7 Deadly Mistakes Buying B2B Software

“Experience is a great teacher, but smart people learn from others' experience.” Abraham Lincoln

Having worked side-by-side with many clients at both Deloitte and KPMG to help make software decisions; and having started a software company (XLerant), as well as run multiple related research initiatives with the Institute of Management Accountants (IMA) I can say that most companies – with uncanny regularity – fall into one or more of these seven mistakes in buying B2B software.

1 FAILURE TO DEFINE THE RIGHT SCOPE

“How long does it take to build a house?” You can guess the answer to this question. It depends on how many rooms... the total square footage... types of materials used... how skilled your labor is... whether or not you want professional landscaping, and so on.

So when you’re looking for B2B software to address a need, the sharper you can define your scope the better you will be. Unfortunately, the opposite is true too.

I’ve had clients that failed to anticipate an obvious extension to the original scope. So they wound up with a point solution rather than the platform they would need a year or two down the road (an expensive mistake in many ways).

I’ve had clients say they want the equivalent of an in-ground swimming pool, helicopter pad, indoor tennis court and multi-plex theater in their home -- that is until they got the estimate from the builder. The scope was unrealistic.

I’ve had clients confide that they wanted to be able to do Rolling Forecast in a new system, but had only a murky understanding of what that means. They didn't think through what they really wanted and why.

There is no one-size-fits all scope, and scoping can be time consuming if done thoughtfully rather than quickly -- but the time pays off with a successful project.

2 PUTTING THE IT DEPARTMENT IN CHARGE

This may get me in trouble with my technical friends, but from my experience IT is an important stakeholder and should have a seat at the table – just not at the head of the table (that chair is reserved for the business).

Why does it happen that IT winds up driving the process (rather than participating as a stakeholder)? In part because of the lack of experience, many Finance and other businesspeople feel ill equipped and turn the responsibility for software selection over to the IT department.

That could be a mistake if IT people don’t know your business to the extent you do, or if they haven't walked a mile in your shoes to truly understand at a deeper level what you need from the software you’re buying. IT tends to see through a technical lens, and while that is helpful, it may not address your business needs or day-to-day requirements.

3 NOT HAVING A REAL PLAN (a.k.a., wingin' it)

“Just do it” is a great tag line for Nike but a disaster when it comes to purchasing software. I can’t tell you the number of times we were called in at Deloitte or KPMG because an evaluation went off the rails. When asked how the company came to the purchasing decision the story went something like this:

“I don't know what to tell you, somehow we just picked the wrong horse. A couple of us started with a Google search and kind of took it from there. We did reference calls and went with who we thought was best... but it just wasn't... now nobody's happy."

As an analogy, that's like deciding to drive across the country -- and rather than routing out the trip or where to stay -- we jump in the car and start to drive -- eventually winding up somewhere we didn’t want to be – or running out of gas somewhere along the way.

You need to think through the process before jumping on Google.

That includes thinking through who needs to be involved in the vendor selection process... how you will develop your initial evaluation criteria... how you'll go about identifying a list of potential vendors... what will happen in that first round of discussions and demonstrations... what mechanisms you'll use to down-select the finalists... what will happen in the final round... who the final decision maker is and how you'll make your final decision. Whew.

Your should also look at the calendar and do your best to answer when all those activities and milestones will happen. Lastly, you'll need to document this and share it with with the other members of your vendor selection team.

This is a more disciplined approach than "just do this" but that discipline will pay off in a much better run process and final decision.

4 LETTING VENDOR MARKETING DRIVE THE BUS

A Partner I worked with at Deloitte put it this way. “Imagine you’re going out looking for a new car. In advertisement after advertisement, you keep seeing all this stuff about Cup Holders. The car companies stress how many Cup Holders they have compared to the other guys, and how smart their placements are.” With a grin he concluded, “So pretty soon you start to pay a lot of attention to Cup Holders, and when you finally buy one you brag about how your car has 12 Cup Holders and ask your neighbor how many they have.”

Funny story of course, but there’s a lot of truth in it.

Does that mean I should ignore everything I read on a vendor’s website or hear in a vendor sponsored webinar or demonstration? No.

It just means you need to be discerning, and really know what you’re looking for. Document what’s important to you and why. If you hear about a new feature or function you didn’t know about, do not dismiss it out of hand, but in a clear-eyed way determine how you’d use it and the benefit it would bring to your organization.

5 NOT INVOLVING STAKEHOLDERS (... enough)

Experienced buyers know that the ultimate success of a B2B software roll out hinges on the end users. If they’re not happy they won’t use it, and that fact will get back to senior management who will ask if you got their real buy-in to the decision... or just tacit approval.

While it can be tempting, avoid taking on the role of a “Doctor” prescribing what’s best for the patient (the end user). Don't just focus your own technical needs but give stakeholders a voice from very early on in the selection process.

6 ASSUMING YOU KNOW MORE THAN YOU DO

I really hesitate to include this one because it sounds condescending. It's not meant to be. It's meant to alert you to what may be a blind spot.

Ever hear of The Dunning-Kruger effect ? It’s where people with limited knowledge or competence in an area greatly overestimate their own knowledge or competence in that domain, often resulting in making the wrong decision or choice.

People who know nothing about a topic are usually aware of that fact. That’s not the problem. It’s when people have some knowledge that they tend to overestimate their expertise.

When it comes to purchasing B2B software most people have limited experience, and often no direct hands-on experience with the exact type of software they’re buying. Yet after reading a couple of articles and visiting a peer review site or two, the Dunning-Kruger effect kicks in. You know more than when you started -- just enough to give you confidence and make you underestimate what you don’t know.

Often it's enough just to be aware of the Dunning-Kruger effect and be open to getting the assistance and support you need.

7 RELYING TOO HEAVILY ON REFERENCE CALLS

This is a quick one. Making reference calls seems to be a natural step in the process, but keep in mind that no vendor is going to consciously provide a bad reference for you. Vendors may even hand over a binder full of references and tell you that you can call any of them, but there’s a reason why many of those references won’t actually return your call (hint: they’re as busy as you are). With this binder approach some buyers are left with the impression that given the appearance of an abundance of references, there’s no reason to actually call any of them… and so they don’t. Or they give up after their third attempt to get someone on the line.

References can be important in a B2B vendor evaluation, but at the right time and for the right reasons.

MY RECOMMENDATION: THE “SCRIPTED DEMO” HACK

So now that we’ve discussed common mistakes and pitfalls, let me offer one suggestion for your next vendor evaluation process.

It’s fine for vendors to demo their offering in the best light possible. It gives them a chance to showcase useful features and functions, some of which you may not have even known existed. But once you have narrowed your list of potential vendors down to just two or three let me suggest you take charge with a “scripted demo.”

This entails coming up with a demo path (and content) for the vendors to follow closely. I've actually created Demo Storyboards for vendors to follow for clients at Deloitte and KPMG.

Let’s say, for example, you were looking for software to assist in financial and operational planning and reporting. You might mockup a planning input template or two; create an approval process; draft some sample reports; create some historical data, etc. You might require the vendors to follow a path that starts with logging in as a Budget Holder, completing a budget template, logging out and then logging in as that person’s Manager to review and approve the budget.

There’s a lot more to it but you get the idea, it's about creating a Storyboard. You want to reflect the real-world use of the application in a setting that can provide a sense of “a day in the life” so to speak; and do it in a way that completely levels the playing field and makes it easy to compare Vendor A with Vendor B.

Is B2B software evaluation easy? No -- not if done correctly (smile). But the payoff can be a great partnership with your vendor that lasts for years and delivers value well beyond expectations.