The market is crowded with digital solutions that can help you evolve your business. But how do you know, if you should invest or not? These 5 key questions will help you make the right decision.
The phone rings.
Shortly after, the salesperson tries to convince you that their solution will take your business to a higher level.
Your employees knock at the door because they would like to buy a new fancy program.
Maybe you think ”there must be a digital solution for this” when planning gets critical and you face problems that don't solve themselves.
The SME’s guide to buying software
The market is filled with digital solutions that can help you evolve your business.
But many digital solutions never turn into a success for the companies buying them.
There are many reasons for this.
Maybe the solution does not match the employees’ work processes. Maybe there was no support in the organisation. Or there was no clear purpose of investing in the software.
In other words; It was a bad digital business case.
At the end of this article, you can download a useful checklist that helps you when looking for business software.
A structured approach – should you invest or not?
To not put your investment at risk, it is a good idea to distance yourself from the good relation with the salesperson and your gut feeling.
You need something which resembles objectivity and a good basis.
To form a good basis, it is important to use a structured approach.
You do not need to make it harder than it is.
But at the same time, it is important to take the decisive factors into account. They determine if your investment is a success or ends up being a failure.
Who can use this guide?
This guide helps you create to invest in new software.
You can use the guide if you are in doubt if you should invest in a specific piece of software.
You can also use it if you would just like to incorporate a structured approach to digitising your business. Something a lot of people struggle to do.
When you go through the guide, it will be easier for you to create a strategy for your future digitisation. It focuses on some of the questions which map your organisation’s basic work processes and identify the needs.
The guide also works as a help for you, who have found a piece of software, which you find will be a good investment, but you still need to convince the board, your management team or your colleagues about it.
Here it helps you to build a good and well-informed case.
The guide: 5 to help you through your software purchase
To help you assess if a piece of software is the right one for your company, we have gathered 5 useful questions.
Each question clarifies the vital considerations you need to include in your decision-making process.
It is a good idea to include more employees or colleagues when answering the questions. They will often be able to provide you with the different perspectives you need.
In the overview below, you can navigate between the different sections of the guide
1) The challenge: Does the software solve a significant problem?
It may sound trivial. But the first part of your considerations should be to find out which problem the software should solve.
The alarms should go off if your employee stops by your office with a super-smart program that does not solve one or more of your specific problems.
When you consider buying new software, the problem should call for a solution, not the other way around.
Because we are attracted to shiny things, and because we at the same time have a tendency to rationalise our decisions once they are made, companies are often stuck with software, they should not have bought in the first place.
And they are stuck with the software for too long.
When the software doesn't solve a problem but only "shines", the employee will experience it as a burden as it doesn't solve their actual problems.
In other words; You don't get value from your new software.
Step 1 – Figure out the problem
When you need to find out, if the software really solves your problem, it is important you formulate the exact problem.
Often a problem has more levels.
If your project manager has a problem creating a project plan, the project group will get a problem fitting the project into their work. And your company gets problems delivering the project on time to the customer.
Therefore, specify the problem by asking:
- What is the overall problem for the company?
- Who has a share in the problem?
- What is the problem for you and the single employees?
- Does the software you are looking at solve the root cause for your problems?
2) Finances: What is the ROI?
In the heat of a sales meeting, it may be difficult to make head or tail of the financials.
And many turn insecure when they need to add specific value to a piece of software.
But you do yourself a great disservice if you have not calculated the costs and ROI of your investment. Nobody wants a software solution, which smashes the financials.
Unfortunately, this is often the case.
It makes good sense to include three central figures in the financial part of your considerations:
- The total costs of buying the software
- The costs for the problem, if you do not solve it
- The extra profit you expect to gain from the software
Step 2 – How much does it cost to buy or not?
The challenge of assessing the software’s financial effects can be intangible.
But with the right questions, you can find a usable value.
The total cost for the software
When you investigate the cost, it seems obvious to visit the supplier’s website, see the prices and multiply the licence price with the number of employees.
But business software often demands a good implementation. Actually, it is almost always a bad investment not to spend money on implementing the software correctly.
It would correspond to you giving away a car to someone who has never driven one before.
Therefore, it is a really good idea to ask the supplier for an outline for a specific implementation and maintenance plan - including associated costs.
If the implementation is comprehensive, you can also calculate how many hours the employees should spend implementing the software. Hours where you cannot invoice their work.
The costs can be calculated like this:
- Purchase price + implementation price + lost work value + possible continuous service
In addition, it makes good sense to budget 10-20% higher. Implementation projects may take longer time than expected if new challenges appear. And it is seldom a good idea only partially implementing the software because the budget is set too low.
The costs of the problem
For it to be good business, the costs of not solving the problem with software should as a minimum be as high as the costs of buying the software.
How you calculate the costs for the problem depends on the problem in question.
If you waste time on heavy, manual invoicing from time registrations in Excel sheets, you can quickly calculate your bookkeeper’s hourly rate. To this, you can add all the non-invoiced hours, because time registrations in Excel sheets are notoriously erroneous.
When you need something specific to calculate the expenses related to the problem, it may be a good idea to take the point of departure in:
- Your employees’ internal and external hourly rates
- The price for postponing projects (by not buying project management software)
- The value of lost sales processes (by not bying CRM system)
All problems are different, so it may be beneficial for you to use different calculations for the costs of your problem.
As long as you get near to a specific value.
The fun stuff – profit
When you find software which solves your problems really well, it often happens the software actually adds more value than the profit from just solving the problem.
Maybe you gain access to a new sales tool not only keeping track of your pipeline, but actually adding new sales channels and streamlining your sales process enabling you to sell even more.
Or good time registration providing you with an overview of your internal time. Then you can move the time consumption from projects and tasks not adding value to your company to tasks that do.
Remember to look out for new opportunities within the software, and then add potential value to them.
3) The work processes: Does the software just digitize worn-out processes?
Let us set one thing straight: Software does not solve any problems on its own.
If you find it difficult to invoice your customers because the consultants don't hand in the hours, or because invoices disappear in mountains of internal e-mails, a new piece of software will not solve your problems.
A part of the problem may be that you lack intelligent software allowing the employees to communicate with each other and execute invoices quickly.
But a different part of the problem may be that you do not have the right process for working with invoices internally.
You need tp take a look at:
- Which internal processes do not work?
- How should we change the processes to profit from using the software?
- Do we want to?
If you do not want to change the process for the software to work properly, it is probably not a good investment to buy it.
Step 3 – Which processes do we need to change to make the software work?
Step 3 adds a lot of value. Even if you end up not buying the software.
It is now you need to cross swords with the software salesperson and ask:
”If I buy your software, what does it demand from my organisation before it actually works?”
Few software companies write this on their websites. This makes it impossible for you to build this part of your business case without talking to a real-life salesperson.
Map the processes together with the salesperson
If you face a skilled salesperson, she will already have asked how you work and spent a lot of time mapping out your internal processes, incl. what you would need to change with the new software.
If the salesperson does not show this initiative, you need to do it yourself.
Make sure you get answers to:
- How it is to work with the software in real life. Take yourself good time to go through a work process from end to end together with the salesperson
- What the different steps in the work process demand from different employees
- Where the new work process distinguishes itself from your existing process
- What you will need to do differently
When you believe you have a specific overview of the new and old work processes, you can decide if the software will fit your company’s way of working.
Or if you believe it would make sense to change work processes to fit into the new software.
The smart thing about step 3 is that the process often uncovers new opportunities to change your current ways of working.
4) The employees: Get qualified answers
Have you ever bought software which was not used by your employees?
Then you are not alone.
Often software is bought based on the best intentions, but the decision-makers have not consulted their employees.
The result may be employees who believe the software is an obstacle in their daily work, why they do not use it.
If you purchase software in the same way, there is a high risk that:
- The software does not match your employees’ way of working
- Your employees will find it is a bad solution
- The employees will find work arounds to not use the software
In other words, there is a high risk that you lose money if you skip this step.
Or even worse; Your employees are forced to work in a way which makes them less efficient.
Step 4 – Include your most prominent experts
From where did the idea for the software originate?
If it comes from your employees, they will probably be very positive about the software. Here it may be a good idea to act as the devil’s advocate as described in steps 1-3 above.
If the idea is yours, the task is entirely different. You must get your employees on board with the idea.
And it is not about getting an unconditional “yes” when you ask if it is a good idea. The immediate ”yes” may mean the employees have not decided if it is a good idea or not.
If this is the case, a “yes” can be turned into a “no” when you start using the software.
Qualify your employees’ ”yes” and look for a “no”
It is an old trick to get people on board by letting them think the idea is their own.
Of course, this is not what you are aiming for here. But it is well proven that people would rather follow ideas for which they have ownership.
This means that it may be beneficial for you to have basic discussions with your employees about the software.
Useful questions can be:
- Agree on the problem: I see X as a challenge in our company. Do you see it the same way?
- Look for a solution: How do you think we can change and do things differently?
- Assess if software is the solution: There is a type of software doing X, can you see this as part of the solution?
- Assess a piece of software: There is X software we are evaluating. Can you see this work in our company? Would you investigate and test it and provide your honest feedback?
There is a delicate balance as there will be some resistance towards change in most companies. And you may end up forcing a decision through.
But listen to your employees’ “yes” and “no” before making your final decision.
5) The IT ecosystem: An elephant in your digital glasshouse?
An IT system seldom stands alone.
Most small and medium-sized companies use a mix of digital tools for project management, internal communication, invoicing, salary payment, and so on.
Often they are not integrated, and sometimes they support some of the same work processes. This presents a risk of double work.
TimeLog delivers Professional Services Automation (PSA software) supporting processes from time tracking, invoicing, project management, resource management to salary management, etc..
This means potential buyers need to find out, if they have a different piece of software already facilitating the processes, and if there is a risk of double work if you have several digital tools to support the same work processes.
Potential buyers need to find out if the systems can integrate with each other to share data across the systems. It is not smart if the time tracking cannot transfer data to the salary and financial systems.
It therefore makes good sense to find out how your IT ecosystem looks.
Step 5 – Are there opportunities and challenges in your IT landscape?
If you have followed the guide, you have already mapped your work processes and found out if the software can make them better.
In this step, you need to link the software to the work processes so you can see if any conflicts or new opportunities arise with the new software.
- Does the new piece of software support work processes already supported by existing software?
- Will it lead to double work? Or do the pieces of software integrate and support each other to optimise the work process even further?
- Does the new piece of software give you an opportunity to link your different work processes better together by integrating to your existing systems? (Like when time tracking is linked together with the financial system)
Here it may be necessary to make use of the sales person’s expertise in the business case.
Because even though most software pages show the systems they integrate to, it is not always easy to see which work processes they supplement or conflict with.
Need help finding the perfect project management or time tracking system?
This guide provides you with overall guidelines for buying all sorts of business software - making the approach very generalistic.
If you need to supplement this guide with a specific guide for finding the right project management or time tracking system, you should download our checklist using the link below.
The checklist will help you specify your organisation's needs if you're looking for time tracking or project management software.
Click the link below to download the checklist.