06 Mar Six things to consider before a major software implementation
Many companies treat the purchase of computer systems like the purchase of a commodity. That can be a big mistake. The software company you are dealing with is not like your other vendors. If you treat the transaction like you’re buying supplies, and focus only on price and delivery, you may very well set the stage for failure. The stakes can be very high, as failed information technology projects can even put companies out of business.
Here are six things you should consider before undertaking a major software implementation.
1. Software implementation is a collaborative effort between the software vendor and the customer. You are a partner in the endeavor and must bring knowledge and skill to the table, together with a commitment to spend the necessary time and human resources to ensure a successful implementation. If you don’t have the resources internally, you should consider hiring a consultant to help you.
2. Clear and open communication is essential. Of course, you need to communicate your objectives to the software vendor. But even more important, you must listen to what your software vendor tells you. The biggest sources of failure are the misunderstandings that develop between what the customer expects and what the software vendor can deliver. Be on your guard and learn the software’s capabilities and limitations. The software vendor may not volunteer the product’s shortcomings unless you do enough probing – and it is possible that his or her power of persuasion may convince you to purchase a product that may not fully address your needs.
3. Negotiate the payment terms. Most software companies will accept a progress payment format. Your goal should be to tie payments to the achievement of milestones in the implementation process. For example, you will want to limit how much you invest in the project before the details are settled in a project plan or specification document. And, you will want to hold back something until the solution has been tested and accepted. The software vendor legitimately needs to be paid for its work at mutually agreed-upon points in the process. But if the vendor wants too much of the license fee paid early in the contract, this is a sign that what the vendor really wants is leverage. Also, be ready to hear about the software vendor’s “revenue recognition” accounting problem, which relates to how software companies book their sales, and take it with a grain of salt.
4. Don’t forget to include the “professional services” piece in the contract. Normally, the software vendor will provide a license agreement with provisions that include ongoing support and maintenance, but the contract may say little if anything about implementation services beyond stating that you have to pay for them on a time and materials basis. Ensure that the contract spells out what responsibilities the software vendor will bear, and build in protection against the price and timeframe getting out of hand.
5. The contract should define service levels that must be met for the implementation to be considered complete, and also for ongoing maintenance services. Many software vendors have standard service level practices that can be built into the contract, and that also can be negotiated.
6. If the scope of the license is limited, for example, by the number of users, you should attempt to build in price protection for expanded usage in the future. Most software companies will be willing to do this.
Software license transactions can be complicated, and the price tag for the software is not always commensurate with the level of risk involved. Due diligence on the front end is essential: You don’t want to find yourself way over budget for a mission-critical application, stuck in a process with no end in sight. With the right attitude and the negotiation of appropriate contract protections up front, you can minimize the risks associated with new software implementation and maximize your likelihood of success.