Fix the way you buy enterprise software

7 tips for selecting and maximizing enterprise software investments

by Jeff Papows - It's usually around this time of year that department managers get together to map out strategies and, most importantly, budgets for the following year. Given the challenges presented by the 2008 financial collapse, it's somewhat comforting to hear that IT spending is finally on an upswing.

According to an August 2010 IDC Worldwide Black Book study, IT spending is expected to rise by 6% in 2011 – registering total spending at an estimated $1.51 trillion worldwide. While the dispersion of funds won't be even across the board, the anticipated 4% increase allocated to software procurement is certainly better than a flat or negative number.

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Since many IT projects have been stalled for two years, the upcoming purchasing decisions will make for interesting discussions. Before you go into those planning sessions, following are seven tips for selecting and maximizing enterprise software investments.

1. Think like a customer. While many of the immediate goals for software are to address critical business issues in your organization, the larger goal is to grow your customer base. With this in mind, for every feature and benefit that is pitched, respond with questions about how it will ultimately bring value to the customer.

2. Don't just buy; invest. When it comes to enterprise software, the purchase should be viewed as an investment in the organization. The longer-term investments, which should begin to show their benefits within 18-24 months, will become obvious in the forms of efficiency and productivity that will continue to increase through the use of technology.

3. Justify the cost. One of the most effective formulas to determine if the software is a worthwhile investment is to multiply the cost of hiring a team of software engineers (E) by the cost (C) of the software and divide that by the amount of time (T) required to realize ROI.

4. Go beyond the obvious aspects of vendor evaluation. Research the track records of the engineering team. Since nearly every keystroke can either be a critical part of the software's foundation or the cause of a multi-million dollar glitch, you want to be assured of the quality and experience behind the software code.

5. Determine the real age of the product. You'll almost never find a version 1.0 of any product due to the obvious questions it would provoke in terms of stability and market adoption. For this reason, you often see a lot of products starting with version 3.0 naming conventions. This doesn't mean that it's not stable, it simply means that it may require more in-depth proof of concept work before the contract is signed.

6. Research customer references. Go beyond the names that the vendor provides to find real customers. This can be done through colleagues, press articles and analyst reports. Meanwhile, if you do speak with a reference provided by the vendor, be sure to ask if the customer receives any discounts for acting as a reference.

7. Tread carefully with industry analyst reports. The analyst community shouldn't be overlooked when it comes to evaluating technology, but you should ask if the vendors they are recommending are also their clients.

This tip is based on the book, "GLITCH: The Hidden Impact of Faulty Software" by Jeff Papows, published by Prentice Hall Professional, Sept. 2010, ISBN 0132160633, Copyright 2011 Pearson Education, Inc. For more book info please visit the publisher site - or

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