Why software purchasing is so much more than selecting software
When considering an enterprise software purchase, people usually think of selecting the software. While that is an essential part of the process, there is more that must be done both before and after the selection to ensure the software delivers the desired business value.
Software purchasing (a.k.a. software acquisition) considers the entire “soup to nuts” process and is made up of 4 stages:
Business alignment - ensuring everything is aligned to maximize the business value delivered.
Software selection - identifying the software that best satisfies the business needs.
Software purchase - check references, verify RFP responses, negotiate contracts.
Implementation success management - manage the implementation vendor to deliver on expectations.
One of the reasons why software purchases fail to deliver value is because stages 1 and 4 above are skipped. Each stage is the foundation for the success in the succeeding stage. This blog article describes the 4 stages and explains how they work together to drive a software purchasing projects to a successful conclusion.
Stage 1: Business alignment
The business vision exists to guide the setting of business goals. When a goal is achieved the vision guides the creation of a new goal. The vision should never be achievable, while goals are achievable and measurable.
The strategy describes how those goals will be achieved and is expressed as business requirements. These are the “real” requirements because business value is only created when business goals are achieved.
There is a quantitative difference between business and software requirements. Business requirements describe what must be delivered to achieve business goals, and the value comes from achieving those goals. The software requirements themselves describe how that value will be delivered by the software. (There are other business requirements unrelated to software but they do not concern us here.)
The first stage of software purchasing is to define the vision, goals, strategy and business requirements and ensure they are aligned. The business requirements themselves describe the desired future state of the new software from a business perspective. This foundation must be in place before software requirements are considered.
Using the power of vision to align the business
If a vision is achievable it is not a vision but a goal. When a goal is far enough away it can masquerade as a vision, but when it is achieved it no longer provides any guidance.
In the early ’90s Microsoft’s "vision" was “a computer on every desk and in every home.” When this was achieved in the late ’90s, they stumbled because there was nothing to guide the setting of future goals. Microsoft went from leading the market to fighting to stay relevant in the early 2000’s.
Compare this with Apple, a company who used their vision superbly. To paraphrase Tim Cook's 2015 commencement address at George Washington University: “Most people have forgotten, but in 1997, Apple had been adrift for years. Rudderless. However, Steve Jobs thought Apple could be great again. His vision was for a company that turned powerful technology into tools that were easy to use, helped people realize their dreams and to improve the world.”
Think of the products made by Apple with Steve Jobs at the helm: the iPod, iPhone, and iPad and how they made Apple one of the most valuable companies in the world. That shows the power of vision. In contrast, Microsoft CEO Steve Ballmer’s reaction to the new iPhone was that it was overpriced, lacked a keyboard, and that he really liked Microsoft’s phone strategy. He simply did not get Steve Jobs’ vision. (See Ballmer laughs at iPhone) That lack of vision caused Microsoft to fail in the smartphone market, while Apple went on to dominate it.
A vision operates like a rudder on a ship by steering and guiding the organization. It aligns the setting of goals, and coordinates everybody’s activities. Everything is choreographed to move in the right direction at the right time. Everything supports everything else. Resources and time are not wasted on distractions, and goals are achieved faster.
Stage 2: Software selection
As mentioned above, business requirements describe what the new software must deliver to provide value. The business requirements also describe the ideal future state of the software from a business perspective. Thus the business requirements are the foundation that must be in place before the software requirements can be developed.
Software requirements describe how the business requirements will be met, and come from libraries or can be purchased, from users, and by reverse engineering the latest features of potential products. Once the software requirements have been defined, process owners and users should weight those requirements for importance. This creates the software requirements specification which is unique to your company, and is used to create the RFP. The requirements interviews should be designed to gather information from users that will be needed for the implementation.
When vendors respond to the RFP, those responses are used to measure how well potential software products meet your requirements, and the best fit software is selected. The last step of the software selection is to verify the RFP responses accurately represent the software’s capabilities, and that the software has not been misrepresented. This completes the second stage of the software purchase.
Stage 3: Software purchase
Once the software has been provisionally selected the next steps are to check references and verify RFP responses. The verification reduces the risk of the vendor misrepresenting the software functionality. The the implementation SOW (Statement of Work) is negotiated which hammers out exactly what the implementation team will do.
Finally the contracts are negotiated and signed with the software publisher and the system integrator who will be implementing the software. These vendors have spent years perfecting the art of maximizing customer revenue. You need somebody who specializes exclusively in software negotiations to negotiate the best contract terms for your needs, protect you from future price increases, and more.
Stage 4: Implementation success management
Once contracts are signed, you need a success manager to take care of your interests in the implementation project. This person should also transfer the knowledge gathered during the selection to the system integrator employees. For best results, plan on using consultants who specialize in services like data cleaning & migration, change management, etc. This fourth stage concludes when the implementation passes user acceptance tests and you launch the software into production.
The diagram above illustrates the 4 stages of the software acquisition process. To learn more about the software purchasing process, click the [Contact Wayferry] button below. With no obligation, let’s explore if we can help make your software purchase an outstanding success for both your organization and you personally.