In today's digital business world, choosing a software vendor goes beyond considering upfront costs. Technology leaders must thoroughly vet potential software vendors and ensure a well-defined working relationship. The chosen vendor can have a significant impact on day-to-day productivity, budgets, future growth, employee and customer satisfaction, and even reputation. To help navigate this crucial process, 20 members of Forbes Technology Council share important steps to take before closing a deal with a software vendor.
First and foremost, conducting a proof of concept or trial with the software vendor is essential. This ensures smooth technical and business integration into the organization. However, before starting the trial, it's important to have clear, prioritized parameters for measuring success. A reliable software vendor will assist in defining these metrics and ensure that their solution is evaluated appropriately.
One crucial aspect that must not be overlooked is the cybersecurity readiness of the vendor. It is vital to thoroughly analyze how the vendor handles cybersecurity to prevent potential devastating outcomes. Recent high-profile attacks have demonstrated that assuming a vendor's security might lead to data breaches or ransomware incidents. Therefore, a comprehensive assessment of the vendor's cybersecurity practices is a must.
Visibility into the vendor's supply chain is another key consideration. With constant threats of cyberattacks, ransomware, and data leaks, understanding the software bill of materials management and overall software supply chain is essential. This knowledge helps ensure that the software purchase doesn't expose the company or its customers to unnecessary risks.
Evaluating the vendor's platform longevity and level of investment is crucial. Changes such as acquisitions or shifts in strategic direction can lead to the discontinuation of a platform. Assessing integration with other products, maturity, and possible overlaps can provide valuable insights into the vendor's commitment to long-term support.
Beyond pricing, the technical scope of the software solution should also be prioritized during the sales cycle. Instead of excessive price shopping, organizations should ensure that the solution aligns with their technical requirements and adequately safeguards their environment across platforms. Revisiting technical requirements before closing the deal can prevent potential pitfalls.
Connectivity and integration with existing IT architecture is a key consideration. The new software should seamlessly complement and interact with current systems in order to build out successful digital initiatives. Ensuring compatibility with existing frameworks leads to smoother implementation and enhanced operational efficiency.
Artificial intelligence (AI) and machine learning (ML) capabilities should not be taken at face value. It's prudent to inquire about the vendor's adoption of AI and ML, including the models they use and the data they train those models on. Understanding the accuracy and trustworthiness of their models, as well as their data science capabilities, is crucial in making an informed decision.
While technical details may take center stage, renewal planning is often overlooked. Establishing conditions for vendor contract renewal before closing the initial deal is vital. Setting reminders, assigning decision-makers, and planning for future assessments ensure that ROI is achieved over the long term, rather than just in the first year.
Flawless and timely integration with internal systems is a critical requirement. The vendor must be flexible and capable of customizing the software to meet specific business requirements, from data formats to legal environments. The ability to tailor the solution to industry or company needs is an important factor to consider.
Understanding how the vendor handles workflow change management and user onboarding is pivotal. A successful adoption and integration of the new software rely on effective change management and mitigating resistance. Ensuring the vendor's commitment to user-centric change management is crucial, as software without users holds little value.
When considering a software vendor, it's essential to evaluate the total cost of ownership (TCO). This includes not only the purchase price but also implementation, training, maintenance, and operational costs. Understanding the TCO ensures a cost-effective choice that aligns with strategic goals over the long term.
Securing favorable licensing costs or price caps over a multi-year contract is a critical step before closing a deal. Given that ROI is important, locking in pricing details in the final stages of negotiations is crucial. This step mitigates the risk of unexpected price increases and ensures a well-defined financial arrangement.
The alignment of values and corporate philosophy is often overlooked but holds great importance. Evaluating whether the vendor's values align with those of the company can greatly impact the working relationship. Considering factors such as how the vendor treats its employees and whether the vendor cultivates a positive working environment helps establish a strong partnership.
A clear understanding of the strategic benefits the new software brings is essential. Combining the new software with the existing infrastructure should seamlessly make data available for strategic decision-making. Developing a well-defined data strategy, supported by the chief data officer and business leadership, is crucial before acquiring new software.
Considering long-term viability is critical. Assessing a vendor's financial health, cash burn rate, and leadership's track record of exiting companies can help ensure the chosen software vendor will be around in the future. This analysis prevents buying into a vendor that may cease to exist, leaving the organization in a difficult position.
Future-proofing strategies are another important aspect to evaluate. Understanding how the vendor's product evolves and aligns with their organizational growth plans is crucial. It's essential to assess the vendor's ability to adapt to new and upcoming technologies and seamlessly integrate them into their stack.
Building trust between the organization and the vendor is paramount. For some organizations, strict confidentiality requirements may limit how much information can be shared. In such cases, having a trustworthy vendor who can provide support within those limitations is invaluable. On the other hand, younger organizations can benefit greatly from experienced consultative vendors who build trust through close collaboration.
Choosing the right software vendor requires careful consideration and evaluation. By following these steps and considering the insights shared by Forbes Technology Council members, technology leaders can make informed decisions that drive success for their organizations.
