5 Lessons Learned From Hundreds of Software Selections That Will Save You Time and Money

I was inspired to write this post on the back of Nicola Askham’s excellent piece How to Select the Right Data Governance Tool. Whilst she makes many valid points, I can bring a slightly different perspective given I’ve got decades of experience on “the other side of the fence” as the Software Sales person pitching deals. Note that these Lessons apply equally to any Software Selection at the Enterprise level, it’s not focused purely on Data Governance.

I’ve worked or collaborated on hundreds of different software selections in the past decade, and whilst I’m biased on the vendor side to some degree I think it is helpful for anyone selecting software to consider the points below and understand the mindset of sales as well as the pitfalls you may inadvertently walk into. This is my take on becoming the “Poacher turned Gamekeeper”.

Here are my top 5 Lessons that you need to know before you embark on an Enterprise Software Selection:

Lesson #1 - Inexperienced Selection Teams Make Poor Choices and Take Longer to Decide

There’s a level of maturity required to make a software selection, especially one that is going to cost hundreds of thousands or millions of dollars, is essential to meet a regulatory change, or is going to fundamentally transform the way your organisation does business. These are often huge decisions that will radically alter the status quo in an organisation for many years to come. The teams selecting software need to be adequately prepared to make such monumental decisions and they need the support of the sponsoring executive during the selection phase. Too often I see the following issues:

Lack of direct engagement from Senior Management to shape and direct the requirements 

“My team has this covered” - yes, they do, but many of them are doing this for the first time. As such they may lack the strategic vision for your company or function to adequately align against your KPIs or goals. 

Teams selecting software when no-one has spent this sum of money previously

Making a purchase decision for hundreds of thousands of dollars is something normal for a C-level executive. Making a purchase decision for hundreds of thousands of dollars for someone in the rank-and-file of an organisation probably happens once or twice in their lifetime, mainly when buying a home to live in or something of that magnitude. 

The last software selected by a large number of people I meet was the latest version of “Candy Crush” for their new iPhone. The expectations of people in 2020 are that software is readily available, downloads and installs in a single click, and is potentially throwaway once it’s lost its shine. 

This mindset is fine for small scale decisions, but it hampers those bigger selections and causes people to focus on the wrong things. The sheer magnitude of the spend (and the potential negative impact on careers if they pick the wrong thing) paralyses the decision process.

Suggestion:

Ensure there is adequate management participation in software selections, or be prepared to make slower, poorer choices. If no-one in the team has gone through a full Enterprise Level software selection before then try and find a mentor elsewhere in the organisation that can help guide you through the common pitfalls and problems you’ll encounter.

Lesson #2 - Lack of a Business Case

This lesson is most applicable when the software selection process has been initiated by IT. Armed with a new 2020 budget the CIO’s key men and women head to Gartner and line up the solutions in the top right of the Magic Quadrant in their sights. BOOM! Your organisation has just bought an expensive new toy that meets the needs of the tech team, or gives them something shiny to play with for another few months.

Suggestion: 

Before any software selection begins, build a solid business case for the investment. What strategic goals does your company have? If you don’t know, download your Annual Report or visit the IR section of your website and read them. Typically the business will be aiming to do one or more of:

1. Increase Revenue
2. Decrease Costs
3. Reduce Risk

So if you have not got a line of sight to achieve one of those three goals in your Business Case, ideally tied to some major strategic priority, you’re probably buying a Shiny New Toy that will become a Big White Elephant in years to come.

Lesson #3 - Stop Relying on the Big 4 Advisors

So you’ve successfully reigned in your IT team, you’ve secured an experienced selection team armed with a business case and led by someone in Senior Management. Things are going well. Then you call in the Big 4 to help you make a software selection and things start to go off the rails.

Why have you called in the Big 4?

Typically this happens when the sponsoring Exec wants to cover his or her ass on the decision being made, to prove to internal or external audit that the selection process was free and fair, or because the issue highlighted in Lesson 1 is so severe that no-one really knows what to go shopping for.

The Big 4 do a great job in setting out Blue-sky thinking for senior execs and persuading you to shoot for the moon. The issue is that beneath the Partner level (and even sometimes at the Partner level) there’s not a great deal of experience from which to draw. Many of the Manager level staff are simply using cookie-cutter templates that are handed out in their training to push a square peg (their selection process and requirements) into your round hole.

What’s in it for them?

 It’s important to ensure there’s a degree of impartiality in your Advisory team. I would strongly caution against using the same advisory partner to implement your software that you’re using to select it - because then there’s a major conflict of interest.

Has the Partner leading the engagement worked in Industry themselves and selected or used any of the software you’re selecting? Do they use the same software in their own business? If so, were the people you’re working with involved in that selection? 

Suggestion:

Limit the role of the Advisor to areas where they have a strong track record and are bringing value. Outsourcing the decision to a third party is not likely to lead to success. Whilst your team may be making the final vendor selection, you’re using a Big 4 process to do it. That process can lead to prioritising a vendor that is more closely aligned to future revenue for your partner than it is to future success of your business if you’re not careful.

Lesson #4 - Ditch the Analyst Reports (yes, ditch the Gartner MQ)

Tying back to Lesson 1 again, the lack of experience means people reach for authority. What better authority than the “World’s Leading Research and Advisory Company”? Well, perhaps talking to your peers in the business world might be a better place to start.

The issue with the Magic Quadrant

80% of Gartner’s 2018 annual revenue came from their Research Subscription business, so I guess I’d better be careful how I phrase this. In my opinion the Magic Quadrant does not reflect the best software products in the domain and it does not reflect the best companies to buy from. 

To me, the position a product reaches in the MQ is strongly correlated with how open the vendor is to sharing info with Gartner analysts (this is the fuel they use to sell you reports), as well as with the amount of money the vendors are spending to attend Conferences and other functions (which represents 11% of their annual revenue in 2017 and 2018 - a nice cherry on top of the Research Subscription Cake). 

Before anyone craps on me for being so blunt - I’ve seen this first hand. When I worked at Triple Point Technology their CXL software was consistently ranked alongside OpenLink in the top-right hand corner of the Magic Quadrant in every year it was released (see image).

That was until Ion acquired the company, stopped spending money on conferences and marketing promotions, stopped talking to analysts about the product, and I watched on as Triple Point plummeted from Top Right to Bottom left in a single year. (Note I can’t find an image of this online, but I’m sure one of my contacts has a copy as we all chuckled at the time about it).

To be fair to Gartner, Ion was a really difficult company to work with and their ownership of the Triple Point brand and CXL product definitely would have moved the value down - however a product with 20+ years combined development that’s used in all of the major Commodity Trading firms from Cargill to Reliance is not going to become a “Niche Player” overnight. Someone who bought the “Visionary Leader” product on December 31st 2013 must have been really pissed off that they ended up with the “Niche Playing Challenger” to install on Jan 1st 2014.

To be more fair, they’re not the only research analyst playing this game - IDC and Forrester do the same thing. “Awards” for Software houses are never awarded unless the Software House turns up to collect them (and **cough cough** pays handsomely for the table or a full pager in a glossy magazine)... the list goes on.

Suggestion:

In 2020 there’s no excuse not to be social and use LinkedIn or other online sources of information to see what people are really saying about a product. You’re likely connected to peers in the industry - ask for their opinion. Go find ex-staff members from the companies you’re looking to select and connect with them, they’ll probably give you a “warts and all” review to help you make a better decision. The Magic Quadrant and its peers is a nice list of potential options, but selecting based on the position here is flawed and lazy. Don’t do it.

Lesson #5 - Check, check and double check the Sales Material Provided

Sales people have a bad rap. They’re often maligned for telling untruths or saying whatever you want to hear in order to make the sale, and sadly in some cases this is a fair accusation. The accuracy of the content they provide is something to be checked clearly and meticulously. Specific areas I’d focus on:

What is Product today and what is Product tomorrow?

If you’ve done your job right and listened to me in Lessons 1-4 you will have a great business case lined up against some real business requirements and a team in place that understands the magnitude of the selection they’re going to make. Well done. This is where you can start writing RFI/RFP and POC requirements with confidence that you are going to select based on facts. 

Are your Requirements Met Today?

Buy based on what the product does today, unless there’s no option but to buy the road-map (e.g. when a regulatory change happens and the software firms are scrambling to build something to meet it). Any requirement scoring future capabilities of the product should be heavily marked down. Unless you can touch it, feel it and see it solving your business problem today, you might want to ignore it.

Are you seeing Product or Vapourware?

This is easier to determine when you’ve got well thought out functional requirements. If your requirements are met by someone showing a flashy report on the big screen TV in your meeting room then you might be buying Vapourware. Note this is slightly different from my above point, some vendors **cough cough** have been known to mock up a screen to show a “feature” that might not even be a footnote on the Product Manager's latest inbox entry.

Are you “Buying the Hype” around the Vendor?

I’ve seen lots of vendor selections influenced by the marketing and scale of the major software vendors. You know, the ones that can afford massive adverts in the tunnels you walk through to board an aeroplane or the ones that have sponsored an F1 race car. These guys chuck money at marketing to get your eyeballs used to seeing their logo and brand. They may not chuck quite so much money on a.) developing good software, b.) working on user experience or c.) having a team that can implement their solution.

Be careful buying from the big boys - often they’ll claim: 

• Their solutions are integrated “we’re selling everything you need rather than point solutions that need integration”. Well, yes, but are their solutions actually integrated or just a hodge-podge of tools they’ve acquired by buying niche vendors?
• “We have staff in all your business locations” - sure you do, but do any of them have the skills to implement the software I’m buying? Can I talk to any of them?

Suggestion: 

Ask deeper questions - don’t rely on the simple, high-level answers. Also be aware of your existing cognitive bias towards one particular vendor or service provider. Whilst the big boys have been around for a long time, it doesn’t mean they’re selling the best software and delivering it with the best service.

Summary

OK - that was much more than I intended to type. There’s a lot more to add beyond the above too - issues with overly aggressive Procurement processes, ridiculous turnaround times given to vendors to produce the RFX documents from which you need to make a million dollar decision, interference from senior stakeholders that haven’t made effort to engage in the process etc. 

It’s a difficult world out there, and I sympathise with the customer side when making a large decision based on imperfect information. Be sure to get your own house in order, do your homework, and prepare to take a bit of a gamble. Remember that you’re entering a Partnership with your vendor, so seek a collaborative approach to the selection process rather than a pitched battle of Us vs Them.

Let me know if you agree or disagree with any of the above - as usual I love a good open debate about this. If I’ve missed anything major it’s either deliberate or accidental - so feel free to call me out on it in the comments section.