3 Strategies for Selecting the Right Software Vendor—the First Time

Over the years we have spoken with quite a few companies as they were evaluating how to choose a PSA software vendor and have noticed a few approaches that work well, and a few others that have, let’s say, fallen short.

Everyone takes a different approach. Some like to dive in head-first and prototype their business within a tool. Others like to perform a formal needs analysis and go through a traditional RFP or proposal process.

The most successful companies tend to approach their vendor selection with an open mind, a clear understanding of their goals, and a desire to view their software vendors as partners. They focus on tangible business results—improved resource utilization or better on-time delivery—instead of a laundry list of features that they think they need. In this post I’ll take a look at a few strategies companies should consider while looking for a new software solution.

1. Conversations, not checklists

The traditional method of software selection is a very structured process. Organizations formulate their requirements, ask stakeholders for input, compile a list of features, rate them based on importance, and send their list off to vendors as an RFP. This process seems rational, but with all of the complexities of modern business software, it often times results in a less than thorough evaluation. It is focused on the current shortcomings of an application or process that is being replaced instead of the actual business reasons behind the software’s functionality.

Organizations that are evaluating software need to have in-depth conversations with the vendors, and soon-to-be partners, they are reviewing. They need to take the time to explain their business model to the vendors and make sure the tool they are evaluating will support their core processes.

Similarly, your prospective vendor’s team should not just be acting as a salesperson out to sell as much, as quickly, and as effortlessly as they possibly can. They should be acting as educator, adviser, consultant, and coach. They should be as interested in understanding your business as you are about explaining it. They should be as concerned about identifying what is not a fit as they are about convincing you about what is. They should be working just as hard to avoid buyer’s remorse as they are at closing the sale in the first place.

This mindset shifts the process from emphasizing the what to exploring the how and the why. For example, firms might ask vendors if they can use their tool to build revenue projections. Yes or no. Each vendor checks a box and moves on to the next question. In our last post about managing fixed price projects we talked about how many solutions approach revenue projections differently. Without digging into the details during the sales process, organizations might find that that “yes” next to the “Can project revenue” requirement wasn’t exactly a lie, but it also wasn’t exactly the full truth…at least for your business.

2. Fix, then automate

Automation of broken processes just makes a bad process more efficiently bad. Over-automation can be even worse…it can take dysfunction and amplify it.

Case in point: encouraging your staff to lie.

A question that we, as a provider of professional services automation software, have been asked countless times goes something like, “Is there a way to auto-populate someone’s timesheet with the hours they’re scheduled to work each week? It will save us a ton of time.” Our answer has always been “no.” Not because we forgot to implement the feature, but because we believe in truth in reporting.

People are busy, and, like water flowing downhill, will take the path of least resistance. Through fear, distraction, or laziness, they’ll just report what time they think they were supposed to report. Projects will always be, curiously, exactly on budget, week after week. Until suddenly, they’re not… and not just by a little. With no warning, you’ve got a train wreck on your hands, all because you wanted to save your team the two minutes it takes to log what they actually, truthfully worked on that day. Perhaps a better approach would be to set a culture of truth in reporting, and then make it easy for people to tell the truth with an intuitive time reporting system.

Like all things, there’s a time and a place for automation. It belongs in the empty spaces between decision points. Over-automate the places where you should have made conscious decisions using sound business judgment, and you’ll have to live with the system’s decisions. Rather, automate the mundane and the repetitive, and you and your team will have more time to exercise that sound business judgment when it’s important.

As you are evaluating new tools, think about the key processes you need to run your business. Fix the ones that need to be fixed before you automate, and beware the tools that say they can help you automate everything. Sometimes that just means the designers of those tools don’t have enough real-world experience to understand the law of unintended consequences.

3. Evaluate the people, not just the product

When you buy cloud-based software you are buying both the current version and all future versions of that tool. This means you need to evaluate the company, or people, behind the software just as much as the tool itself.  You need to be sure that they will be able to grow alongside your business and address your future needs as they change. If you don’t, it will mean that you will need to go through the same daunting search for a software tool again in the next few years.

As I mentioned in the beginning, choosing the right software vendor is really about forming a partnership with your solution provider. Here are a few things to think about when talking with vendors:

  • Flexible contract terms: SaaS contract terms should be flexible and fair for both the vendor and the client. Watch out for organizations that try to include term commitments, cancelation fees or user licenses that are bought a year at a time. Beware the vendor that forces you to buy extra licenses to cover for peak staffing or usage levels rather than just charging for what you use. Those are signs that they are trying to lock you into their solution. If a solution no longer works for your business you should have the freedom to either ask the vendor to make some changes or find a new product.
  • Domain expertise: Of course every software vendor will have experience in the industry they develop a product for, but there is a difference between understanding how to build software and having true domain experience. True domain experience can usually be spotted in a vendor’s story about how they got started. If all of the principles at the vendor lived and breathed the industry their product serves before starting their software company, there is a good chance they have broad domain experience. Their experience will become a competitive advantage for you. They have already made the mistakes other vendors in their market segment are still learning about. That experience will translate into product designs that do a better job supporting your business.
  • Post-sale support: One of the most important aspects of choosing the right software vendor is the support you will receive after the sale. Oftentimes a vendor’s ability to support you is the difference between a failed and successful implementation. Make sure the vendor includes full support in their subscription fees. Before selecting a vendor try their support out. Look for a support team that knows the product, knows the market and can understand your business. Ask whether support is provided by full time employees or less knowledgeable, contracted, or offshore resources. Try giving them a call or sending them an email to see how quickly and thoroughly they respond.

Take your time, the first time

Selecting the right software vendor is hard. It takes time to do it right. Today’s SaaS-based software companies keep you on the latest version indefinitely. Because of this it is important that you make the right choice when you are selecting a new vendor to partner with. The right vendor will grow alongside your business and continue to adapt to the market’s needs.

By keeping an open mind and focusing on the business results of a tool instead of a laundry list of features, you’ll be able to find the vendor that is the best match for your business.  Forging a long term relationship with that vendor will allow you to focus less on your tools or processes and more on what actually matters to your business. Besides, making the right choice the first time could mean never having to select another software vendor again.


Determine the Ideal PSA Solution for Your Organization

Projector PSA Logo 2020


1 thought on “3 Strategies for Selecting the Right Software Vendor—the First Time”

  1. What if your selection team can’t decide on a software? What if there is a tie or you find none of the vendors are good?

Comments are closed.