How to avoid a six-figure software selection mistake

by Steve Epner

Every time a distributor thinks about automation, one of the first thoughts going through his or her mind is: “Will this be a six-figure mistake?” It does not have to be. For many businesses, evaluating software seems easy, until they get into it. Doing it right – the first time – is not difficult, but the process takes time and effort.

For more than 30 years, our team at the Brown Smith Wallace Consulting Group has developed a proven methodology to guide software selection studies. We’ve assisted countless distributors in their quest to find software solutions and support this effort with our “Distribution Software Guide,” recently released in its 14th edition. We hope the following points will help you and your teams make the right decisions for your business.

The software selection process
Before you start to look at solutions, identify every piece of paper, form or report that flows through your operation. Paper tells us what was or is important. We may not use all of the information on the paper, but everything we use is written down somewhere.

Make a list of the procedures necessary to do each person’s job. This will be the start of a “requirements” document that you will use to compare different application programs.

Do not just document the paper flow, look at it carefully. Review every step. Ask, “How does this add value to my customer?” In many cases, organizations can eliminate steps and improve their workflow even before installing a new or upgraded technology solution.

Brainstorm your wish list
Next, it’s time for a “Blue Sky” meeting. These can be great fun. Pull the team together and have an off-site meeting where you can dream about the future. For a short period, leave behind real-world concerns of cost, time, technology and personnel; do not let anything stop the creative juices.

Work as a team to develop innovative approaches to improve your business. Some ideas may be available for little or no incremental cost. However, if no one suggests them, they may be eliminated from future use.

Prioritize requirements
Take the new ideas and existing procedures and create these groups:
• Absolute. If they are not in the solution, the solution will not work.
• Wanted. This functionality will help you improve your processes.
• Wish List. Nice to have, but they will not affect the final decision.

These become your “system requirements.” Give this shopping list to the various vendors. They can propose ways to get you from where you are to where you want to be.

Without a detailed list, salespeople will sell you only what they do best. Each will have the perfect solution for your needs without having to ask what they are. Require each vendor to respond to your list of requirements. In this way, you can learn about each system and compare them to each other.

Every software solution can be successful in the appropriate environment. It is also true that every software solution can fail if used for the wrong purpose, if the staff wants it to fail, or if the system’s personality does not match the organization it is to serve.

Commit your time and resources to evaluate the nuances that will allow one solution to serve you better than the others.

Selecting vendors
You’ve done your homework, now it’s time to find out which vendors offer the solutions you need. The “2004 Distribution Software Guide” produced by the Brown Smith Wallace Consulting Group is a resource for the distribution industry that makes it easier than ever to make the right decision, the first time.

Using the online guide at www.software4distributors.com, you can perform head-to-head comparisons of more than 900 features of the most popular systems, all at the click of a button.

While price should not be the deciding factor, be reasonable. If your budget is $150,000, there is not much sense in spending too much time with million-dollar solutions. Also, stay away from hardware-specific solutions unless there is an overriding “platform” requirement. Remember, it is more important to find the functionality you need to operate your business instead of the lowest price or a specific hardware platform.

In any selection study, we suggest distributors quickly reduce the number of solutions considered to three or four. It is difficult enough to remember which package has what features. Additionally, most companies do not have the time or resources to evaluate more.

It is usually worthwhile to include your current vendor in the process. Sometimes, the functionality that seems to be missing is there but no one ever learned how to use it. Since there is no such thing as an easy conversion, continuing to use a system you know is always simpler. Learning how to use additional functionality may provide the greatest value with a minimum of pain.

Once you limit the field, use the online guide to do additional research to learn more about the packages you selected. Visit each vendor’s information page and link to its Web sites. In addition, you can request information on multiple products from one easy-to-use form. The goal of the guide is to simplify the selection process.

See the software in action
Every vendor will want to show you a demo. Be careful. Demonstrations are carefully constructed to “wow” you. They use limited amounts of perfect data. The sales speech covers any delays and makes the data entry seem effortless. You need to understand how the system will really work in your environment. Prepare a list of features you want to see, using your data if possible.

Before meeting with any vendor make sure:
• They have reviewed your requirements and believe they are a viable solution.
• They understand your mission-critical processes that must be demonstrated.
• You have prepared a demo plan and evaluation process for your people to use.

Talk to references
When visiting or calling a reference, be prepared. Don’t just ask: “Do you like the system?” or “Does the system work?” The vendor will not send you to a bad reference.

Get the real scoop by asking,“If you had it to do over, what would you do differently? Did the system implementation happen on time and within budget? Were there any surprises during the start up?”

These questions allow the businesses to be a great reference and still provide valuable input to the decision-making process.

Making the decision
The decision-making process can be the key to success. If a small group – such as the information system department or just the president – chooses the system and it fails, it’s their fault. If a team of people is involved, it becomes a group decision and the group owns it. They’ll work hard to prove they were right.

Finally, top management must support and make a commitment to the change or the system will fail. Make sure the owners are in favor of the project and understand the challenges it will cause. Keep them up to date on the process and solicit their input.

If the owners are concerned about the cost, help them recognize that software is not just a depreciating asset. They cannot compare the cost of software to things they understand better, like delivery trucks and inventory.

Consider software as an operating expense. $100,000 will cost about $2,000 per month on a 60-month lease. In most parts of the country, this is less than the fully loaded cost of a good clerical person. Therefore, if a system will eliminate the need to hire one new clerk, $100,000 can be justified. Treat the system as a payroll cost and most executives will understand.

Negotiating the deal
The last step in selection is negotiation. Some people look forward to doing battle with the vendor. Keep in mind: the people you are negotiating with (against) are the very people who will be responsible for your success. This must be a win/win situation.

If you get the lowest possible price, good business sense says the difference in price has to come from somewhere. If training and support are shortchanged — a common place to cut costs — you may never get the system operational. If you caught the vendor at a vulnerable time, when a better contract comes along, guess who will get the attention.

There are discounts available for most systems. A good vendor will wait until there is a deal before giving the last dollar. We often tell the selected vendor that the contract is theirs to lose. Then work with them as a partner to put together a deal that serves the best interests of both parties.

Ongoing evaluation
Even if you are not interested in changing systems, the process described here can help your organization. Perhaps you will discover options you may not be using currently.

Even if you’re not planning to invest in a new system, annually create a list of the features and functions you need to operate the business. Talk to your vendor to see if they are available. Work with the vendor to see if they can add the functions you need. Remember, there is no such thing as an easy conversion.

One last comment
The world of computers and the world of business are in a constant state of flux. If you undertake a selection project, make your decision within six months of starting. Any longer and the answer may change.

Software providers normally enhance systems every year. Hardware changes every six months. Business requirements can change monthly.

The answer is a moving target. To hit it, you have to fire before it is out of range.

This article originally appeared in the March 2004 issue of Progressive Distributor. Copyright 2004.

back to top                                      back to e-business archives