where it is excelling.

If you’re changing software, make a list of reasons why. Creating a pros-and-cons list is a simple way to look at the benefits and disadvantages of new vendor services. Even the high-tech companies in Silicon Valley use these processes to brainstorm why they are doing something. Like it’s part of agile software development, it should also be part of agile software procurement.

Compile a list of all the possible vendors. Use landscape graphics and product directories to get an idea of what’s out there. Make a list of everyone who’s selling the specific type of software you need so that you can have access to all of the choices on the market to make a decision.

Communication

Get all stakeholders together that need a say in the software selection. Include all parties at every stage of the process. You may use diverse methods, from surveys to board meetings or even eliciting written feedback from several people at any step in the process. Keep it organized, though, so you have an audit trail for who made decisions and why.

Distribute your RFP. In some cases, you may have to advertise an RFP or take other steps for industry compliance. Make sure the RFP gets out to the target audience that you’re trying to contact.

Ask for feedback from your peers/colleagues who’ve selected software in the category you’re evaluating and the experiences and obstacles they faced. These discussions will help you figure out how to leverage these technologies and some potential arising challenges. This feedback lets you avoid some common barriers that keep businesses from enjoying the best return on new software acquisitions. Bring in a selection or implementation consultant if needed.

When decisions go beyond the ability of staff, having a consultant on hand can be extremely valuable. Ideally, you could have these individuals on call and ask them questions on a case-by-case basis. Write down sets of questions to ask these consultants and determine the scope of their contract — how involved will they be in your purchase and implementation process?

Requirement Answers for Vendors

Vendors can come up with one of seven responses when asking them about specific features, which can affect requirement scores:

• The element is supported out of the box as is — 100%
• The element exists via configuration through available tools, wizards, settings or the equivalent within the accessory(ies) identified at no additional costs — 90% (Here, you want to ask the vendor to provide you with additional information to explain this response)
• The element has out-of-the-box availability, but you’ll need another feature(s) and pay an additional fee — 75% (Ask the vendor to explain this answer more thoroughly)
• The element exists but requires third-party source code customizations, including the pre-existing integration, at an additional cost — 50% (Here, you’d also want to ask for more information from the vendor to explain this answer)
• The element needs integration at an additional cost via SDK/API and more — 25% (You’ll also want more additional information from the vendor to understand this answer)
• The element is identified in existing documentation and is on the roadmap to development within three to six months or sooner — 10%
• The element is not supported — 0%

Eliminate vendors who don’t offer your most critical requirements. Look at your list of needs and discard vendor options that don’t have the core functionality that you need. Almost as important as finding the right vendor, trimming your list of vendors that aren’t good fits saves you significant time.

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4. Distribute

After careful evaluation of other vendors, you’ll want to shortlist them to your top five potential choices and consider assessing your current software or methodologies of gathering and allocating information throughout your company.

Shortlisting

Shortlist your favorites. Narrow down your potential lists to selections that you think will make the most sense for your business needs. Your shortlist will guide you as you continue through the process. You’ll have to do less work because you’re no longer just paging through the market but working off of a list of precisely screened vendors that have a better chance of offering you best-fit products and services.

Current System Check

Evaluating your current solution or protocols is vital. This review will determine how you choose to move forward in your selection journey.

Leverage SelectHub’s RFx system — or an RFP, a request for information (RFI), a requisition for quotation (RFQ) or a combination of all three — which consists of a hierarchical functional and technical requirements set that polls suppliers, manages the selection process, analyzes outcomes and generates in-depth reports. This matrix will help you determine one of three possible conclusions:

• The system is as good as or better than those evaluated, and we’re keeping it.
• The system is slightly lacking in one or more areas, but a new purchase is not practical. Let’s consider exploring reimplementation plans or adding additional specialized modules.
• The system is lacking in one or more areas and needs replacement. It does not align with our businesses’ objectives.

5. Justify

You’re justifying your decision from the previous step. You’re diving into why these vendors are your potential choices or why you’re sticking with your current software with your selection committee and executives. Here, everyone may discuss their reasoning and deliberate on how they want to move forward.

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6. Prove

If you’re on this step, you’ve decided to push ahead with your shortlist of vendors, or you’re considering modifying your existing platform. You want vendors to prove that their software can perform your request requirements through structured demos, uses cases or proof of concepts (POCs).

Demos

Demos enable you to see simple processes. For example, if you’re interested in an accounting solution, you may ask vendors to show you how to do bank reconciliations. You should come up with a demonstration script that highlights the modules you want to see in action. As you see these demos, make scorecards and compare how one set of features compares to other vendors’ features in your shortlist.

Many companies have free trials available for their software. Some even have interactive demos online. Take the time to test drive these products and learn more about what each one does and how to use the particular interface. These tests will be necessary later on in the process. Perhaps save this step for your shorter shortlist as it can be time-consuming, especially going through a full-fledged trial.

Use Cases

Use cases focus on particular tasks and operations rather than just capabilities. You could ask how to perform month-end reporting, inventory management or reviewing the status of shopfloor machinery. You can also structure scripts and score them accordingly on scorecards.

POCs

POCs surpass demos and use cases because they’re simulations. Vendors showcase a physical setup of the solution based on client data to show how the solution operates in real-life scenarios like a simulation. The downside of POCs is that they’re more costly and time-consuming. SelectHub recommends you do POCs for one or two solutions and stick to demos and use cases.

More Research Tactics

Review case studies of your favorite vendors. In-depth case studies can give you insight into how other companies use these products. Case studies of companies closely related to yours (e.g., industry) are most appropriate, as they will tell you better how the vendor will be able to meet your needs as well.

Read software reviews of the products you’ve shortlisted. People rely on them so, but perhaps to a fault. It’s essential to read what customers have said about specific products, but it shouldn’t be your primary (or only) reference for selecting software. While it is crucial to drill down and do a detailed reading on the particular products you’ve put together, don’t neglect the other steps we’re outlining here.

Request references for your shortlist. Reach out to these companies and ask them if they can provide references that show more about their track records and histories of what they have provided to customers in the past. This duty is just one way of doing the “due diligence” that ensures you select the best vendor.

Research your shortlist. Read non-customer reviews/news, e.g., financial performance, corporate information, etc., to guarantee you’ll be doing business with a viable and trustworthy organization. Vetting the company is another critical step in that chain of finding the best vendors, not just someone who’s willing to sell you software. Just like in the hiring process, securing vendors should mean doing the background work to make sure you’ll be in good hands later on.

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7. Rank

It’s time to rank the vendors on your shortlist. Remember that the endgame of Lean Selection is narrowing down your selection to the top two or three solutions that best align with your organization’s objectives. Based on your scorecards, whichever applications had the highest total scores. Also, consider the total cost of ownership (TCO), fit (the RFx score along with scores from demos and other information from step six) or both.

8. Negotiate

Ok, you have your top two or three solutions, and you’re ready to decide.

If you so choose, you can ask SelectHub to identify unclarities, discrepancies, conflicts and more within the vendor’s proposal for a contract to help you better understand the terms and conditions. SelectHub will consider timing, past experiences and other factors from this vendor that best align with you and your company’s best interests. You can rely on your standalone research and resources. As a rule of thumb, understand that SelectHub can only give you an objective business review of a vendor. If a contract sounds fishy or skeptical, consider seeking a lawyer or law firm for examination.

Understand Pricing

Talk to the vendor at length about what pricing options are available.

• Is subscription pricing available, which will allow you to benefit from “on-demand” services and add or subtract servicers month after month as needed?
• Are there multiple pricing options, for example, a “Basic” package or a “Gold” or “Premium” one?
• What are the payment options?
• What’s more convenient for your budget and schedule?

With the advent of new cloud and web-delivered services, pricing structures and packages are more important than ever, and vendors should present attractive options.

Start thinking about how to negotiate contract details. Start to look at sample SLAs or other contract documents to figure out what sort of costs you’d be looking at and how you can influence vendors to provide products and services in a way that’s more to your advantage.

Final Deliberation

After your review and talking to vendors, you’ll have a final deliberation that will end in two ways:

• The terms are acceptable. You may ask to tweak a few things, or you may feel comfortable about everything, and you’re ready to sign.
• These terms are not acceptable. You would instead review the other ranked solutions on your list. You can ask SelectHub to do another analysis, but keep in mind that this costs extra.

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9. Sign

If you’ve reached this step, it means that you’ve chosen your software, and you’re ready to sign.

Make the agreement final with the selected vendor. Verify with all stakeholders about this change and start fostering enthusiasm about the products and services to get a better chance of successful implementation and adoption.

Cultivate connections with the vendor while doing even more research about the new products and services included in the enterprise architecture. Stay engaged as the beginning steps occur — as people get trained, as functionality gets added to the existing systems, and as these changes start to affect internal operations. Generally, a (great) vendor becomes an ongoing proactive partner with you, but your organization should make the same commitment.

Implementation

Understand the implementation requirements of your shortlisted solutions. Ask in-house IT staff or others about precisely how you’re going to blend the new product into your existing architecture. The implementation phase is where all of your research on APIs and other tools becomes concrete and pragmatic. You may face problems related to manual data entry or a lack of connection between platforms that makes some types of combinations impractical.

Create a change management plan. You’re going to encounter change, so it makes sense to have a change management plan in place, which covers the massive process of training people in new technology and other aspects, such as changing how people access data and additional business process revisions. If you don’t document these procedures, it could disrupt business as usual over a long span.

Make a list of the people who will use the program. One way to make training more precise is to figure out that list of ‘power users’ and how they would need to be prepared to use a new tool accurately and efficiently. When you have that list of key people, you can also start looking at identity, access management and other protocols to fit a software setup to your business needs.

Assign a tech liaison between IT and the department requiring the software, e.g., marketing or accounting. The tech liaison will serve a vital role after the contract is completed — by keeping the channels of communication open for ongoing management and troubleshooting any problems that might arise. Since it’s become more common for business units other than IT to select technology, establishing this liaison is necessary.

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Last Words

Lastly, take a deep breath. As you can see now from the extensive tips above, the software purchase process is complex. That doesn’t mean they have to be a drag or a burden. You and your organization should be excited about acquiring technology that is going to move your business forward.

Remember, you’re trying to give your company the best chance of taking advantage of its new capabilities the right way and benefit from an informed, profound and thoughtful long-term relationship with a third-party vendor.

These nine steps, aka Lean Selection, are our software selection tips. SelectHub’s mantra is “confidence in software.” We help with nearly everything outlined above. Give us a gander.

How have these and other steps helped you in choosing new software? Let us know in the comments!