Don't be swayed by software vendors

Evaluating software like customer relationship management (CRM) is far more complex than any other business. This assessment is a combination of science, art and strategy. You are no stranger to the struggles involved. The evaluation team identifies and proposes product requirements and sets evaluation criteria. The IT department develops a return on investment (ROI). VPs negotiate business with a number of suppliers as they swing the golf course. They haggle and intrigue, and vice presidents exhaust their minds, not to mention suppliers.

In the end, you are left with a series of well-matched alternatives, and your feeling is that as long as it works, the product is fine. But here's the crux of the matter: your choices have nothing to do with the evaluation process. As a result, many CRM projects are predicted to fail when a vendor is selected. Although the vendor will go to great lengths to work on the implementation phase.

This happens because, in most cases, you are not driving the software evaluation process, but the vendor. They are better at evaluating you and know how to make money from you than you are at evaluating them. Vendors are able to brag about the simplicity and power of their software because customers themselves are prone to being oversold and believing their exaggeration. You may be the creator of the game, but they are the director of the game.

Simple math can explain a supplier's strengths. He sells this type of product every day, and a buyer may only have done it twice in his career.

Martin Siebold feels this way. He is CEO of Wetzel GmbH, a small-scale printing and embossing cylinder manufacturer with stable revenue in Grenzach Wyhlen, Germany. A few years ago, he started evaluating enterprise resource planning (ERP) software. The choice matrix showed that SAP, the leading ERP application, was too complex for his small company; other products were better suited to his needs. Still, Seabird made a decision that insiders considered ill-advised and chose SAP.

The cost of scaling down the SAP functional modules proved to be higher than expected. Seabird also admitted that some of the SAP software he bought was useless.

Now, he blames his choice on misleading suppliers. "Ultimately, you're at their mercy," he says. "They're trained, have experience with a lot of clients, have a huge advantage and know that you're probably new to it."

Don't rely on intuition to make decisions

You work hard, and the salespeople work hard to do their jobs. They follow a detailed sales methodology, exploiting the buyer's inexperience and impulsiveness. Moreover, some sales staff regularly attend professional lectures and receive rigorous training to hone their sales skills.

They learn how to shorten the sales cycle, urging customers to sign final contracts at draft meetings before putting on their "negotiating shoes".

Of course, high-performing sales reps are always comfortable playing the complex and sometimes opposing roles of customer partner and salesperson. One such sales rep is Paul Bayne, who has worked on ERP and CRM packages.

Bain defends the reputation of most of his colleagues, emphasizing that both inattentive buyers and aggressive sales can lead to software failure. He has visited factory floors and the salespeople are really helping buyers get a clear picture of their needs. He even once advised potential buyers to purchase software from other vendors, but buyers ended up choosing his product. At the same time, Bain admitted to having witnessed salesmen fabricate the functionality and usefulness of the software to get buyers to sign off on the deal.

Bain points out that those salespeople are doomed in the long run. But he admits, "In the short term, they're doing good sales." And in the meantime, customers will fall victim to unscrupulous salesmen. In particular, these salespeople take advantage of what matters most to customers: When choosing a software platform like ERP or CRM, buyers always make decisions based on intuition rather than rationality.

Despite solid experience in choosing the best software package, many managers act on their intuition when faced with major decisions. It's not intentional, they've become habitual, which makes the evaluation process pointless.

Marvin Balliet, CFO of Merrill Lynch's Technology Division, noted, "It was a very emotional decision-making process, and vendors captured that emotion. We're going to retail financial services When we moved to the internet, emotions led us to make poor technical decisions. We were so convinced of the decision at the time that we discovered later that emotionality doesn't necessarily lead to the most efficient process or decision. Vendors know this, it's their specialty. "

Bain also admits: "The buyer's gut instinct really helps the product sell."

Don't let suppliers dictate selection criteria

Salespeople look for fanatics in buyer IT departments. Zealots are techies who take vendor insights as they go. They provide many opportunities for suppliers to develop sales market and are favored by suppliers. They like to hear bragging. When vendors say CRM can improve business, fanatics are lucky to have found a partner. Same enthusiasm, different endings, fanatics inadvertently communicate their promotional intent with the objectivity that suppliers can only dream of.

Suppliers also take advantage of buyers' concerns. For example, the purpose of large suppliers is to make buyers worry about the possible consequences of abandoning market-dominant products. They'll say things like "you're not going to get fired for buying...".

The supplier's competitors object to this herd mentality. Therefore, they hyped: choosing market-leading products is not good for buyers in terms of price and technical support. They promise to offer buyers better features than the leading product at the same or better price and better service. As Merrill Lynch's Balliett puts it: "The salesman always tells us he'll solve A, B, C problems for the same price, plus D, E, F, G features."

Bey En used this sales method. "If a client sees us as a small company, I tell him that the smaller size is our strength. At any time he can communicate directly with the company's technical staff or even the CEO. And the big company that is the market leader Only the customer complaint will be forwarded to the call center for processing. But I never have to name the market leader."

Ultimately, it is the supplier, not the buyer, that dictates the selection criteria. Vendors always talk about too many functional components. "This will induce buyers to buy a lot of unnecessary features and do too much at once," said Jim Shepherd, an analyst at AMR Research.

"There are five things I want CRM software to do first," said Jay Pieper, vice president of corporate development and finance at Partners HealthCare, who is evaluating CRM software. Show us the other 25 features that CRM software has implemented for other customers. It's hard to put together a product spec sheet because the vendor doesn't want to describe only the features we need."

"That's a pain in the ass. "They'll tell you all the features of the product. Even if you tell them you don't want to talk about those, they're still chattering."

Don't buy modules you don't need right now

Frankly speaking, in order to adapt to the fierce competition in the market, suppliers continue to add functional modules. If a supplier provides a certain functional module, other suppliers must follow suit. Likewise, the more a software company sells up front, the better. The growing promotion is annoying many suppliers for one simple reason: their profits are falling.

To make matters worse, a plethora of functional modules doesn't make for a bright spot in the evaluation. If it wasn't a buyer's request, why would a sales rep ask for new hardware, a new strategy, etc.?

Why are only a few large app projects successful? This is not difficult to understand. According to David Bradshaw, a market analyst at Ovum, the happiest ERP and CRM customers start projects with the right goals. And those companies with the highest ROI use applications from different vendors across departments, and even use competing software families.

Bradshaw said, "When you talk to a CRM vendor, you get the impression that their customers have every interaction with their consumers through their software. That's nonsense."

Why CRM Suppliers keep signing big projects while CRM failures are on the rise?

"That's where the suppliers outsmart the buyers," says AMR's Shepherd, "they configure the product and set the price to avoid incremental rollout. If you're only buying some of the modules at the moment , when you go back and buy more components, maybe not so much money." This is more worrying for buyers.

So we're in a situation where there is an evaluation of software from multiple vendors with too many functional modules that the vendor doesn't want to shrink; fanatics in the buyer's company clamoring for it ; unknowingly, managers overseeing evaluations make emotional decisions; suppliers take advantage of this and offer to sign contracts out of the blue.

Barriette says, "In fact, you may end up making decisions that you don't understand in hindsight."

Take full control of the evaluation process

When evaluating larger software such as CRM , in order to offset the supplier's advantage, the following aspects should be considered:

Deprive the supplier of the initiative. Suppliers always follow the script. Asking a few difficult questions they didn't expect and didn't cover on the slides could easily weed out the pompous salesman.

"The first question I ask is, 'What have you learned from other customers? What are the things that customers have tried and failed to do?'" says Pepper. "Most of the time, customers never ask Salespeople. That way you can quickly pick out experienced salespeople."

Double the cost. Individual analysts have suggested doubling or tripling the budgeted cost from the price quoted at the appraisal stage, to avoid getting caught up in cash shortages at that time.

Dan Ginsburg, president and chief operating officer of the Massachusetts General Physicians Organization, has just installed a major billing application. He admits that they underestimated the resources needed to make such software widely available.

Look for nitpickers. Suppliers are constantly flattering fanatics; buyers can reconcile fanatics’ indiscretions by involving nitpickers in their evaluations.

Criticists are more prudent by babbling about tiresome things like budgets and user needs. They can also introduce more intense internal dialogue, prompting the evaluation team to make more thoughtful decisions.

Be wary of consensus. During the evaluation process, the divide between fanatics and nitpickers seemed difficult to bridge. But it's surprisingly easy to reach an agreement, and you should feel anxious if the assessment team agrees. This means that they either make a simple prudent choice to save themselves, or that a handful of people on the committee have the upper hand, while the rest linger in anger. "If the business people on the evaluation committee aren't enthusiastic about it, I'm skeptical the project is worth it," says Balliette.

One deciding rule: keep it simple. It sounds obvious, but as long as there are major software failures, it's worth repeating: small new products are often more successful than larger ones. Software with only a few functions can be applied more effectively than software with full functions.

Pepper adheres to this principle. If the vendor doesn't limit his promotion to the five features he wants to know about, he won't listen to their tirade anymore. "You should keep saying, 'I want to start with a very simple function and see how it works, and if I like it and it produces the results I need, then I'll expand horizontally and vertically,'" Piper points out. "If that's not the case, it's just a small, inexpensive experiment."

Adapted with permission from Scott Berinato in How to Buy and Darwin Magazine, December 2001 The article Not Get Sold, Copyright CXO Media Inc 2001. Translated by Liu Jun.