Software Selection Best Practices

In our last newsletter, we discussed how to recognize if your business software technology aligns with your business strategy, processes and people. If, after undertaking this type of assessment, your organization has decided it’s time for a new software application, it is important to understand the players and processes involved.

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In our last newsletter, we discussed how to recognize if your business software technology aligns with your business strategy, processes and people. If, after undertaking this type of assessment, your organization has decided it’s time for a new software application, it is important to understand the players and processes involved.

What Is At Stake?

In our last newsletter, we discussed how to recognize if your business software technology aligns with your business strategy, processes and people.  If, after undertaking this type of assessment, your organization has decided it’s time for a new software application, it is important to understand the players and processes involved.

You know something needs to be done to improve your current situation and you are ready to commit financial and human resources to accomplish it.  But like many organizations you have little experience selecting and implementing large ERP, accounting and CRM applications. Selecting enterprise class application software is a complex project and the stakes are high.  A successful software selection and implementation can transform your organization into a best-in-class player in your market.  However, poorly executing the selection phase of your project can result in:

  • Selecting software that is not aligned to your organization’s current requirements and plans for the future
  • Failure to prepare your organization for change and a successful implementation

This can result in an implementation that fails to complete on time, within budget and deliver significant benefits.  The resulting negative impact on morale can have a lasting effect on the organization’s ability to properly leverage its application and investment.

On the other hand, a successful implementation can energize the organization’s ability to continually leverage its application to improve itself and adapt to future business requirements.

Where Can I Get Help?

There are many resources available to assist with software selection.  You can find many articles, white papers, case studies, blogs and even methodologies on the internet.  These are typically published by software vendors, on-line software selection providers and consultants specializing in selections.  You should be aware of the source of the information or service and understand what may result from making use of it.

Software Vendors

Software vendors will naturally be biased towards their product, and filling out a request form for information or a demo will surely result in a call from a sales person.  You should be cautious about engaging a vendor and viewing a demo until you fully understand your requirements.  Doing so may only mislead you because the vendor will often focus on features that are their strengths but not necessarily relevant to your needs.

Online Software Selection Services

There are a variety of software selection websites that offer differing levels of information and service.  They typically have business relationships with software vendors and may provide them leads from the activity on their websites.

Some websites are simple catalogs of software vendors organized by industry while some provide more complex databases of software features and tools to identify vendor applications based on a high-level requirements profile.  Some even provide a brief phone interview to establish high-level requirements.   Use of these tools may also result in you being contacted by several vendors.  While the use of these tools may provide a more informed interaction with the vendor, many tend to be too superficial to properly guide you to an informed decision.

Some online services can provide you with fee-based selection tools and methodologies.  These can provide more factual and statistical approaches to your selection based on detailed questionnaire matrixes of software features.  But if you do not have considerable experience with ERP solutions and a wide range of business process knowledge, it may be difficult to understand how the features can transform and benefit your business.

Selection Consultants

Consultants experienced in enterprise class applications have an understanding of the full potential of a software selection and implementation.  They can work with you face-to-face to help you achieve the best return on your investment (ROI).  The most innovative ones actually treat the selection process as the first phase of your implementation.  Among the most important capabilities that they can provide are:

  • The business process knowledge to help you identify and design best-in-class process improvements that can be enabled by modern applications
  • The vision to help you create a roadmap to a more integrated, collaborative and knowledgeable working environment
  • The ability to accurately communicate the improvement objectives and requirements to the vendors so they can develop realistic implementation plans and estimates to achieve the changes
  • The skill to prepare your selection team for their transition to an implementation project team to promote and manage the changes necessary to achieve the desired improvements

If you do not have employees with extensive enterprise application and process re-engineering experience, you should consider engaging an experienced selection consultant.  They can significantly improve your ROI by helping reduce acquisition and implementation costs, risk and business disruption while identifying significant process improvement opportunities.

What Are The Steps?

How does one properly go about selecting software?  Every good software selection project should have certain elements including:

  • Project organization and management
  • Business strategy, process and requirements review
  • Define improvement goals and opportunities
  • Application market research and long list of vendor candidate selection
  • Request for proposal (RFP) creation and long list vendor invitations
  • RFP response analysis and short list vendor selection
  • Demonstration script creation and execution
  • Demonstrations analysis and due diligence
  • Implementation planning
  • Vendor negotiations

Project Organization and Management

The first step of the project will be to form a selection team made up of executives, process owners and subject matter experts representing a cross section of the critical business disciplines and entities throughout your organization.

You should give careful thought to who you pick considering that they will likely make up your implementation team after the application is selected. Their participation in the selection project will prepare them for the implementation by building buy-in and enthusiasm from a holistic knowledge of how the application can improve the business.

Business Strategy, Process and Requirements Review

You will need to review your business processes across all business disciplines throughout your organization that will be impacted by the scope of the new application.  You will need to document your process requirements with a particular focus on things that make your organization unique and that are not currently well supported or automated.  You must also review your strategic plans to understand what future requirements they might introduce.

Define Improvement Goals and Opportunities

During the process review you will likely find some:

  • Inefficiencies
  • Lack of automation
  • Poor collaboration and integration between business areas, customers and vendors
  • Difficulty monitoring the business and accessing information

These represent opportunities for process improvement, and achieving them should be defined as implementation goals and success criteria.  They may also form the basis for calculating an ROI assuming you can establish benchmarks for your existing processes.

Application Market Research and Long List of Vendor Candidate Selection

You will want to develop a long list of vendors and application candidates that are appropriate for your type and size of business and the markets that you serve.   A well-researched long list will promote a broad understanding what software vendors can offer and help prevent excluding any good choices from consideration.

Request For Proposal (RFP) Creation and Long List Vendor Invitations

You will need to create and send an RFP to the long list vendors.  The RFP will ensure that all the vendors have the same understanding of your business and that their responses can be easily compared.  The RFP should describe your organization, your improvement goals, requirements, user counts, sizing data, technology preferences etc.  It should also define the terms and process for responding to the RFP with the appropriate facts and pricing estimates needed to analyze and fairly compare the responses.

RFP Response Analysis and Short List Vendor Selection

The RFP responses should be compared based on your prioritized criteria.  A short list of two to three vendors should be invited to demonstrate their application to the selection team.

Demonstration Script Creation and Execution

A demonstration script and schedule covering your most critical improvement opportunities and process requirements should be created and sent to the vendors.  This will ensure that they show you what you want to see and not just focus on their strengths.  The demonstration script should represent a vision of how your processes could be re-engineered to achieve the greatest improvement

Demonstration Analysis and Due Diligence

You should devise a mechanism to gather the selection team’s feedback on the demonstration.  You should also conduct reference calls for vendor clients who are similar to your organization.  From here you will decide which vendor or vendors you want to move forward with.  You should still maintain the presence of competition even if you think your choice is obvious at this point.  This will aid in negotiations and give you a fall-back if they break down for any reason.

Implementation Planning

You should meet with the vendor’s services group to develop an implementation plan and statement of work (SOW).  This plan should be tailored to your specific requirements, scope and timeframe.  The implementation costs can typically be well over half of the total cost so it is important that the SOW is well thought out and defined.  The higher the quality of the RFP and demonstration script, the more accurate the SOW will tend to be since they provide the understanding of what needs to be accomplished.

Vendor Negotiations

The final selection activity is to negotiate the most favorable pricing and terms and execute a contract.  While the license cost may seem like the most important aspect of negotiations, it is usually the least significant component of your overall cost and ROI.  The most important principal to keep in mind is that you should negotiate a deal that times payments to the vendor at the time the value is actually delivered.  This will allow you to maintain leverage on the vendor to live up to their end of the deal during the course of the implementation.

Vendors will typically ask for considerable license and support fees upfront before they have any real value to your business.  They will also attempt to negotiate a time and material implementation statement of work that puts all the risk of going over budget on the customer.  If you agree to the typical terms and problems arise during the implementation, the vendor has less incentive to correct them since they already have the bulk of your money.

Standard vendor contract terms typically favor and protect the vendor.  You should have a lawyer experienced in software acquisition review and modify the vendor’s contract terms to ensure your interests are properly addressed.


While a good selection process is complex, it is critical for selecting the right software, reducing cost, achieving the best ROI and minimizing risk. You should assess your capabilities and experience to determine the appropriate type of help needed for your project. To learn more about the software selection assistance that blum can provide, please learn more.

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