Shopping around Featured

11:25am EDT November 28, 2005
Faced with a perplexing array of software, glossy sales materials and glib salespeople, it is easy for a harried business executive to simply choose the cheapest enterprise system or the one with the most bells and whistles. Worse, it is easy for that overwhelmed executive to decide to leave well enough alone, or add additional software programming enhancements that will keep an older system limping along for a few more years.

An alternative approach is a process that considers not only today’s requirements but also anticipates the needs of the future. It is not a quick fix — done right, the process should begin a year or more before desired deadlines. It is, however, the best way to ensure that the systems selected will accomplish their goals for a number of years.

Success in selecting a new enterprise system begins with constructing requirements and expectations. A management team should consider the company’s guiding strategies and evaluate its existing enterprise system for critical functions that must be retained, as well as gaps that do not support the future direction. The management team can then develop and prioritize specific criteria for a structured evaluation of potential systems.

Collaborate internally
One critical component in evaluating a future system is a discussion with the people who will use it. It is vital to know which functions they would like to see added and it is equally important to know which functions they do not want to lose. Not only does a collaborative effort help determine core strategic criteria, it also helps build consensus for — and acceptance of — the changes that will result with a new system.

In addition, having a carefully considered list of strategic criteria in hand will simplify dealings with vendors. Vendors are eager to demonstrate everything their systems can do, including functions that appear impressive during a presentation but are not critical requirements. With a plan in place, the business can invite the top vendor candidates to demonstrate how their systems will perform the functions that are important to that business.

To streamline the process, the management team should develop a script for vendors to use during the demonstrations. The script prevents vendors from attempting to wow the selection team with those impressive capabilities while avoiding the critical functions the systems cannot perform.

The management team should also develop a scorecard for its members to use during the demonstrations. The scoring template ensures that the team is comparing apples to apples, and can be weighted to emphasize the attributes and functions that are most important. Providing vendors with copies of the scorecards in advance will help them organize their demonstrations.

Study the possibilities
Before making the final decision, the management team should research the vendor company for a broader set of strategic, or investment criteria. These criteria may include areas such as total cost of ownership (TCO), vendor viability, technology architecture, industry fit, service and support, and ease of use.

In researching TCO, it is critical to understand the true cost of the system over time, which includes more than just first-year software and implementation services. Annual maintenance fees (software and support) need to be considered, as well as internal and external resource costs necessary to manage the planned and future environments.

Vendor viability is an important concern, given the levels of consolidation in the enterprise technology market today. Buyers should review the vendor’s financial information to assess such areas as growth, allocation of resources to research and development, and distribution of revenue between maintenance fees and new software licenses. They should also look at how the vendor’s current financial reports compare to those from previous years in terms of profitability and balance sheet strength.

Finally, the management team should research the service levels of the vendor organization to ascertain whether the support is centralized or distributed through an affiliate partner channel. It is important to know how many employees staff the vendor’s support lines, as well as their experience level.

Josh Cole is an executive with Crowe Chizek and Co. LLC, and can be reached at jcole@crowechizek.com or (616) 752-4274. Kim Eaton is an executive with Crowe Chizek and Co. LLC, and can be reached at keaton@crowechizek.com or (574) 389-2508.