The Importance of a Holistic Approach

"​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

This insight is crucial when selecting vendor software. It's not just about the software and hardware; a vendor's service breadth and depth to support and enhance your needs long-term are equally important.

Choosing the Right Software Vendor: Beyond the Code

While a startup might excel at innovation, it's often not the right choice for critical business software. When selecting a solution, always consider a vendor's:

Decide on a vendor solution that considers:

When you're evaluating a vendor solution, look beyond just the software to these key areas:

Having engaged in over 200 RFP projects, I've made two primary observations:

  • If you don't need an RFP, don't use one. For example, if an existing vendor partner already offers a solution you're looking for, work with them to assess its suitability directly.
  • If you do proceed with an RFP, do so with caution and preparation. This helps avoid a time-consuming effort that leads to a sub-optimal decision.

Understanding Vendor Application Software

Vendor application software, also known as Commercial Off-the-Shelf Software (COTS), is a ready-made program or collection of programs developed by a vendor.

It can take several forms:

Establish Clear Evaluation Goals

Today, tens of thousands of high-quality commercial software packages and services are available. Regardless of your selection approach, a sound business process is critical to optimizing your vendor partner decision.

Consider buying software rather than custom-developing it for these compelling reasons:

Differentiating Capabilities

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

  • A vendor's ability to meet and continuously enhance these differentiating needs may not be sufficient or efficient.
  • These differentiating capabilities likely give your organization competitive advantages. Be cautious about sharing competitive secrets with external suppliers who might share or develop your ideas with others. Ensure your agreements include strong confidentiality clauses.
Miscommunications

Be aware of the communication challenges that can arise between your organization and potential software vendors. Often, your organization doesn't fully understand how a vendor's system works, and the vendor doesn't completely grasp your business processes. This creates a significant gap to overcome.

Communicating solely via an RFP with your procurement department as an intermediary further impedes communication quality and understanding.

  • Many vendors will respond "Yes" to every requirement in an RFP, even if they don't fully understand your needs.
  • Many organizations accept these "Yes" responses without further questions or assessments.

During implementation, the realization often surfaces that the selected software vendor 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 actually need. Focus your requirements on the vital few that genuinely enable your business case.

Comflexity™

No, that's not a misspelling. Comflexity™ represents what happens when too much flexibility creates complexity.

Commercially available software is designed with powerful configuration capabilities.

  • These capabilities offer many choices for configuring how the software works.
  • Organizations without well-designed, thoroughly thought-out 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 such as Enterprise Resource Planning (ERP), combined with weak business process discipline, can lead to configuration decisions unexpectedly impacting other parts of the organization.
Lack of Business Process Awareness

Buying application software is essentially buying a business process. If you're not willing to commit to the business process and its associated integration, don't buy the software.

  • Far too many organizations buy software and then heavily customize it to meet their current business process needs.
  • Many of these needs stem from "this is how we've always done it" thinking.
  • These organizations incur high costs to customize the software to fit their existing business processes. This substantially diminishes their ability to stay current with vendor's new software versions and releases due to the extent of their customizations.
Transactional Thinking

Buying, implementing, and sustaining software is a significant and strategic organizational investment. You need to establish a strong partnership with your software vendor.

Adopt a partnerial mindset to:

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

A vendor might promote using their software to satisfy a use case for which it wasn't explicitly developed. They'll emphasize the "commonalities" and the "minor" changes required. 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 "shoehorned" a vendor's solution to fit their unique needs will likely maintain a customized, expensive solution.
Bias

People bring all sorts of biases to the decision-making table, including prior experiences, favoritism, and personalities.

  • Minimize bias by establishing a rigorous and quantitative scoring methodology.
  • Score and quantify vendor proposals and solutions as much as 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 truly leverage vendor software solutions.

Is Your Organization Ready?

Vendor decisions are about more than just selecting a vendor. Is your organization prepared to extract optimum value from a vendor relationship?

It's not just about the vendor's capabilities. Does your organization have the requisite abilities to truly leverage what the vendor brings to the table?

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

Simplifying the RFP Process: Making the "Complex So Easy"

A vendor I know uses the tagline, "Complex things can be so easy..." This idea also applies to the Request for Proposal (RFP) process, which many organizations unnecessarily complicate. They often rely too heavily on just paper communication and their procurement team, making the process more difficult than it needs to be.

You can simplify the RFP process by directly interacting, talking, and listening to each vendor. During these discussions, make sure to document crucial conversations, expectations, conclusions, and decisions.

Think Before Acting: Assess Your Current Landscape

Many organizations jump into a vendor selection process too soon, without fully exploring other possibilities. Before you even consider new vendors, take stock of your organization's existing solutions and partner relationships.

Ask yourself these key questions:

Prioritize leveraging your existing partner relationships before looking for new ones. Consider solutions in this sequence:

  1. Leverage an existing partner's solution.
  2. Seek viable options from new partners.
  3. Co-develop a solution with an existing partner.
  4. If none of the above are feasible, create a custom solution internally.

Key Vendor Roles: Who to Rely On (and Who Not To)

Don't Rely Solely on a Vendor's Project Manager

Vendor project managers often act more as administrators than true project managers. Their primary role is to manage the vendor's deliverables, schedule meetings, and facilitate internal communication within their own organization. Crucially, they represent the vendor's interests, not yours. To effectively manage your implementation project, your organization must assign its own dedicated project manager.

Do Rely on a Vendor's Solution/Product Architect

A vendor's solution architect, often a product specialist, deeply understands how their system works. They are incredibly valuable resources for helping you understand the vendor's solution during the evaluation phase. They also provide detailed insights and assistance during the implementation process.

Final Thoughts

Vendor software selection is about more than just software—it’s about making a strategic investment that aligns with your organization’s needs and capabilities. By considering service breadth, vendor stability, business process alignment, and long-term viability, organizations can make more informed and successful decisions.