Ten steps to choosing the right business software

If you’re like most small business owners, you don’t see yourself as a software technology expert. In fact, you are likely to approach new IT projects with trepidation, handing them off to back-office staff or outside consultants. This is an understandable and healthy fear considering most software projects fail.

This is also one of the reasons why small and medium-sized businesses lag behind large companies when it comes to adopting software technology. While the largest manufacturers, retailers and financial services providers enter the 21st century with streamlined supply chains and web-based customer management applications, too many small or medium-sized businesses are still struggling with inefficient, paper-based business processes.

The good news is that you probably already have the experience you need to use IT to transform your company’s success. The same skills that make you a good manager in general can be applied to software selection. Selecting software requires a detailed plan, an accurate budget, and careful project management. Overcome your fear of technology and you can be on your way to the first of many successful IT projects.

Why so many software projects fail

There are many reasons why IT projects fail, but we’ve singled out what we think are the top five:

  • Limited budgeting and planning;
  • The wrong team for the job;
  • Poor demand planning;
  • lack of a rigorous selection process; and,
  • Weak change management or training.

Ten steps to successful software selection

After identifying the main reasons why IT projects fail, we outline in ten clear steps how construction companies can manage an efficient selection process that ensures success.

1. Assemble the right team. Begin by identifying a senior-level project sponsor who will ensure the project receives the right funding and attention across the organization. Next, you need a project manager who will oversee all the details of the project from start to finish. Of course, if you have IT staff, they play an important role in this process, but don’t let your software decision become purely technology-driven. Finally, you need to identify end users who are enthusiastic about their requirements and ideas for improving processes.

2. Set clear goals for the project. Once the team is chosen and assembled, a good first step is to outline the goals of the project. These goals justify the project costs and guide the team in difficult decisions. All decisions made during the project should be weighed according to how well they contribute to achieving goals such as: E.g.: “Close books faster and more often”; “Improving my sales processes and pipeline tracking;” or “provide more efficient customer service”.

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3. Create a detailed project plan. The next step is to create a project timeline that outlines all the main activities and their subtasks. You should consider the different dependencies and resource requirements of each activity. Make sure you assign an owner to every activity and even every task. The project plan itself can be as simple as an Excel spreadsheet to track the various tasks, or as sophisticated as using project management software to manage the project with Gantt charts and a critical path network diagram.

4. Create a budget for the project. An otherwise successful software project could be considered a failure if it goes over budget. Because of this, it’s important to have an accurate budget to work against. The biggest budgeting problems occur when the project team doesn’t account for costs outside of the software itself, such as: B. New computer hardware required to run the software; platform software requirements such as a new database; or consultants to help install and customize the software.

5. Define your requirements. The next step is perhaps the most important in the whole process: defining the functional and technical requirements you have for the new system. As software selection practices have evolved, requirements planning has shifted from a simple list of features—often influenced by software vendor marketing—to a more conscious, thoughtful analysis of “current” versus “optimal” business processes. This requires the project team to map out existing business processes (perhaps using a flowchart) and then consider how each could be improved.

6. Draft Call for Proposals (RFP) and Evaluation Framework. Now it’s time to design a Call for Proposals (RFP) and Evaluation Framework. The RFP is in the form of a Microsoft Word ® document with questions that can be sent to software vendors for response. It should cover all features and functions identified as critical during the process mapping phase. It should also cover technical requirements, e.g. B. which databases and operating systems are supported or whether the software is offered as “Software as a Service” so that it is hosted by the provider and accessed via the Internet via a web browser.

A rating framework is a table that allows you to track each product’s capabilities in relation to your list of requirements. Typically this would consist of a Microsoft Excel ® spreadsheet with all of your requirements listed in rows down the left hand side and each of your shortlisted providers represented by a different column.

7. Develop a short list of products. Next, you should create a “short list” of software products – three to five products that meet your high standards. If your shortlist grows beyond five vendors, you probably won’t be able to rate each one in enough detail. If the shortlist is fewer than three, you’re probably missing a few good products. To create a shortlist, start with a longer list of products compiled from a variety of sources, such as: B.: Industry trade journals, especially annual tech issues; trade fairs and congresses; and recommendations from peers or advisors (e.g., CPAs). Filter the list to three to five products based on questions like:

  • Does the company serve your specific industry?
  • Do they serve your company size?
  • Do they present a professional image (e.g. high quality website)?
  • Do they meet your technological needs (e.g. database)?
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8. Evaluate shortlisted products. The next step in this process is to evaluate your shortlist of products to select a single “winner” and a possible “runner-up” if reference checks or negotiations with the first vendor do not go well. Start by sending each vendor a copy of your RFP and asking them to fill it out. At the same time, start collecting information from each provider, e.g. B. Brochures, papers, trial versions of their software and demonstrations. As you review this information, use your rating framework to track how well each vendor’s product meets your needs.

After completing all demonstrations and reviewing the RFP responses and product literature, it is time to review the evaluation framework in detail and rank each product. Using the feature-by-feature scores entered for each product and the weights you assigned to each requirement, rule out any product that does not meet your key requirements. Then prioritize the others based on their performance for each important requirement. Finally, pick a provider that you think is best, as well as a runner-up.

9. Check customer references. At this point, it’s important to do your “due diligence” by checking the customer testimonials of the successful vendor. In addition, you must “play detective” and delve into these references. Remember that the testimonials a vendor points you to are most likely their happiest customers. To offset such cherry picking, obtain at least three customer testimonials and prepare a detailed list of questions that require specific answers rather than broad, positive generalizations. Better yet, try to find your own customer references by networking with industry peers, attending trade shows or user groups, and speaking to your industry association.

10. Negotiate the deal. The final step in your selection process is negotiating the right deal. Don’t stop diligent just because the finish line is insight. This step of the process determines the price you pay for the software, the level of service you receive, and the recourse you have if something goes wrong. Some of the key areas to consider when negotiating include: What type of license is the vendor offering? how is the software priced; What is the maintenance and after-sales service policy? and what rights you have to new versions of the software and periodic upgrades. Keep in mind that with medium to large sized stores there is usually leeway to negotiate with the seller on all of these points. The larger the check you are asked to write, the greater the bargaining power.

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Software selection is not easy and should never be viewed as a secondary project. The right software, properly implemented, can have a huge positive effect on your business. Follow these guidelines and you’ll be on your way to IT project success.

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