Buying software

Where To Start

Justin Honaman, business process manager, Coca-Cola Bottlers Sales and Service, sums it up, "It all starts in the beginning -- what happens a lot of times is the business [buyer] is typically looking for a tool that is going to solve everything and so they are too focused on the technology versus on what changes in the business process (BP) are going to take place."

Providers and consultants alike agree. There appears to be too much emphasis on the "end-game," and not enough on the steps it takes to get "there." And what it takes to get there is "substantial," according to Mark Osborn, chief solutions & services officer, Gelco Information Network, Inc., Trade Management Group.

Osborn says that with any type of software solution, of course, a successful implementation is absolutely feasible. He views it as great opportunity and a great vision for the consumer goods (CG) company, but it also requires an enormous amount of organizational commitment, with a very strong centralized leadership and a very specific set of metrics in mind to make it happen. Osborn explains that managing expectations requires discussions in a wide arena.

"People need to talk about what that centralized leadership would have to look like, and talk about the kind of investment that would have to be made and the level of organizational commitment that would have to be made cross-functionally to get these things done."

Al Kenny, consultant with Best Practices Research & Consulting (BPR), calls software selection a "science." He says that buying software "involves equal effort on both sides."

This has a lot to do with the nature of the product. Kenny says, "Unlike selling a box of Advil, which is ready to be delivered to the customer at the time of the sale, software has so many moving parts; a constantly evolving product, rapidly changing technology, people shifting, and many different client environments. Designing, building, selling and implementing products . . . takes a strict process, dual commitment, product and industry expertise and good people." For a CG company, software is not an off-the-shelf solution.

Know Thyself

Certainly CG companies feel the unwanted "pain" of failed implementations, and it's no wonder they have found themselves coming up with work arounds. Michael Ferrara, vice president of customer marketing, Coty Inc., recalls advice he was once given: "Double both the cost and time estimate on the project and you'll probably estimate much closer to where you wind up."

Hence in order to curtail project disappointments and receive the greatest value from an implementation, the CG company needs to start at home. Finding a vendor is more like the last step in the selection process since the vendor is not in the position to make organizational decisions for the CG company.

Honaman explains, "We have got to have the business process defined that is going to be changing from the selection and implementation of technology...once you map out the current state and the future state of where you want to be, then you can start defining what technology is out on the marketplace that can support a change." Ferrara says you need to be realistic about what you expect to gain and that it should be written and agreed upon before the kick-off of the project.

Kenny adds, "Document your infrastructure, processes & requirements." His experience has been that approximately 70 percent of all buyers who are looking for a software solution to solve a problem, have not done this. He says, "This is a huge mistake for several reasons. The old adage 'if you don't know where you are going, any road will take you there' couldn't be truer. Without detailed documentation of your current environment and needs, you will have no framework by which to judge your potential solutions."

Osborn recommends that the buying company engage in as in-depth a self-evaluation as they would when evaluating the provider.

Consensus also demands that there be a dedicated team with representatives from across all functions. Honaman says that you must get the "constituents" that own the processes involved. "There are all different kinds of processes that are intertwined in those areas and you have to involve the business owners of those so that they understand how their worlds will change once the software is installed," he details. He thinks the team that selects the software should be heavily weighted toward the business side and to the people that own the processes.

Kenny's advice: "Your chosen team leader should be alleviated of their current responsibilities and be assigned full time. This will ensure consistency both internally and for the vendor."

Once the processes are mapped out and the issues and changes to be made are thoroughly identified, the company can move into the RFP phase -- another essential part of the selection process. Kenny emphasizes that an RFP must be "very specific." He suggests that companies implement a ratings system to narrow down their choices to three potential vendors. Bring the vendors in, narrow it down to two and bring those back for a day each with a specific agenda in mind.

Reference checks are also key, and Kenny says that the selection team should go see the reference "face-to-face." Honaman agrees, "Hearing good stories from other good companies helps, but the problem with that is the situation is not the same from company to company. It is easy to see the end result from the outside, but you don't see the pain points and what it took to get there. As a potential buyer you should go and talk to those customers and really understand how the change effected the way they do business."

Managing the people effected becomes the next critical event. Kenny notes that sometimes during the implementation phase the buyer may get "cold feet," doesn't want to change that much and then has the software implemented mirroring old broken processes. He says, this is one of the main reasons companies don't get the ROI they were seeking.

Measuring and monitoring ROI is inevitably the final step for the project. Kenny says that 90 percent of companies fail to do this. Honaman says, "Everyone puts down huge hard benefits with capital projects and different software installations, but a lot of times there is no measurement to go back and look and see how you did versus expected benefits, and you can learn a lot from doing this, avoiding mistakes in the future."

For more on creating the RFP, selection timeline and other software buying issues, visit www.consumergoods.com to read Kenny's full article, "A Best Practices Approach to Buying Enterprise Software."