Successful Software Selection: Do Your Due Diligence

Successful Software Selection: Do Your Due Diligence

software, industry, businessA survey by consulting firm Software Advice, based in Austin, Texas, has found that the small and medium-sized (SMB) businesses most satisfied with their software-selection projects used basic due diligence during the selection process, rather than the kinds of complex analyses often employed by IT departments. The two most effective tactics cited by respondents turned out to be checking vendors’ references and having software agreements reviewed by an attorney. Several commonly used tactics turned out to have little impact on project success.

For its report, “The Best Software Selection Tactics for SMBs,” Software Advice polled 321 company decision-makers about the results of their recent software purchases. Researchers presented respondents with 14 different software-selection tactics and asked for simple yes-or-no responses to determine which ones they used. Then they rated respondents’ satisfaction with their software purchases on a scale of one to 10.

Researchers assigned an “impact score” for each tactic, based on the extent to which respondents who employed the tactic reported a different outcome from those who didn’t. These impact scores, combined with the satisfaction scores, were used to place each tactic in a quadrant, with the most effective tactics on the upper right and the least effective ones on the lower left. Tactics falling outside of those two quadrants were classified as neutral.

Speaking with ThomasNet News, Ashley Verrill, analyst at Software Advice, said that the firm commonly does research as part of its interaction with software buyers, who come to the company for free help finding the best software applications for their unique needs. Software Advice makes its money on the vendor side by bringing together buyers and sellers.

As a result of interactions with buyers, Software Advice produces industry-focused BuyerView reports that provide market insights into the needs of software buyers. For example, according to the company’s BuyerView report on manufacturing software, nearly all manufacturers contacting Software Advice said they need both manufacturing execution system (MES) and materials requirements planning (MRP) software. The majority of respondents said they are migrating to software from manual methods such as spreadsheets and paper.

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In the Software Selection report, though, Software Advice wanted to delve more deeply into the processes decision-makers use when they purchase applications. “The BuyerView reports are really great for outlining what people are looking for and the pain points they are trying to address,” Verrill said. “What they don’t do is look at what are the most effective means in general for selecting software.”

It turns out that reference checks and legal reviews were scored, by far, as the most effective tactics for software selection. Also appearing in the “most effective” quadrant were the similar due diligence practices of assessing vendors’ financial viability, preparing requests-for-proposals (RFPs), and estimating total cost of ownership (TCO).


Compared to the ways large enterprises conduct their software selection, “in the SMB space, the process needs to be simpler and less expensive,” said John Parkinson, affiliate partner at Chicago-based Waterstone Management Group, an advisory firm focused on serving the technology sector, speaking with ThomasNet News. Fortunately, the choices are easier in the SMB space, he said, as “there is little functional differentiation between products in a software category. Unless you’re way off the mark, anything you pick is likely to work.”

That’s not to say due diligence has no role to play, he stressed. “Vendor reputation might well matter, and getting a lawyer to look at the contract makes sense, to ensure the basics for support and that SLAs (service-level agreements) are covered adequately.”

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This article was originally published on ThomasNet News Industry Market Trends  and is reprinted in its entirety with permission from Thomas Industrial Network.  For more stories like this please visit Industry Market Trends.