It’s a sinking feeling. You realize that you’ve lost countless hours. Thousands (if not hundreds of thousands) of dollars are simply gone. Everyone blames you.
Business software purchasing mistakes are expensive (and embarrassing) lessons. Especially if you’re the one making the decision. For you, it’s more than a software purchase. You stake your pride and reputation to that purchase. If the software doesn’t meet expectations, it’s on you.
What makes a software purchase go south? The reasons vary. Maybe the software didn’t live up to the hype. Maybe it became prohibitively expensive over time. Maybe it couldn’t meet your company’s future needs. I could go on. Whatever the reason, it’s always an expensive, embarrassing lesson.
The question: How can you avoid these mistakes?
If you’re in charge of software purchasing, I’d like to help. While every business and situation is different, there are a few areas every business must consider before purchasing business software. To help you identify those areas, I’ve solicited input from experts on the subject and compiled their advice below. Here are 10 tips that will help you purchase software that you won’t later regret.
1. Initial price isn’t everything–look long term
One of the biggest mistakes companies make in a software purchase: Focusing on the up-front price. They compare vendors based on upfront cost, rather than long term cost. Huge mistake.
“Too many times companies look at the initial purchase price of a solution and not the 5-year cost,” says Ron Thompson, Jr., General Manager at DataBank IMX. “When implementing a new software or solution, it is never a short term investment. You need to look at the additional rollout cost, software maintenance, and infrastructure (if not hosted) cost for a minimum of 5 years. This will give you a true comparison when you are evaluating multiple products.”
2. Look at the enterprise–but start small
Many companies make the mistake of departmentalized software purchasing. They purchase software for a specific department or segment of their business, without considering if other areas of the business might benefit from this type of solution.
“Companies should always look at new software solutions as an enterprise application – why not leverage an investment you already made and not get in the dreaded syndrome of 101 systems running your business,” explains Thompson. “But, with this being said you need to start small – one application or one department at a time. Getting a win in one department helps achieve buy-ins from the rest of the organization that the technology actually works.”
3. Focus on both present and future needs
Businesses often go into a software purchase with their present needs in mind. They want software that solves their current pain points. But, what happens in a year, when they have new pain points? If they don’t plan ahead, they’ll need new software.
“By looking at the enterprise solution, organizations will see if it’s a long-term fit,” says Thompson. “Don’t get wrapped into a niche solution that only does one thing. Not only look for solutions that can help with the pain points you are experiencing today, but can help solve other department challenges in the future. For example a mortgage company may be looking to go paperless with its mortgage processing process, and would later like to automate their AP/AR processes. They need to ask themselves if other products on the market can help with this current pain point and help them automate other department processes in the future.”
4. Be wary of “future features”
At a conference a while back, I remember a booth visitor expressing surprise upon learning that our software actually included the features that we advertised (a novel idea). Apparently, he had visited other vendors who were advertising features that weren’t actually available yet–which is unfortunately, an all-too-common practice.
“Some software companies try to convince you that their software will have the functionality you’re looking for in the future,” explains Brian Kelley, CIO of Portage County. “This is called ‘vaporware’ as what you really want does not exist! Be cautious of such promises that may never materialize!”
5. Talk to existing clients
Have you ever heard a software vendor list all of their drawbacks and faults? Neither have I. So, how do you find an honest assessment of the software? Ask their customers.
Kelley’s advice for obtaining honest feedback: “Query the company’s existing clients via phone, questionnaires, or a visit to find out how the software really performs, how well the company supports what you are purchasing, and their overall satisfaction.”
6. Test their support
“My advice is this, when trying to decide on a software package sign-up for competing pieces of software,” says Allan Branch, CoFounder of LessAccounting.com. “In the first few minutes of use, submit a few general questions, even if you already know the answers. This is a test to see how fast the support responds with the correct answer.”
In my experience, the level of support offered by the vendor indicates their perception of their customers. If they outsource support, or send support calls to a low-level phone service, they’re only concerned about cutting costs–not about their customer’s success. Rather, seek out vendors who staff their support desk with actual product experts. Excellent customer service goes a long way towards the software’s success.
7. Look for adaptability
Adaptability is absolutely essential in business software, on two separate levels. First, with technology evolving at its current pace, modern software today could very well be obsolete in 5 years. How will the software adapt to changing trends? Second, your business will change and (hopefully) grow in the coming years. How will it adapt to meet your needs and scale with your company?
“Simply knowing your long term needs doesn’t guarantee that software will be able to meet those needs later on,” says Reuben Yonatan, CEO & Editor-in-Chief at GetVOIP.com. “Technology changes rapidly; therefore, businesses often find themselves with outdated tech quickly. Be sure the software you select is flexible and scalable—allowing for advancement and updates as new extensions/functionality become available.”
8. Check the shelf life
There’s a term in the business software industry that I absolutely despise: Planned obsolescence. It’s the practice of building software with a limited useful life. In other words, it ensures that the software you buy today is outdated in a few years–so you must buy new software. Great for the vendor, but bad for you.
“How long do you need this software to last ideally?” says Yonatan. “Look for the shelf life of different software and see how often they update, issue new versions, add extensions, etc. In looking at this, you’ll be able to better decide if the product’s shelf life is aligned with your wants.”
9. Watch out for additional fees
Yes, the software may have everything you need, but are all of those features included in the base price?
Yonatan explains: “Software typically has a base price, but can often incur additional fees—multiple user charges, add-on/extension feature charges, etc…”
The problem is, some companies just assume all of the products features are included in the price. That’s not always the case. Before you buy, make the vendor list every feature not included in the base price. You might be surprised how quickly the price goes up.
10. Don’t just go for the “industry standard”
Back in the 80’s, I remember an “industry-standard” CASE tool for the IBM AS/400. They touted their massive customer list and their low support call volume–which could only mean their customers rarely had issues…right?
Wrong. In reality, they distributed their software as a package with other popular hardware and software, which explains the large customer list. The software itself was so difficult to install, that most “customers” never even used it–which explains the low support call volume.
Why am I telling you this story? If a company just blindly selected the “industry-standard” CASE tool at the time, they were in for a rude awakening. Don’t fall into the same trap.
“Simply going with software that’s considered industry standard can be a big mistake if it doesn’t fit company needs,” says Andrew Schrage, Founder of Money Crashers. “The research process should include, but is not limited to, the history and future of the software organization, and a full review of any ancillary facets of the product, such as its overall complexity, its level of customer support, and whether it “fits in” with company culture.”
Software purchasing mistakes are never cheap. I believe the points listed above will help your company avoid such mistakes, and choose software that helps your business for a long time to come. So, what do you think? Would you add anything?