CFO, what do you expect from your Software Vendors...

Matters for Discussion

The Management Team of ABC Company (fictitious company) would like to embark on a Business Transformation program. Management are therefore asking the Board to please read this paper, discuss its contents and make any additional comments if required.?Management are also seeking approval from the Board, for management to evaluate various alternatives, and make a recommendation to the Board for approval (see matters for approval).

This is a strategic statement that attempts to describe what is important to ABC, and the principles we value in building a long-term relationship with any software vendor and business partner.

First and foremost, we want to enjoy the whole experience with our software vendors.?This includes: alignment with our selection process, the sales process, the solution engineering process, the implementation, ongoing optimizations and of course enjoy the solutions and relationships for many years to come.

?We will build trust and confidence in our software vendors, bringing peace of mind & reassurance in their organisation.?Our software vendors will achieve this through their: style, manner and approach towards our organisation and our people on a daily basis.

?It’s critical we comprehend what sets our software vendors apart from their perceived competitors and that we understand their unique value proposition, and what competitive advantages and or value that will bring our organisation.?It’s important that we buy into those differences, feel it and believe in it.?

?We understand that this is a significant strategic decision, and this decision will have a major impact on our organisations ability to execute on our strategy.?We must be uncompromising in making the best possible decision for all our stakeholders. We will not put our future at risk by implementing anything less, than the best solutions for our organisation.?We need to partner with industry leading software vendors, so we can give our ourselves the best chance of becoming the greatest organisation we can be.

?We need to partner with an organisation that has a demonstrated capability and track record in delivering world-class solutions.?We expect our software partner to deliver services professionally and to respond quickly and efficiently.?We want a team with relevant industry experience with the ability to draw on expertise when needed.?We want our software vendors to focus on a minimum number of solutions, so they don’t get distracted by a myriad of different products.?

?We don’t want to be sold software products, we want to be provided with services and solutions that “solves our pains and challenges”. We believe that products are consumed, but services are experienced.?We want every person in our organisation to experience wonderful modern solutions that solves their individual day-to-day frustrations. We want to invest today, to build capacity and capability in our organisation tomorrow and for the years ahead.?Our organisation will become more productive by leveraging and utilizing scarce resources efficiently, whether it’s time, people or money. We need to create readiness for ABC to take advantage of opportunities that will come our way, if it’s growing revenues, or taking new products and or services to market with unparalleled agility and speed.?We don’t buy on “price”! We acknowledge that world-class software vendors provide “value” through initial and ongoing services, so we expect to be presented with a viable business case, one that makes sense and is sustainable for ABC.

?Our software vendors must have industry expertise, in fact we want them to be right in the middle of our “sweet spot”. We expect them to have hundreds of people dedicated to serving just our industry. Growth rates, number of customers, and referenceable customers in our industry is very important to us. We expect our software vendors to have enormous capability in terms of depth and breadth of functionality and they will also continue to invest in developing and enhancing solutions for our benefit.

?We recognize that progressive organisations like ours are moving towards "real" cloud solutions. We are not interested in simply moving our old on-premise software into a hosted environment.?Simply moving problems to another server is not the answer, it’s extremely short sighted, and ultimately will not solve our pain and challenges.?We know the world is moving towards multi-tenanted cloud environments and we must jump on the “technology bandwagon” or get left behind. We can’t afford to have a very own Kodak moment and put our business model at risk. Even Nokia lost the plot!

?Our software vendor will have built their own “cloud-based” solutions from the ground up and they know it inside and out.?They have most likely attracted an amazing eco-system of other solutions providers that have leveraged the platform to build other solutions using a “single data model approach”, giving us a “single source of the truth”. We expect they have pre-built connectors with other popular applications if necessary.?We want to avoid the new “cloud hairball”, and we will demand a unified platform where possible to avoid version-lock and unnecessary complicated and expensive integrations with a myriad of disparate systems. Their solutions must be simple and easy to understand, as we like to keep it simple stupid (we called it the KISS method).?We expect any software vendor to demonstrate the scalability and flexibility of the platform, as this will be critical as we grow and our requirements expand.

?Most importantly we see this transformation initiative as investment in our people. We value our people and want to provide world-class tools, to support their day-to-day tasks.?This will be important in their career and professional development in building their skills and competencies. Our people are important and we want them to know that their role is critical as we execute on our strategic initiatives and how we operate in delivering products and services to our customers. Our people deserve this investment in them, to enhance and balance their lives, to have rewarding and satisfying careers and to improve their overall well-being. We see technology as a key enabler of connecting people with people inside and outside our organisation to build warm productive relationships. We have no doubt that this will have a positive impact on our people and culture, and this will improve our chances of attracting and retaining the right people. We want to become or improve our “employer of choice” status.

?Often overlooked, how software vendors approach us will make a huge difference to our overall experience.?We expect them to: listen & establish needs, guarantee confidentiality, present tangible benefits back to us, they must be holistic: what is “good for the whole” organisation, all things considered??We won’t rely on personal views, big egos, or the needs of individual departments. We expect software vendors to appreciate our goals and objectives, and continually question themselves: “why are our solutions the best solution for ABC? Why are we the best fit for ABC”? We want documentation around our engagements, and we want them to exceed our expectations, as we are seeking long-term enduring relationships, in building a mutually beneficial partnership. We want our software partners to take responsibility over their solutions, even if we choose our own solution integration partner to help with our implementation and associated solutions and services. Our business transformation program is a journey that requires ongoing investments in our governance, policies, people, processes and systems. Therefore, we value proactive account management and ongoing optimizations to our solutions.?The journey is just as important as the destination… we’ve learnt that lesson!

?For ABC, value, quality of work and quality of outcomes are more important than cost. Our software vendors must have all the appropriate certifications, and comply with all best practice global standards and be subject to regular infrastructure and compliance audits, that protects our data, with minimal downtime for scheduled maintenance and upgrades.?Governance, Risk and Compliance (GRC) is of critical importance to our directors, every record must be time & date stamped on who did what, when.?In fact, we also demand a GRC dashboard, with alerts, reminders and dashboards. Workflows must be easily configurable to allow for example “delegations of authority” to be implemented, and updated at a moment’s notice. We believe that our data is more secure, when it’s held in industrial scale Data Centres, just like banks, rather than on premise servers that typically reside in a corner office or in a managed services environment.?We can’t compete with that level of security in terms of quality and or cost.

?Partnering with an organisation that has invested in creating an amazing brand and image is important to us.?We want to deal with a great cloud-based software vendor that is at the forefront of their industry. We don’t want to invest in something today that will not be relevant tomorrow and beyond.?We don’t want to go through another transformation program again in 3 years because we have compromised our investment today. So, the questions we need to ask ourselves is: which software vendor has the best proposition today, which will be the most relevant tomorrow and which is most likely to invest in continuous innovation and support ABC well into the future?

Matters for decision

The Board approve that Management will undertake a review of ABC business applications and make a recommendation to the Board by MM/YYYY.?A budget of up to $Xk will be set aside for the FY MM/YYYY, with possible go-live date of DD/MM/YYYY.?If management can justify that this investment will support the execution of our strategic initiatives, and will create additional shareholder value, then the project will be accepted, subject to final Board approval supported by an appropriate business case and relevant investment hurdles.?The investment hurdles will include: an acceptable pay-back period (2-3yrs), an Internal Rate of Return (IRR) greater than the discount rate (cost of capital), a Profitability Index (PI) of greater than 1, and a positive Net Present Value (NPV) between 3-5 years.

Motion to carry: noted in minutes of meeting.

Steven Skinner - FCPA, GAICD, FEI - CFO, Advisory Practice

Steven’s role is to support and influence CFO’s their finance teams & their organisations on their transform journey, by evaluating, selecting and implementing enabling technologies. These are Steven's views and do not represent the views of his current or former employer.