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Software Selection Guidelines for Systems

Updated 22 Oct 00

So you've decided to invest in new software for your business...enterprise software. It was inevitable.

There's a revolution going on in business and it's being driven by information technology. The internet has opened the door for business models the would have been unthinkable a few years back. Even in the most traditional industries, new tools are emerging that are reshaping the way companies do business with their customers and suppliers. The terms of B2B and B2C and more new acronyms crop up almost daily. Fully integrated enterprise systems allow your business to run much more efficiently and communicate more effectively with your clients and customers and vendors, etc.

The pace of change is accelerating. Homegrown systems have become an endangered species as companies find they can't hire programmers fast enough to keep them current. Even the leading ERP software packages have had difficulty keeping pace with the nimble, new upstarts as an example.

With the technology becoming a key part of every business's competitive strategy, we are seeking more and more buyers in an increasingly confused marketplace. Not only are they confused. They are intimidated by the horror stories they have heard about a "never-ending" project that a company throws money into without achieving the results anticipated.

So how do you sort through the noise and make the right decision? Not only in software, but in the implementation of that software. Who can you turn to to "make sure" that the software, the implementors, and the on-going value of the system are maintained when the implementors leave. And...did you really get what you needed? And...do you really have what you need?  Will it be there for you five years from now, working and functioning in line with your expectations and those of your B2B and B2C players? Our team, The ROAD Group, LLC, has the ability to assist you in your endeavors. From our collective experience (including our teaming partners: Grant Thornton, KPMG, Fluor Daniel, CSSC) we have assembled the following tips to guide your foray into the software market and the enterprise automation capability you need now and in the future.

Keep Your Eyes on the Prize

There's a reason that your business is considering an investment in new software. Clearly, you expect to realize a strategic or operational return from your investment. Unfortunately, in the heat of the software sales cycle each vendor attempts to shift the focus to his or her own product's latest features and world-beating technology. It is easy to lose sight of the business objectives that started the process in the first place.

As you launch the team that will lead the selection effort, remember that you will be selecting a package that may be in place for many years. Seek out the visionaries in your organization (starting with the CEO and including all the other C-level executives as a minimum) and have them share their thoughts of where the company should be in five to ten years. Have them consider the following questions:

• How fast will you grow?
• What is the unique competitive advantage that will fuel your growth?
• How is eBusiness changing the rules in your industry?
• Do you plan to make acquisitions?
• Will you add new locations or business units?
• Will you expand into new markets domestically or internationally?

Be sure that your Selection Team begins with a solid understanding of your business strategy, vision, and objectives so that it will develop requirements that reflect the business you want to be. If you are having trouble developing this vision, consider getting outside help to get you started on the right foot.

Select a Solution, Not Just Software

The market for business software has become increasingly confused. The leading eCommerce software vendors are acquiring or partnering with other companies to round out their capabilities and offer features like content management and auction capabilities. The traditional ERP vendors are broadening their footprints in an attempt to offer an "end-to-end" solution with everything from web storefronts to customer relationship management (CRM) to supply chain management (SCM). The CRM and SCM specialists are branching out into web order fulfillment. And a number of "best-of-breed" technologies are offering impressive solutions targeted at specific market niches. Underlying all of this is a network of partnerships and alliance agreements that formally and informally tie these companies together.

So how do you sift through the noise and confusion of these alliances during the software selection? You should develop system requirements based on YOUR business objectives and allow the competing vendors to assemble complete solutions to those requirements, either on their own or through partnerships. Where a solution with multiple components is likely, consider assigning or hiring someone to act as a "general contractor" (project direction and management) and giving him or her the responsibility for coordinating and communicating with the various parties that make up the complete solution. The challenge is to manage the integration points between the packages and to ensure that the end result is an integrated solution that supports YOUR business objectives.

The key here is Master Planning, one of The ROAD Group's services, with a proven industry standard. The ROAD Group uses PERA for master planning for systems which consist of physical, logical and people elements.

Put Decision-Making Authority in the Right Hands

Executed correctly, the selection process itself will build momentum for the changes to come. Your Selection Team will develop a shared vision of how the business will operate with the new technology. Master Planning (using PERA - The ROAD Group's standard) will address and catch the issues. Excitement will build as people see how the new tools will make them more effective. Having had input into the decision, they will understand and support the selection of the preferred software. The will feel ownership and will be committed to making it work.

Unfortunately, things don't always work that way. Most software vendor representatives are trained to bypass the rigorous analysis of the Selection Team and sell directly to the top management of the company. "People buy from people," they say - implying that the product capabilities are secondary.

Your challenge will be to keep the decision in the hands of the people that will make or break the success of the project. Top management must safeguard the authority of the Selection Team by repelling any attempts software sales representatives make at circumventing the established selection process. This policy will ensure a level playing field for all software vendors and will empower your key decision makers by establishing and ensuring their credibility and clout.

Set a Realistic Budget

Before you launch the Selection Team, be sure that you are ready for the price tag they will present to you at the end of the process. The best software tools are expensive and the full cost of implementing them is not always apparent. Don't focus on the license fees; they are often discounted and usually pale in comparison to the other costs of implementing the solution, including:

• Maintenance fees
• Training costs
• Implementation costs (both internal and external)
• Hardware and other infrastructure costs

Be sure to consider the total cost of ownership (TCO) for the solutions you are considering. If you develop a TCO model with a software vendor, you're likely to get only a subset of the overall costs. Instead, work with a trusted business advisor to develop a list of ALL costs. Next balance these costs against the business benefits you plan to achieve. Take this total value proposition to anyone in the organization whose buy-in must be secured before investing the time and effort in a selection process.

An important and essential element to effectively accomplishing the above is to model your business processes. This is the key in successful and effective implementation, understanding by all those effected, and gaining buy-in as the Selection Team begins its processes of evaluation. You MUST do Master Planning and the first pass at your business processes BEFORE you try to select and implement the software solution. The Business Process Engineering is normally done by experienced management consultants. This should NOT be done by IT personnel. They do not have the business knowledge and understanding. In addition, the business process modeling MUST be done simultaneously to make sure that the business processes to be used can, in fact, be implemented. There may be a desire or need to alter the business process to "best practise" or another variation that will effectively work with the application. Business Process Modeling is another service offered by The ROAD Group. This helps both senior management and the Selection Team understand the entire enterprise and how it works from a "systems" point of view BEFORE choosing a software provider.

Manage the Selection Process by YOUR Rules

Software salespeople are highly trained professionals. They follow well-developed sales methodologies that are designed to tilt the playing field in their direction at every turn. Some vendor tactics you can expect to encounter are:

• Attempting to bypass the Selection Team by insisting that they have an opportunity to meet with your top executives early in the process. (There is a very legitimate reason for this IF it is to establish that the CEO must be the champion of an enterprise system effort, not the CFO or especially the CIO - they should be coordinating points, BUT the CEO MUST be the one for continued support, managing expectations, and maintaining alignment on the project).
• Providing their own list of "suggested requirements"
• Cultivating sources within your organization that can feed them inside information
• Attempting to exclude other competitors by suggesting an early "proof of concept" demo

The challenge for the Selection Team will be to ensure a fair and objective evaluation of the solutions under consideration. Recognize that a horde of software vendors pursuing your company will quickly consume an incredible amount of your time with visits, meetings, lunches, etc. Set the rules of engagement early in the process. Who will be the contact point(s) for the vendors? When will you welcome a visit? Who will the vendors meet with and for what purpose? Without firmly enforced rules, the selection process can easily get out of control, delaying the decision, and potentially creating "analysis paralysis."

Be Careful What You Ask For

Defining system requirements is the most critical part of the software selection process. We often encounter companies that have researched their software options for months, yet haven't been able to come to a consensus on a solution. Why? Because they never came to a consensus on what they required in the first place. This is ONE of the major reasons why Master Planning is critical PRIOR to selecting enterprise system software.

The reason for this is pretty obvious. Today's solutions are build to support business processes that cross organizational boundaries. These organizations don't always agree on their needs and priorities. We have found that the best way to get consensus is to get people from each organization or business unit together in a room to develop a shared vision of how the integrated process will operate with the tools offered by the new technology. As they talk about how to get from today's process to the one they envision for the future, they will identify the things that the new technology must be able to support. These become YOUR requirements.

The challenge is to get everyone to agree. Each person and department will have their own agenda and may be unwilling or unable to be creative in addressing entrenched policies and procedures. Also, many of these people will not be aware of the latest technologies available to streamline the processes. A Skilled Facilitator (The ROAD Group's Team has these facilitation skills) - whether internal or external - is essential to this process. Use an individual who has demonstrated skill at getting group consensus and who understands the software market you are exploring.

Focus on What's Really Important

In most companies, the requirements definition process will lead to a list of hundreds of requirements. In years past, the accepted practice was to bundle these requirements into a Request for Proposal (RFP) and send it off to the vendors so that they could check "YES," "NO," or "MAYBE" next to each one. Unfortunately, what comes back is neither accurate nor helpful. Software vendors merely respond in a way that maximizes their likelihood of getting invited to the next round.

There's a better way to narrow the field. Since the vast majority of your requirements will be easily met by the better software vendors, focus, instead, on a few differentiating requirements. These differentiating requirements are the ones that are strategically or operationally critical for YOUR business and, as a result, difficult for most software vendors to satisfy.

For these few differentiating requirements (never more than 20 to 25), ask the candidates to describe how their solutions will satisfy those business issues. These narrative answers will quickly differentiate the contenders from the pretenders. The tough part, of course, is identifying those differentiating requirements. That is best done with the help of someone who has both an in-depth understanding of your business issues (an obvious result if Master Planning and Business Process Modeling has taken place beforehand) and the capabilities of the available solutions on the market.

The Demo - Have it Your Way

Its during the demo that the rubber meets the road. The demo is your opportunity to see how the proposed software solutions will satisfy YOUR business objectives. Therefore, it is critically important that you, NOT the software vendor, set the agenda. Each vendor has a "canned" demo and, left to their own devices, that is what you will see. In that demo, everything works and the best features of that system are showcased. Unfortunately, you may not get to see how the package will work for you.

Develop a script for the demo that reflects your own needs and mirror a "day in the life" of YOUR future business processes (which means YOU MUST understand them to enable you to do it). Then make sure the script is followed. In our experience, this is easier said than done. We've never seen a vendor not try to steer the demo back to his or her own agenda. This if often done so skillfully that you may not even be aware that it is happening. Worse yet, your own people will complicate matters by asking questions that aren't related to the script.

It takes a firm hand to control both the vendors and your own people. Sometimes an outside facilitator is the best way to ensure that the demo includes ALL of the features that you need to see in the limited time you have available.

Beware of "Vaporware"

Nowhere are product life cycles shorter than in the software business. New technologies and applications are announced every day. However, the announcement of a solution doesn't necessarily mean that it ready to ship. There is a tendency in the software business to sell solutions before they are ready (normally thrust into this by the "first to market" driver). This situation creates a real dilemma for the buyer. One the one hand, you don't want to buy a solution only to find out that an important piece of it doesn't work. On the other hand, you don't want to ignore promising new features under development, particularly if months will pass before you implement that part of the solution anyway.

Use the demos to expose "vaporware." Watch out for "chalk talk" where the demonstrator draws diagrams on the board and talks through how the system "could" work, without ever showing it on the screen. Take the attitude of "unless I see it, it doesn't exist." Be from Missouri - the "show me" state.  Make sure that you leave the demo understanding what's there - and what isn't - so that you can separate promises from reality. The input you receive from people with "real world" experience in each package is incredibly valuable at this stage in the process.

The Decision is Yours

Once the demos are done and the analysis is complete, it's time to make the final selection decision. Inevitably, individual departments or groups will have different favorites, depending on how each solution addresses their own needs. The challenge will be to get the group to agree on which solution best meets the needs of the organization as a whole. A consensus decision will build momentum for the implementation project to come.

In order to reach a consensus, assemble the members of the Selection Team and begin by reviewing the facts of the case.

• What are the strengths and weaknesses of each solution?
• Are there technical issues based on a package's architecture or level of integration between the solutions?
• How financially stable are the vendors?
• What have you learned from the references?
• What will be the total cost of ownership for each solution?

As the Selection Team members begin to see the whole picture, the focus will shift away from what is best for individual departments to what is best for the company. The challenge is to move the Selection Team towards a solid, well-supported business case justifying the consensus decision.

Everything is Negotiable

Once you've got a consensus decision, you move into the negotiation phase. Keep in mind that the variable cost for a software vendor to provide the software for your new business system is roughly the cost to burn and ship the CDs. Of course, the software vendor wants a little more that that to cover the massive fixed costs for development, sales, and support. The difference between two amounts is your negotiating space.

First, be sure that you are getting a quote that includes ALL of the costs you will incur including licenses, maintenance, training, and any implementation and support costs. Secondly, be sure that the quote covers ALL of the elements of the solution including any third-party packages and development tools, especially the one that provide your eCommerce solutions. A good rule of thumb is that if the software vendor shows it, then it must be included in the quote.

Next, when you have the initial quote, devise your negotiating strategy. Determine a strategy, set some goals (for price, added modules of functionality, free training, etc.), and devise the tactics you will use to get what you want. If you are not experienced in negotiating for software, consider using outside help. We often find that the savings you gain in bottom line prince can easily offset the cost of hiring a consultant to help you with negotiations.

Know When to Get Help

Ultimately, the selection of a new business software solution is all about managing risk. The trade journals are full of stories of software implementations gone bad. These fiascos generally stem from a few main causes:

• The organization never bought into the new solution
• The project team set expectations that couldn't be met
• The solution didn't work as the vendor had promised
• The goal shifted from one of "Improve the Business" to "Go Live"

Our last tip is a simple one - know when to get help. As with everything in life, wisdom comes from experience. If you do not have experience in selecting software, you would benefit from hiring an "experienced guide." The risk of failure is great. And the value in starting off on the right foot is immense. If you are still not sure whether or not to seek outside help with your software selection project, consider taking the Self Assessment Questionnaire below:

Self Assessment Questionnaire

If you answer "NO" to any of the following questions, you could benefit from the experience and success that The ROAD Group Team has achieved in helping companies in a wide variety of industries select and implement enterprise system software solutions. To learn more about how our Team can help you, call us at 281-263-3798 today or e-mail us.

• Do you have a clearly defined business strategy and vision, and does your Selection Team understand it?
• Does your Selection Team understand how this software implementation will support that vision?
• Do you understand the software market you are evaluating - the key vendors, their strengths and weaknesses, their reputation, and their development plans?
• Do you have enough experience in the software packages you are evaluating to determine what is "vaporware" and what is not?
• Do you understand which of your business requirements will help you differentiate between the vendors?
• Do you have a skilled facilitator who can achieve consensus from a room of differing opinions?
• Do you know which items a software vendor is most likely to negotiate and which they will not?

Other Issues of Importance

There is more to a new enterprise software solution than the selection and implementation. How do you keep it maintained? NO, we are NOT talking about software vendors providing maintenance...that is maintenance of their software codes, etc. dealing strictly with the software, upgrades, and the like. We are talking about the "business processes change maintenance management" required for your system software to enable it to work as you change your organization and business practices from time to time. Software vendors ARE NOT there for that. So...who is?

Enterprise systems applications, such as SAP R/3, work in an environment of client-server. This requires business processes that can be well understood by the system. This, in turn, requires business process modeling with modeling tools designed to enable the system software to understand and handle the relationships - organization and data knowledge. You can only get there with the tools that allow you to "model and test" changes BEFORE you implement them into your system. IF you don't, the system will not continue to function in support of your changed business environment because the system and the software cannot learn by osmosis. Someone has to maintain the system software application by re-modeling the modeling used to establish the system in the first place. This was the system as it was delivered and accepted by you at a very definitive point in time. The ROAD Group uses ARIS, the leading business process modeling tool, for not only modeling for system planning and implementation, but system business process maintenance too. This tool is a proven key to effectively working with major enterprise systems, and maintaining those systems long after the "implementors" have left the scene.

Business Process Modeling Maintenance Services for Enterprise Systems is a service provided by The ROAD Group, LLC. We not only model the processes for system  planning and implementation, but offer post-implementation services utilizing the best tool to keep your system in tune with the changes that will happen. This permits you to make sure that you always have a system that reflects your latest organization and your latest business processes and needs. Our experienced business process system modelers are constantly kept up to date with the latest revisions and improvements in the ARIS modeling tools and applications.

Another value-added service for ensuring you are getting the software you bought and that it performs within the specifications is the Validation Services. The ROAD Group's sister company (CSSC, Inc. - Computer Systems Services and Consulting) provides software quality assurance and validation services as an independent service and consulting firm).  CSSC's experienced enterprise system software validation and quality assurance team have in-depth experience in the pharmaceutical industry and familiarization with the various CFRs (Code of Federal Regulations) required. CSSC excels in compliance testing and validation as a third-party independent entity.

Put the "Framework" Around Your Enterprise System Project for Successful Results

The ROAD Group's enterprise systems services offered noted in RED CSSC's software validation & QA services offered noted in BLUE

Framework for Successful Enterprise Systems

1. TRG offers Master Planning
2. Business Process Modeling (TRG offers Planning support) 4. Business Process Modeling (TRG offers Negotiation support) 6. Business Process Modeling (TRG offers Implementation support)	3. Enterprise System Planning & Selection (TRG offers Facilitation) 5. Enterprise Implementation Activities (TRG offers Project Management)	7. CSSC offers S/W QA & Validation Services
	8. TRG offers Business Process Modeling & Testing Support and Implementation for YOUR Enterprise System Maintenance by maintaining business process usefulness.

To learn more about how our The ROAD Group Team can help you,

call us at 281-263-3798 today or e-mail (Paul.Allen@theROADgroup.com)

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