One of the biggest challenges faced by senior IT professionals in organizations is the choice of the right software vendor. In the highly competitive enterprise software industry, there are lot of vendors who claim to offer the best software for the problem and it can be really daunting to narrow down the best choice. Additionally, enterprise software costs can often run into millions of dollars thereby leaving very little margin of error. The real cost of choosing a wrong software can often result into losses much more than the cost of the software itself as highlighted by software disasters experienced by leading companies like HP, Nike etc. In such a scenario, senior IT professionals despite years of expertise can find it very difficult to choose the right business software vendor for their organization.

Here are some of the proven ways of short-listing and selecting the right business software vendor for your organization,

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·         Understand and Define The Exact Need First: Before embarking on a journey to select the software vendor, it is critical to understand and define the exact problem you want the software to solve. The paramount question to be asked is what business objective does the software need to solve. Is the software required to “reduce costs” or is it to “improve productivity”? Extracting and defining this fundamental question is the bare minimum but necessary step to go searching for the right vendor. It will then form the basis of comparing multiple vendors on this very need that your organization has and will help drive the selection process going forward. The detailed approach involves creating a set of parameters that the software needs to meet in order to be considered. In fact, consider categorizing these parameters further in “must-haves”, “good to have” etc. which will help you assign relevant weights to these parameter and how the software’s fare on each of these parameters

·         Building The List of Vendors Who Meet The Need: Once you have defined your need and distilled that need into various parameters, it’s time to built the list of vendors who you think will meet the need. This is akin to a lead generation model wherein you want to identify a large enough pool and then filters your list down to the best ones. There are multiple ways of building a list of vendors and more often than not, you must use a combination of these methods to build a good enough list.

o   Use Industry Reports: We discussed the IT intelligence offered by leading industry firms Gartner and Forrester in How To Keep On Top Of Latest Trends In Information Technology. These firms based on their access to leading software vendors and CIO network publish vendor comparison research reports across specific verticals as well as specific technologies. Gartner’s Magic Quadrant and Forrester’s Wave are a very good starting point to get an insight into the best software vendors. For example, if you were looking for a CRM solution, you could look for Gartner’s Magic Quadrant for CRM and look at the vendors that make the list. These reports can be pricey but well worth the money if you are going to invest hundreds of thousands in the software. Having said that, you don’t have to trust these report blindly because how these firms define the best software may not match how you define the best software for your organization

o   Competitive Intelligence: If you are a smart professional, you are already keeping tabs of your competition. Chances are that if you are a big organization, you might see a Press Release either from your competitor or their vendor announcing the implementation of new software. Extrapolate that across 5-10 key competitors of yours and you might discover the vendors that your competitors are choosing. This gives you a good indicator that the vendors used by your competitors must be offering something right.

·         Rate Vendors Based on Public Information Available: Assuming that you have been able to identify a list of 5-10 vendors from the exercise above its time to collect as much information available on public domain about these vendors and the services they offer. The objective is to rate these vendors on the parameters and factors you defined at Step 1 based on the information available. Say for example, you identified the need for 24/7 phone support as a key criteria for choosing a software vendor. You can download the product specifications from vendor websites to see which vendors make the cut. This will help you start filtering your list of vendors in a scientific manner.

·         Engage the Vendors, Ask For More Information:While you might find a lot of valuable insight about vendor’s offering publically, there might be specific answers that you are looking for that the vendor only can answer. For example, can the software be customized based on your specific industry vertical?  At this stage, it might be a good idea to engage with the vendors directly and request an informational meeting. Vendors will be more than happy to assist you in every which way they can and answer your specific questions. This will then help you fill in the blanks that you were not able to answer based on the publically available information

·         Do A Cost-Benefit Analysis: Now that you have been able to compare each vendor against each parameter, score them based on the weights assigned and you will be able to build a robust model that clearly identifies the winners and losers. You must also be able to get a fair estimate of the cost of each software. Use these two data points to do a cost-benefit analysis and you will be able to shift the rating of each vendor based on the trade-offs you are ready to make based on the costs involved.

·         Ask The Top Three To Provide Customer References: Let’s say that the end of the above step, you have narrowed down to a list of 3 vendors that rate highly on your parameters. It is now time to engage with these 3 vendors more closely. Specifically, ask these vendors to provide customer references preferably from your industry. This will allow you to learn right from these customer’s as to how their experience has been using the software. If you start seeing less than enthusiastic responses for any vendor, you know what software vendor to check off your list

Choosing the right software vendor is a time consuming and resource intensive process. The above framework provides a simplistic yet useful approach towards identifying the right business software vendor for your business.