The economy is on the uphill now, making some good progress. Quite a few companies are looking to replace some of their outdated business software with new ones. It could be the Financial or Enterprise Resource Planning (ERP) system, or the Customer Relationship Management (CRM) or ECommerce. There are so much new updates in these systems that will give companies a chance to grow and develop good business processes. However, with so many options to consider, choosing the right one is a big task. That’s why we have come up with three tips that can help you during the selection process.
1.Choosing the Right Value Added Reseller
Most of the large scale software vendors, sell their software through the outlets of local Value Added Resellers (VARs) and not directly. You can google to find the ones closest to your place. These Value Added Resellers will show you a demo, will sell the software, and help you to implement the software as well. Since they are not dependent on the software vendor, there will be many VARs near your place, who are selling the same product. Each one of these resellers will have their own USP, so choose the one who fits your criteria. Choosing the ones with a good history with your software product of choice will help you later during implementation.
2. Hold Full-Length Demos
After you reach a final shortlist of around 3-4 software vendors, make sure you see a scripted software demonstration process, to learn more about the processes involved in the software. The scripted demo will pave way for your vendor to change their default product demo to fit your specific business needs and show how it will solve it. If you opt for the default, standard presentation, they will highlight their strengths alone and will hide their weaknesses. This will make it very difficult for you to effectively evaluate their products.
Take efforts to make sure that the demo script is long enough to to cover the important details, but don’t make it too long as it will take too much of your time. You can also include a Business Case Scenario, which would cover a critical business process that you are already experiencing in your company (say for example, Purchasing). These scenarios should include sample company data to check their actual practical application. Ask the vendor for interesting new features in the software that might help you and your business run effectively.
3. Contract Negotiation
When you finally get to the negotiation stage of your software purchasing, take proper time to negotiate your business issues (which includes warranty, support system, etc) as well as pricing. Your final agreement will have three different contracts.
Software License Cost – This is the base license agreement and it will depend on the number of modules that you are buying and the type of license you want based on use case scenarios in your business.
Implementation Services Cost – This is a ratio of Implementation to License cost. For every single dollar you spend on getting the software license to its equivalent on the implementation component. Usually it’s in the ratio of 1 to 1, but will change based on the complexity of your particular project. This cost is calculated as a function of the consultants’ hours, training requirements, etc.
Maintenance Cost – This is the annual fee that will be charged by the software vendor in order to maintain, support, and upgrade the software that you purchase. This will be around 18-25% per year of the full licensure cost. (This will be on the full license price and not the discounted price you got via negotiation during initial purchase, however if you are buying in large volumes, you can negotiate on this as well.)
The critical component to negotiation is that both parties should feel that they got a good deal. The software vendor or VAR will also provide best of their services to you in the future if they get into an equitable agreement. It will be good for your company in the long run as well.
I hope this article was useful for you to learn about the software selection process. If you have any doubts regarding the topic, let us know through the comments and we will be glad to help you out. Let us know your suggestions as well for us to improve.
