<Originally published - September 11, 2006
In Alice in Wonderland, Alice gets lost and stops to ask the Cheshire Cat which path to take. The Cat asks, “Where are you going?” Alice replies, “I do not know.” The Cat answers, “Then any path will get you there.” The same logic can be applied to the software selection process: without a clear plan, the endeavor can be intimidating, overwhelming, and time-intensive.
The Selection Process
Every aspect of your business operation is affected by the software being used. The disruption caused by the implementation of enterprise software—even if it fits your business well—is significant, and it takes a dedicated project team and software vendor to be successful. The cost of a failed implementation is so significant that it can put your business at risk, or set you back years from achieving your business goals. It's no wonder selecting a computer system can be an intimidating process.
It is imperative that you follow a disciplined plan in conducting your selection project. The process requires a company-wide commitment of time and resources; many companies dedicate a single person to managing a project of this importance. Selection projects can be divided into five phases:
- Project planning and kickoff, where you define goals and constraints, assemble the project team, and conduct project kickoff.
- Documentation of the current situation, where you document existing infrastructure and applications, and analyze and document business processes.
- Needs assessment, where you decide where you are going by identifying immediate savings opportunities, conducting brainstorming meetings, and prioritizing requirements.
- Software vendor identification, where you identify a long list of candidates using simple determinants, evaluate candidates using prioritized requirements, initiate sales process with vendors, prepare a request for proposal (RFP), and solicit and evaluate responses.
- Software evaluation, where you prepare demonstration scripts, conduct and score demonstrations, perform gap analysis, refine pricing, conduct site visits and reference checks, perform pre-implementation planning, and negotiate and execute contracts.
An analysis of the average duration of each phase of the software selection projects we've conducted produces the results shown here in Figure 1:
Figure 1: Average duration of each phase of a software selection project.
Software Vendor Identification
Many companies make the mistake of skipping all the steps needed to build the foundation for their decision, and start with this step. Don't. By following the methodology outlined above, you will have first completed the research on your business processes, your project team and company will be deeply involved, and you will have a standard to judge the software packages against. But how do you identify and qualify the software packages that you should consider in your selection process?
Resist the urge to search the Web as your first step. If you google “ERP,” you will get 133 million pages. Try to be more specific and use “manufacturing ERP,” and you'll get “only” 30 million pages. Continuing to refine your search by adding additional qualifiers such as “industry” still results in information overload. Instead, start by using a software directory.
A software directory is a web site or publication that specializes in the research and organization of information about various software products. These directories can have a functional focus, such as accounting solutions; an industry focus, such as wholesale distribution; a broad software focus on all business application software; and even the “kitchen sink” approach, with hardware, programming tools, and application and specialty software.
Start your search by using two primary determinants:
- Does the software vendor have expertise in your industry and vertical market (for instance, discrete manufacturing for electronics, wholesale distribution for fasteners or bearings, and so on)? A software vendor without this “domain” expertise may not understand the unique business process requirements of your business or provide the depth of functionality needed to handle the types of transactions specific to your business.
- Does the size of your company, measured by the number of users and locations, fit into the “sweet spot” of the vendor's customer base? Buying a software package designed for smaller companies could mean that the functionality needed to handle the complexities of your business might be missing. Buying a software package designed for larger companies might mean that you are buying too much complexity (features you do not need), and your organization will spend too much time and energy trying to implement it.
Many directory sites also conduct their own research into the functionality of the software packages. These “knowledge bases” of features can be prioritized based upon your own requirements. Many generate an analysis that ranks the results so that the packages that are the “best” fit can be identified. The quality of these sites varies, so be sure that the site validates the data provided by the vendors.
Once you have a manageable list of software vendors to work with, you are ready to proceed with the next phase of your selection project.
Software Vendor Engagement
Many software selection methodologies recommend writing an RFP and submitting it to your list of software vendors. That used to work, but in today's competitive marketplace, software companies do not have the unlimited staff to allow them to respond to every RFP they get. RFPs are very expensive to complete, especially the ones that ask for the encyclopedic 90-page response.
Once the “long-list” or “shortlist” software vendors have been identified, you will need to engage the vendor's sales process. Like any good sales organization, software vendors classify leads and devote the most resources to the most qualified prospects. By establishing a budget, creating a project team, and defining a time frame for making a purchase decision, you will be classified as a “qualified” prospect that the software vendors will push to the top of their list.
Call the software vendor or complete an inquiry form on its web site. Provide the requested information so that you can move up the “food chain” as quickly as possible. Expect a call from the telemarketing group; it is their job to collect more information about you and the opportunity. They'll ask about your industry and company size, what software you're using now and its platform, your position and role in the selection process, and your time frame for making a decision and budget.
The telemarketing group will pass your information on to the salesman. If the target software vendor uses resellers, you may be handed off to a reseller based upon your geographic location and industry. Once you have a contact, schedule a time to meet with the salesperson to introduce your company and requirements. The salesperson will serve as the gatekeeper to other resources that you'll need in order to get a response to your RFP, such as a product demonstration, answers to technical questions, and the like.
We recommend you use this initial sales contact to qualify the software vendors, and to eliminate the ones that do not fit your company's requirements or culture. For most companies, three or four vendors should be considered for the demonstration and evaluation process. Depending upon the number of companies on your list, you'll need to allocate at least one to two months for this step in the process.
Accelerating the Process
One way to accelerate this process is to visit a technology fair or trade show where all the software vendors on your list are represented. This provides an opportunity to engage the sales process of multiple vendors very efficiently. But not every industry hosts an event like this; not all software vendors may be present, and the timing of the trade show may not coincide with this step in your selection process—or you may not have the travel budget or time to take advantage of the event.
An easier way to accelerate this step of the process is to attend a virtual trade show. During the Internet boom years of 1998 to 1999, online trade show software was developed. Conceived as a way to replicate the physical trade show and to deliver the experience using the Internet, this software did little more than create multiple web sites within a trade show front page. Many of these providers went out of business when the Internet bubble burst, but the survivors have developed robust applications that allow for delivery of content and interactivity that can support thousands of attendees simultaneously.
There are several benefits of this new online trade show format:
- No logistics to manage.
A virtual trade show incorporates the most successful elements of the live trade show, and translates them into the virtual world of the Internet. Attendees have access to product demos, event networking, and educational presentations from industry leaders, all at no cost and from their own offices.
- Interactive access to vendors.
Just like a live event, a virtual trade show will give you the opportunity to collect product literature, view product demonstrations, and engage in live “chats” with the participating exhibitors. It may also be possible to schedule one-on-one interactive sessions with the companies whose products and services interest you the most.
- Participation of the entire project team.
Without the limitations of time and travel costs, many more members of a selection project team can be involved in the screening process. Project team members can be assigned to visit specified software vendors and gather information. After the trade show, the information can be shared amongst the team to accelerate the process of qualifying and ranking software products.
The virtual trade show has some limitations: product demonstrations are limited in time and depth, as the exhibitors' resources are spread across many attendees; the booths are staffed by vendor representatives who may be sales or pre-sales personnel without the expertise to answer detailed questions about specific functionality; and of course, nothing can replace establishing a personal relationship with the vendor. The virtual trade show cannot replace all of the due diligence steps of the selection process, and it is imperative that you complete the software evaluation phase of your project.
The software selection process can be complex and time-consuming. If shortcuts are taken or steps in the process are skipped, the risk of selecting a software package that doesn't live up to the expectations of management and the user community increase significantly. Many chief information officers (CIOs) have lost their jobs after a failed implementation.
The vendor engagement process can take an exceptionally long time to execute, especially when more than a few vendors are being included in a selection study. However, it is possible to use the new technologies available to accelerate this process.
About The Author
Jeff Gusdorf, CPA, is a principal of Brown, Smith, Wallace Consulting Group (http://www.bswllc.com/), with a focus on enterprise applications for the wholesale distribution market. BSW Consulting publishes research, provides a software directory for the distribution marketplace, hosts its own virtual technology fair (http://www.virtualtechfair.com/), and provides software selection consulting services to its clients. He can be reached at firstname.lastname@example.org.