Complete Vetting Process Before Software Purchases

While it happens only a couple of times a week, sometimes it seems that I get a call every day from someone asking me to recommend some type of software for them.

The popular requests are for general ledger software and order/inventory management software.

My response is always the same. “What do you need the software to do for you?”

The answers I receive tend to be very broad and less than specific – which tends to beg the question of why a software recommendation is being requested in the first place.

Small- and mid-sized businesses tend to have many reasons for wanting to look at new software. The most common are frustrations in using the existing software along with the inability to easily get information “out of the system.” As businesses grow and get more complicated, these issues tend to jump to the forefront of business owners and management. Intuition, obvious gaps in the existing software or on-going staff complaints suggests to them that opportunities for improvement exist.

Eventually someone is assigned the task to “look into it.” That’s when I get the call for a software recommendation.

My message for them tends to be very simple. The absolute worst move is to go directly to a software recommendation. In fact, my advice is typically to stop thinking about new software.

Unfortunately, this is not something that most want to hear.

What should a business do when it seems that new business software is needed?

First, the business should develop a clear understanding of why new software might be needed. This understanding should be documented in several lists. While people tend to resist committing lists to paper, my view is that “if it is not on a list, it doesn’t exist.”

A list should be made up of the issues that exist with the current business software. Is the software hard to work with? Is the software fully implemented? Does the staff have knowledge gaps in using the software? What are the functionality gaps that exist? What reporting needs does the software not adequately support?

Another list should be made up of the opportunities the business thinks it has that could be realized if new software was put into place. What process improvements would be expected? What business cycle times could be improved? What would be the expected cost savings potential? What revenue opportunities could then be capitalized on? How would customer relationships be improved?

Secondly, the business should do a high level evaluation of risk. Again, lists should be made.

A list should be made of all of the risks to the business of a decision to not consider new software. Will the existing software impede business growth? Are there concerns about the software vendor or the software being discontinued? Will the existing software gaps lead to expensive staff additions to compensate? Will the lack of timely information negatively impact business performance?

An additional list should be made regarding the risks of changing business software. No matter how well-executed, implementing new business software is a disrupting and time-consuming experience. Is the business willing and ready to absorb such an effort? What negative impact could this have on staff? Customers? Cash flow?

The business also should develop a complete understanding of the cost of ownership structure of the existing software along with a high-level budget for the new software. Unfortunately, I have found it often the case that small- and mid-sized businesses do not have any idea of the true cost of their software on an annual basis.

Most companies are spending much more on their software than they realize. By having a solid knowledge of cost of ownership and the cost that can potentially be eliminated, the business is in position both to budget for new software and develop an idea of the potential financial opportunities of their investment.

With a solid, documented understanding of the potential opportunities, risks and cost/budget implications of new business software, a business is well on its way to making a well-informed decision regarding consideration of new software. 

Steve Hankins is CEO and co-founder of Accio.US, a technology company providing advisory and management services for small- to medium-sized businesses. He may be reached at [email protected].