Vendor Software Investment is More than About Software

"​We collectively, to get things done, work together as a team. Because the work really happens horizontally in our company, not vertically. Products are horizontal. It takes hardware plus software plus services to make a killer product."

Tim Cook, CEO of Apple

Insight and Tips to Selecting Vendor Software

Vendor Breadth and Depth

Selecting software is more than just about the software and hardware. A vendor's service breadth and depth to support and enhance your needs long-term are just as important. 

While two guys in a garage may be helpful when innovating to create a new industry or product, they are not the right choice when selecting critical software to run your business.

Vendor stability, capabilities, and market positioning are vital when choosing a software solution.

Decide on a vendor solution that includes:

I've engaged in 300+ RFP projects. Two primary observations include:

  • If you don't need to go through an RFP process, don't. For example, if one of your existing vendor partners already offers a solution you're seeking, then work with that vendor to assess whether their solution fits your needs.
  • If you decide to proceed with an RFP, do so with caution and preparation to avoid a time-consuming effort that results in a sub-optimal decision.

What is Vendor Application Software?

A software package, aka Commercial Off-the-Shelf Software or COTS, is a ready-made computer program or collection of related programs developed by a software vendor.

Establish Evaluation Goals

Tens of thousands of high-quality commercial software packages and services are available today.

A sound business process is critical to optimize your vendor partner decision regardless of the selection approach.

Consider buying, rather than custom developing, software for the following reasons:

Differentiating Capabilities

Capabilities that differentiate your organization in the marketplace may require custom software.

  • A vendor's ability to meet and continue to enhance your differentiating needs may not be sufficient and efficient.
  • Those differentiating capabilities likely enable your organization to realize competitive marketplace advantages. Be wary of sharing competitive secrets with external suppliers who may share and develop your differentiating ideas with others. Ensure strong confidentiality terms exist in your agreement.
Miscommunications

Maintain awareness of the communication challenges between your organization and potential software vendors. Your organization doesn't understand how a vendor software system works, and the vendor doesn't understand how your business works. That's a significant gap to overcome.

Communicating via a Request for Proposal (RFP) with your procurement department as the intermediary further impedes communication quality and understanding.

  • Many vendors will respond "Yes" to every requirement you specify in an RFP, knowing they don't completely understand your needs.
  • Many organizations accept vendors' "Yes" responses without further questions or assessments.

During implementation, the realization surfaces that the software vendor selected can't support your essential needs, ultimately dooming or diminishing a successful business outcome.

Overpaying

Sometimes, organizations request too many desirable requirements, buying and paying for more than they need.

Focus your requirements on the vital few that enable your business case.

Comflexity™

No, that isn't a misspelling. It represents when too much flexibility creates complexity.

Commercially available software is architected with powerful configuration capabilities.

  • Those capabilities provide many choices for configuring how the software works.
  • Organizations without well-designed, thought-through business processes and requirements often get stuck trying to decide how best to configure the software, which can be time-consuming and expensive.
  • Tightly integrated enterprise software, such as Enterprise Resource Planning (ERP), together with weak business process discipline, results in configuration decisions unexpectedly impacting other parts of the organization.
Lack of Business Process Awareness

Buying application software is essentially buying a business process. Don't buy if you're not willing to commit to the business process and associated integration you're buying.

  • Far too many organizations buy software and then heavily customize it to meet their current business process needs.
  • Many of those needs fall into the category of "this is how we've always done it" thinking.
  • Those organizations incur high costs to customize the software to fit their existing business process. They substantially diminish their ability to stay current with vendors' new software versions and releases based on the extent of their customizations.
Transactional Thinking

Buying, implementing, and sustaining software is a significant and strategic organizational investment. Establish a strong partnership with your software vendor.

Adopt partnerial thinking to:

  • Improve the frequency and quality of communication.
  • Focus the relationship on strategic matters of importance to both parties.
  • Accelerate outcomes by decreasing relationship friction.
Venturing Too Far from a Vendor Solution's Standard Use Cases

A vendor may promote using its software to satisfy a use case for which it wasn't explicitly developed. They will emphasize the "commonalities" and the "minor" changes required to enable the solution to satisfy your needs. Please don't believe it!

  • Moving too far from vendor standard use cases creates unnecessary short and long-term risks.
  • Vendor changes to those use cases may break or constrain your organization's capabilities.
  • Vendors strive to support their customers with standard yet configurable use cases. Customers who have "shoe-horned" a vendor's solution to fit their needs will maintain a customized, expensive solution.
Bias

People bring all sorts of biases to the decision-making table. Prior experiences, favoritism, personalities, etc., can enter a decision process.

Minimize bias by establishing a rigorous and quantitative scoring methodology. Score and quantify vendor proposals and solutions to the extent possible.

Source your core evaluation team with objective and independent-thinking people.

Don't consider vendor software a solution if you're unwilling to entertain changing your business processes.

Viable vendor software solutions are highly configurable to meet most business process needs. However, you must be flexible and open-minded to change your business process to leverage vendor software solutions.

Is Your Organization Ready?

Vendor decisions are about more than selecting a vendor.

Is your organization prepared to extract optimum value from a vendor relationship?

It's more than just about vendor capabilities. Does your organization have the requisite abilities to leverage what the vendor brings to the table?

That question leads to Capability Thinking®. At a minimum, your organization needs requisite skills, methods, and experience in the following areas to leverage the vendor relationship fully:

A vendor I'm familiar with uses the tagline "Complex things can be so easy ...."

That tagline also applies to the RFP process. Organizations make it more complicated by attempting to communicate using only paper and their Procurement team. Simplify the process by directly interacting, talking, and listening to each vendor: document crucial discussions, expectations, conclusions, and decisions.

Think Before Acting

Take inventory of your organization's current solution assets and partner relationships. Many organizations initiate a vendor selection process prematurely before considering other options.

Take stock of existing partner relationships first before considering new partner options in the following sequence:

  1. Leverage a solution that is available through an existing partner.
  2. Seek viable options from new partners.
  3. Co-develop a solution with an existing partner.
  4. If one, two, or three are not feasible, create a custom solution internally.

Don't Rely on a Vendor's Project Manager

Vendor project managers act more as project administrators than project managers. ​They administer a vendor's deliverables, schedule meetings, and facilitate communication within the vendor's organization. They represent the vendor's interests, not yours. Your organization must assign a project manager to effectively and efficiently manage the implementation project.

Do Rely on a Vendor's Solution/Product Architect

A vendor's solution architect, a product specialist, understands how the vendor's system works. They are valuable for helping you understand the vendor's solution during evaluation. They also offer detailed insight and assistance during implementation.