7 Steps to Selecting the Best Software Vendor

As an IT manager, engineering manager, CFO or CEO, you will likely at some time in your career be faced with selecting a software vendor. Get it right and you and your company may enjoy years of improved efficiency and productivity, happier workers, and lower costs. Get it wrong and you could spend years in litigation. So here’ a simple 7-step formula to follow to ensure you get it right.

1: Determine Your Business Requirements

Sit down with the stakeholders—the frontline people who will be using the software every day, and come up with a detailed list of what they need, and what it would be nice to have. The solution should satisfy their demands while aligning with the goals of the business.

2: Investigate and Perform Vendor Due Diligence

Vendor Company Size

What you’re doing here, is conducting as thorough an investigation as possible of potential vendors who meet a predetermined set of requirements. Do you want to work with a small company, a mid-sized company or a large company? Big companies usually have all the expertise and handle big jobs, but their downside is they tend to be inflexible in prices, schedule, and offerings, and they work at their convenience and can move like slow-floating icebergs. The problem with working with a small company is often they don’t have a verifiable track record and you take a huge risk that they can do the job right. So know what you’re getting into with different sized vendors.

Vendor Company Location

Are you working with a local vendor or one from half way around the world? Offshoring may save some money but can create communication challenges and present cultural work differences that may hinder a harmonious relationship. Likewise, be ready to pay more for an on-shore company but communication is usually easier.

Software vendor assessment

It is important to perform the necessary due diligence when assessing different software vendors

Vendor Software Credentials and Certificates

Do they possess authentic documentation that demonstrates they have been educated and trained to perform the job in question?

Testimonials and References

Don’t just read the testimonials on their website. Ask for a list of 10 customers who had the same product/solution installed. Contact those customers with a detailed list of questions like: “Were you satisfied with the job?” “Would you hire them again?” “Did they meet all of the deadlines?” “Did you receive everything you expected?” “Did they support you after the sale?” “Were there any problems?” “Is there any question I should be asking you that I already haven’t?” “If you could change one thing with the vendor regarding their product/service offering, what would that be?”

Investigate the Vendors Background

Prepare a detailed list of questions and investigate to find answers about the software vendor, like:

“How long have they been in business?” “Are they growing or downsizing?” “Do they have significant experience working in your company’s industry?” “Have they ever had a customer sue them?” “Why?” “Do they have negative reports with the Better Business Bureau?” Do they have a high rating on Google Maps and Yelp?” “Why not?” “What do their employees say about them on Glassdoor?” “Do they ask good probing questions when you sit down to talk with them?” “Do they seem to understand your problems and concerns?” “Do they seem to care?” Are there any conflicts of interest associated with the vendor company and decision-makers at your company?” “Do they have partner certifications relevant to the solutions you are looking to implement? Do they have an engineering team to focus on product/solution development?”

Ask your friends/coworkers/LinkedIn network for software vendor recommendations.

3: Interview the Software Vendors

Conducting preliminary interviews will ensure you have the information you need to make the correct decision

Conduct preliminary interviews with a list of three to five strong vendor candidates who will send you their detailed proposals. Prepare a detailed list of specific questions to ask them during a formal interview, like:

“Will the software integrate with your existing system?” “How easy is it to set up and train users?” “Who provides the training?” “Is training included with the cost?” “Will you support us after the sale?” “What kind of guarantees and warranties are there?” “How are upgrades and updates managed?” “Are there a lot of business interruptions and downtimes due to maintenance?” “Why are you better or worse than your competitors?” “Will the software scale in case you experience high growth?” “What level of customizations are available with their product?” “Will you and your direct employees be doing the job or will you be contracting it out?” “Who gets custody of your data in the case your vendor and your company split up?” “Are there any additional fees or provisions that we haven’t discussed?” “Is there anything that you have not disclosed?”

4: Additional Fees

Look for hidden costs in the contract, such as additional fees for in-person training, document management services, setup or annual maintenance fees in addition to the monthly support costs. Also, watch for provisions that allow the vendor to increase fees during the course of the contract — and see if there are provisions that would allow you to get out of a contract after six months or a year if the system is not working for you.

5: Vendor Selection

After getting proposals from your shortlist, you are finally ready to select the vendor to move forward with.

6: Embark on a Free Trial Period

Before committing to a new software solution, be sure to test the software in a non-committal test period. Most SaaS companies offer a free trial to test features, benefits, and usability. Then, during the trial, make sure the software contains the features you need, as well as the functionality.

7: Contract Negotiations

Don’t be afraid to negotiate. It’s not always possible to get a price reduction, but things like training and payments are usually negotiable.

Contract Benchmarks and KPIs

Agree to key performance indicators (KPIs) before signing a contract.

Good luck!

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At FreePoint Technologies, we go beyond just software and machines. We also focus on engaging and empowering your employees, equipping them with real solutions to make them more efficient and often make their jobs easier.

Get in touch with us today to learn more.

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