Selecting an Order Management Software solution, or some other system, is a challenging task. The process normally begins by documenting a set of requirements, constructing a Request For Proposal (RFP), identifying vendors, viewing web demos, and conducting site visits and reference checks. Recently a trend appears to be emerging to select vendors based on word of mouth recommendations and two-hour web demos. Is that really the right approach? Selecting the right vendor is critical to the success of your company. The choices in the software marketplace are overwhelming, and if the software solution meets your requirements, how do you determine if a vendor is the right vendor for your business? Here are a few points to consider.
No matter how many times I’ve heard businesses claim that cost is not the primary factor in the selection process, in actuality it always becomes a prime factor after RFP responses are returned. But is enough information provided in the RFP to ensure the vendor’s pricing is accurate? Does the pricing include the software, hardware, number of user licenses, transactional volumes, upgrades, maintenance, training, integrations, modifications, conversions and implementation services? I’ve seen instances where clients developed what they thought was a good RFP, which the vendor responded to appropriately with an initial cost based on the defined requirements—but after due diligence determined the real cost was more than double the original. The best course of action is to have an RFP that not only covers all the requirements but also identifies any and all unique business processes. The more detail provided to the vendor, the more likely the pricing will be closer to actual. Key areas that affect pricing are data conversions, integrations and implementation services.
When investing in software, either purchasing a licensed software solution or using a Software as a Service model, vendor stability is key to ensuring that the vendor will be around in the future. Does that mean a vendor has to have been in business for 25 years? No, but there are questions that need to be answered. Besides how long the vendor has been in business, consider if the executive team includes proven industry leaders. What is the size of the vendor? What is their core business, and does their software support your industry? How is the vendor staff organized? How many people are within the organization? Is their software solution proven in the marketplace? Inquire about where the vendor stands in the market: Do they consider themselves a top-tier, mid-tier or low-tier player? Inquire if the vendor is being acquired or acquiring other companies. Are they involved in any litigation or lawsuits that may affect their services?
Along with stability, you should try to determine if the vendor is financially secure. Is there an investment group backing them? Are they public or private? Have the vendor describe their ownership structure, including any parent or holding company. Ask for their total billings/revenue and the revenue for the type of business segment you are in.
The client base will indicate the vendor’s experience relating to your business segment or industry. Is the vendor a strong player in Business to Business or Business to Customer (Direct to Customer)? Do they specialize in apparel, gifts, furniture, electronics, etc.? Most vendors are willing to share their entire client list. Other key questions to ask are:
- Does the vendor hold annual user meetings?
- What size are most of their clients?
- Would you be the largest or smallest client?
- How many of their clients are in your business segment or industry?
- What modules of the software are clients using?
- How many clients are currently being implemented?
- How many clients have left the vendor in the last 24 months?
Reference Checks and Site Visits
A critical aspect to identifying the right vendor is conducting reference checks and site visits. Vendors will typically provide a list of 3 to 5 clients for reference checks. It’s best to take that a step further and contact clients outside of the list the vendor provides. And don’t just ask typical simple questions such as, “Does the software work?” or “How did you configure order entry?” Ask more revealing questions, such as, “Did the vendor do what they said they were going to do?” “How did the vendor treat you?” “How did the vendor respond when things went wrong?” “Did the install meet the implementation schedule?” The face-to-face with a client using the software has always proved to be worth the investment in travel and expense. Visiting at least two client sites will provide a good indication of how well the vendor does what they say they are going to do. Not only is it recommended that you visit at least two client sites, you should also consider visiting the vendor’s headquarters to meet with the executives of the company, the implementation team and the application developers.
Does the vendor have a long-term development strategy for the software? Do they utilize user input for implementing new features, or do they require that each client fund modifications, which are then incorporated into the core application? How does the vendor prioritize new features?
It is equally important to meet the implementation/project manager along with the account liaison or future account manager. You will want to know the project plan, timeline and the number and amount of resources needed to keep the project on track, on time and within budget. If the vendor cannot provide any of these it usually indicates that they don’t use a proven methodology for implementation.
A Successful Partnership
Last, but not least, one of the most important keys to successfully selecting the right vendor is having a good culture fit. Creating a partnership with a vendor that understands your business, is willing to work with you and “gets you” is paramount to a successful relationship. That is why you want to spend the time onsite at the vendor’s location to meet with the executive team, project manager and account manager to make sure the “fit” exists. Doing so will give you a clear understanding of what it will be like to work together. At the end of the day, creating a successful vendor/client relationship means being able to look them square in the eye and trust them to deliver on whatever is promised.