In science, everything that is observed to happen must have a cause. Although the root cause of most problems with major software purchases can be traced to inadequate requirements, what is the cause of that problem? Why do so many organizations have inadequate requirements? The answer is that few know how to evaluate and select enterprise software. While it looks deceptively easy, in practice it is anything but.
Anybody who has worked with sales & marketing would be familiar with the sales funnel which describes the steps needed to sell a product or service. The software acquisition funnel is similar but views the process from the perspective of the buyer rather than the seller. Note that the volume of each of the four buying phases corresponds to the amount of work in that phase, and shows that most of the work in a successful software selection is in the requirements analysis. This article looks at each part of the funnel.
Most enterprise software purchases are driven by pain:
Growth pains: Outgrowing existing software, functional limitations, processes with too many manual steps, too many spreadsheet workarounds, too many bolt-on software products to fix specific problems.
Obsolescence: Increasing software support and maintenance costs, end-of-life software, the vendor milking the product for revenue but not doing any development, the product is discontinued e.g. after the vendor is purchased by another company.
Increasing complexity: Different silos in the organization selecting different software to solve similar problems, software functional overlaps, rogue IT, duplicated systems, e.g. after a merger or acquisition.
Software mismatch: The software originally selected was not the best choice, and the shortcomings have become apparent with use, e.g. functional limitations, bugs, inadequate vendor support, difficult to use
Competition: Competitors using much better software products which is giving them an advantage in the market.
Emotion: The perception inside the organization that current software is the cause of many business problems.
These pains drive a growing awareness that the current software has a negative impact on the business. The organization begins quantifying the problem, perhaps estimating the ROI of new software or the cost of doing nothing. This investigation may take as long as a few years, or, if urgent, as little as a few weeks. The output is a decision to replace the software, and this is where the organization enters the software acquisition funnel.
1) Requirements phase
The first phase is to decide what is needed and express this as requirements. It is the most time-consuming part of the process by far, but it is vital to get it right. The root cause of most of the pains encountered when a major software purchase goes wrong can be traced back to an inadequate requirements analysis. A comprehensive requirements analysis contains the following:
Initial user interviews. These interviews build rapport with employees, uncover their pain points and any software products they would like considered.
Product & vendor research identifies potential software alternatives and, where appropriate, implementation vendors.
Requirements libraries, especially requirements related to things like support, license terms, security, usability and so on. These requirements tend to be the same for most enterprise software purchases.
Rate requirements for importance: document who wants each requirement, why they want it and how important it is to them. This step is critical for building employee buy-in for the new software. Eliminate requirements rated as less than important.
The output of this phase is a comprehensive requirements specification that describes what the organization is looking for. It is the standard against which competing software products will be measured.
2) Evaluation phase
This phase evaluates how well alternative software candidates meet requirements.
Use showstopper requirements to eliminate unsuitable products.
Use the RFI or RFP process to capture how well products meet requirements.
While software evaluation and selection looks deceptively easy, success remains elusive. Follow the process outlined in the software acquisition funnel above to reduce purchase risks. In addition to selecting the best-fit software, this process also builds user buy-in and ensures organizational expectations are aligned with what the selected software delivers. Best of all, you will minimize the pains so prevalent with major software purchases.
Chris Doig graduated from the University of Cape Town, South Africa with a bachelor of electrical engineering degree. While at university, he founded Cirrus Technology to supply information technology products to the corporate market. The focus at Cirrus was helping companies buy the best IT products for their particular needs. Cirrus also developed custom software for the South African 7-Eleven franchise holder and other corporate clients.
In the 1990s, Chris immigrated to the United States and worked at several companies in technical and IT management roles: Seagate, Biogen, Netflix, Boeing, Bechtel SAIC, Discovery Communications and several startups. At all of these companies he repeatedly saw software being purchased with an immature selection process. Invariably this software would take longer to implement than planned and cost more than budgeted. To make matters worse, the software seldom met expectations.
Having struggled with software selection himself, Chris founded Wayferry, a consulting company that helps organizations acquire enterprise software. He is also the author of Rethinking Enterprise Software Selection: Stop buying square pegs for round holes. While ERP projects account for much of Wayferry's work, other types of enterprise software acquisitions include CRM, HRIS, help desk, call center software, clinical trials management systems and so on. For Chris, the ultimate satisfaction is when clients report meeting or even exceeding expectations with their new software.
The opinions expressed in this blog are those of Chris Doig and do not necessarily represent those of IDG Communications Inc. or its parent, subsidiary or affiliated companies.