Sizing Up Your E-Commerce Software Vendor

Selecting the best software vendor is no easy task. They come and go, and many are backed by venture capital companies that will pull the plug if financial returns are not met. Also, technological changes often shake the very base on which vendors build their applications. With these potential difficulties in mind, ask each vendor on your short list the following questions:

• How long has the vendor been in business, and what is the history of its business?

While being around for a long time isn’t essential, longevity has value. There are dozens of outstanding vendors that have been around for three to eight years with excellent software offerings that will likely remain excellent in the future. For example, McGraw-Hill may have been seen as taking a risk when it became the first customer of SalesVision’s new Java-based Web Customer Relationship Management offering. Although SalesVision is a reasonably new vendor in the CRM industry, McGraw-Hill was willing to take that risk and has not looked back.

Despite some vendors’ backing by venture capital and their relative youth, there are no hard and fast rules concerning their long-term viability. While important, the number of years in business is not alone sufficient to determine whether a vendor is appropriate for you.

• Does the vendor have experience and customers in your industry?

A software vendor that demonstrates an understanding of how your industry works, including the industry’s best practices within its software offering, may be a real plus.

However, you should not be swayed by a vendor’s demonstration of industry-specific software since creating impressive demonstrations is relatively easy using modern software tools. Ask the vendor about its active customers in your industry and whether it will provide contact information for these customers. Answers to these types of questions will allow you to conduct your own due diligence concerning how well the CRM vendor has met the needs of a live, industry-specific customer.

• What is the vendor’s technological direction, including Web strategy and CRM module intentions?

The best way to determine this is to hold a one-day technology session with the vendor’s chief technical officer. The objectives of this session are to determine where the vendor is headed, to reveal your functional and technical needs today and in the future, and to ascertain whether you and the vendor see eye-to-eye. Don’t be surprised if you are asked to sign a nondisclosure agreement, which is standard for these types of meetings.

• Who are the members of the vendor’s management team, and what are their backgrounds?

The cumulative background and experience of a vendor’s management team can provide some insight into the stability and credibility of the vendor. Ideally, you want to see experience in a variety of areas, such as accounting, finance, information systems and operations, as well as an industry background that is representative of the vendor’s product focus and offerings.

• How is the vendor financed?

Many new companies in the high-tech area are finan-ced by venture capital groups. Often, the venture capitalists want to be paid back in a short period of time. This creates additional pressure on the software vendor to sell as many seats or licenses as it can in as short a period of time as possible.

Also, if the venture capital organization has dictated an exit strategy by acquisition, there is increased pressure on the software vendor to do whatever is necessary to make its financials look attractive. Therefore, go beyond the financial statements when evaluating the stability of the vendor.

• Is source code included?

Increasingly, vendors provide toolkits that allow the customer to make changes to the software without using third-party implementation consultants. If the vendor does not provide the source code, you need to know why. What happens if the vendor goes out of business? Pay attention to the fine print about what is and what is not provided.

• What training does the vendor provide?

The cost of training will probably exceed by one to five times the cost of the software over the life of the system. You must find out if the vendor provides training and whether the training is provided in-house or on site. Does the vendor pass on training responsibility to the resellers or implementation partners? Does the vendor have structured plans for ongoing training, refresher training and training for new hires? Ask how the vendor measures the performance of its trainers and how it will measure the effectiveness of their training methods.

• How does the vendor support its software?

Many vendors provide support services as part of the maintenance agreement. Find out what types are offered, such as phone, Web-based and on-site support. Some vendors offer a la carte programs with pay-per-incident or per-support calls. Are the support services passed on from the vendor to the third-party partner? If so, what certification programs does the vendor provide in teaching third-party personnel?

• What is included in the vendor’s maintenance agreement?

Maintenance programs vary greatly in cost and complexity. Get specifics on what is provided, the time frame and who will provide the service and support (the vendor and/or the vendor’s implementation/service partner). Ask the vendor how it will provide upgrades and updates. Find out if you will have access to a dedicated technician or group of technicians and whether the vendor guarantees a turnaround time for problem resolution. What types of resources has the vendor devoted to particular support/service options?

• What is the vendor’s warrantee period, and what is its bug-fixing policy during this period?

Many vendors offer a standard 90-day warrantee. Ask what is included in this warrantee and if it is exclusive of an annual maintenance agreement. Question the vendor about how, when and where software fixes, updates and upgrades will be made available. Also find out if an extended warranty is available, and the costs.

• How does the vendor implement its software?

Most vendors that provide comprehensive software suites employ the services of third-party implementation companies. If the vendor does the implementation using its own technical staff, how many consultants are dedicated to implementation efforts? Does the vendor provide a “rapid implementation” option. Ask questions about the qualifications of the vendor’s implementation staff. In the case of third-party implementation partners, determine the certification and length of training required to become a vendor implementation partner. Ask how the vendor ensures the quality of the implementation company.

• How important to the vendor is your business?

To ensure that the software vendor provides appropriate attention, some customers insist they sit on the vendor’s management board of advisors. Regardless of what approach you take, secure guarantees from the software vendor that it is prepared to commit the necessary resources to ensure the successful realization of your project.

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