Moreso, it is a critical time to mitigate any major risks around product procurement and ensure significant value generation can ultimately be realized.
Perform a thorough product diligence effort
IT and business leaders meet with numerous potential partners and often become enamored with slick-selling sales teams, cool product demos or simply the name and brand involved. Having sat through hundreds of sales pitches in my career, one element to keep in mind before walking into the meeting room is that a sales engineer’s job is to show you how the product works, and to make a high-impact pitch.
They are never going to show you how it does NOT work, or what limitations exist, if you don’t dig deep and probe for clarity. Unless you’re more of a natural pessimist type in sales pitches, I encourage you to keep this point top-of-mind.
To help you along however, I’d like to share a more detailed list of topics to think about when reviewing potential new software products. Also, consider creating a simple scorecard to support your selection criteria – and use this as a basis for your final decision-making process.
Product due diligence – key points to consider
- Differentiated and industry-specific business processes – Think about these and how the potential solution you’re exploring will enable or hinder the automation of any key processes.
- User design and user experience – Place a critical eye on this. Strong design and UX is generally a sign of good organizational hygiene and that the product has been well thought out.
- Compare feature maturity – Comparable software platforms will claim similar features as competitors in their marketing material, but how well is that feature integrated into the platform? Prioritize what is important for your business and score those features against each platform for success selection.
- Product roadmap – Look deeply into the vendor’s product roadmap. It can be very telling about future product improvement areas and the software development lifecycle.
- Implementation process – These programs can be hard and complex. Ensure the right resources exist to implement in a highly efficient manner within your timelines.
- Support model – Are resources and skillsets readily available for both internal hires and project staffing. Does the vendor have dedicated account support to help your team along seamlessly, or will some aspect of maintenance land on your lap? Be sure to explore the vendor’s costing model to this.
- Identify deficiencies – Is this a multi-tenant cloud-based solution or on-premise, 2-tier or N-tier architecture? Does it have sufficient mobile capabilities, and is it utilizing legacy or obscure technology with limited resources? Any deficiencies here could limit the speed and velocity of future enhancements from the vendor.
- Security and compliance – Ask pointed questions around these topics. Will your potential partner provide you with security audit reports or certification? Do they perform penetration testing on an annual basis? Do you need to satisfy GDPR, HIPPA, CCPA or other regulatory requirements?
- Vendor business strategy – Especially with a more niche product, gain a view into the supplier’s financial structure, business strategy, and ownership structure. You want to have a stable partner, but also one committed to the right levels of R&D spending in the years ahead.
Be strategic. And win the negotiation and contracting phase!
Now that you’ve completed a comprehensive product due diligence checklist to ensure your potential software solution and vendor is fit-for-purpose, the most critical time has arrived. Contract negotiation typically represents the final step in the process of selecting the right solution, often serving as your last opportunity to shape the terms before making a commitment.
One approach we find extremely valuable is to negotiate with two vendors you rated very highly so you have options when going into hard contract discussions. This is a great lever in getting more value and a better cost structure, but also in simply comparing and contrasting deal structures.
When a vendor knows they have clear competition, it keeps them highly-engaged to win the business, and one will often ‘sweeten the deal’ with extra add-ons and benefits. Use this to your advantage!
Key items to clarify and understand in your agreement
- Know the terms – Read and understand the business terms of the agreement. Lawyers may review the agreement, but they will not understand the details you negotiated.
- Protect your data – Understand what the vendor can do with you and your customers’ information. If the agreement is silent on customer data, it’s critical that you add language protecting all data.
- Negotiate start of the contract – You will need to pay either a subscription or purchase + maintenance, but try and negotiate payment of the contract to align with when the software goes into production, not when you sign the agreement.
- Understand your risks – The agreement should work to protect you against uncertainties like vendor bankruptcy, cyber security breaches, down-time, etc. (and have adequate remedy to pay for those related issues). Understand what recourse you have with your partner and to what extent you will be covered.
Time invested today is ROI awaiting tomorrow
Selecting the right partner is an important step to a successful implementation of new technology solutions. It’s critical to get it right and make highly informed decisions based on every bit of information you can obtain. We believe that by following a thorough approach and detailed assessment, your chances of making the right decision are very high – and your ability to drive measurable impact for your organization and stakeholders can be lasting.
At Cuesta, we’ve advised hundreds of companies in this space, and have helped to re-orienteer software buy decisions that may have gone off course. Our tried-and-true methodology, and team of experts, know the value levers to help ensure the right decision for you based on your business objectives. I look forward to your thoughts on this exciting topic.
