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Oct. 14 2008 04:16 PM

Selecting the right partner is as important as selecting the best software. Oftentimes the best software may not be the best partner. It is important to evaluate all aspects of this new partnership to really find the best solution for your business.
 
First of all, who should be on the selection team? If it is just the IT department, this is a selection ready for failure. The IT department should definitely be involved, but the functionality and the productivity gains the business will get for the software should be the primary driver. It’s not uncommon to come across an IT executive that dictates the platform, programming language and the new partner without concern for the benefits of functionality. These implementations are some of the horror stories you hear, like doubling people count, etc. It is refreshing when an IT executive dictates, “We have our preferences, but ultimately we want our operational people to get the solution that best helps them do their jobs.” After all, IT is a support structure to other areas in the company.
 
You now have much work to do before you start determining what solutions you will review. The next step is to map the process you are using today and be open to a better process. The process flow should be analyzed; are there steps, touch points, walk times, data inputs that can be reduced or eliminated? Benchmark the best in the industry. What features do they have that you could deploy with new software? Look at any paper in your process flow; can it be reduced, combined or eliminated entirely? It is so important to avoid buying software and deploying it over bad processes. The software people don’t care, you have to make sure this step is followed.
 
Now that you have your functional design, you are ready to determine what companies would be the best fit. Some go to analysts and determine the list. That’s not necessarily bad, but there are many great companies with good software that don’t make the analysts list. At this point, a decision should be made: do you want to be a big fish in a small pond or a little fish in a very big pond? This decision usually affects the cost of your long-term customer service budget and the quality of support. Also review the amount of money the company spends on research and development. A partner today needs to spend a good amount on R&D because software technology is changing so rapidly. Others determine the list from web searches, magazines, trade shows, etc. Sometimes this only gets you the people with big marketing budgets, not the best companies. For example, there are over 150 companies that deliver warehouse management systems. Develop a list on your criteria. What are your most important priorities? Is it functionality, technology, company financial picture, company size, customer service? Don’t be afraid to look at new emerging companies. These companies have the newest technology platform, and you won’t be paying a lot of money for an antiquated engine.
 
Send a request for proposal to your list matching the process flow you developed. Don’t buy one off the Internet unless you are willing to customize for your organization. If you don’t have a person to dedicate to this effort, hire a consultant. If your perspective list is longer than 12, shorten it before you send it out. Once you receive the proposals, you’ll be able to grade them by content and price. Some make their cut by proposal style, feel, etc. It’s important to stress that at this point, you are not buying the sales department process; it’s the technology and implementation department that you are interested. Therefore, the slickest, prettiest proposal is not exactly the best partner.
 
Using a consultant to sort through the sales messages is usually helpful. But if you select a consultant that is not aware of the space, they won’t see through the sales or marketing pitches, either. Talk to people in the space, listen to all messages, right and wrong, and evaluate the comments. Usually a subject matter expert in the space can help you get right to the meat of the evaluation choices. A person that knows the space well can tell you the information that makes a big difference in your selection. For instance, a large 3PL recently did a selection with a consultant. They followed the normal due diligence in selecting a partner and finally selected the perceived right partner after six months, only to find out one month before go live that the company sold and the new owner is going to shelve (or end the life of) the software product they just purchased. How could this have been prevented? It’s no secret who is up for sale, what company is having trouble in installations, what product is unstable, etc. Within the inner circle of competitors, all this information is known; ask a subject matter expert. A good question to ask is, “Why were you not selected the last three times, and who was?” That will make the salesperson squirm. Also, ask the consultant who won their last three selections. Unfortunately, many have relationship ties to one software vendor, and no matter the term of selection, due diligence and process, they will recommend that partner.
 
Narrow your selection down to the top four. Have the team vote, but caution them to look at the really important stuff and not the sizzle. Some use the next steps to bring the companies in for demos, site visits, due diligence and references last. Why take the team’s time to review a demo from a company that has bad references?  Check references first. Ask for the entire customer list and not just the reference list. Does anyone give out bad references? Call several. Yes, it takes time, but the benefit well pays for the time. Don’t just call the person on the reference list; ask to talk to the user and others involved too. Usually, the VP on the list was the one that selected the company and doesn’t readily admit that a mistake was made. Many people give a good reference only because they want others to join the company to help bail them out of a hole. If the references are bad, narrow your selection some more. References checked out, you now have some good companies to bring in. Ask them to walk your site identifying any modifications, enhancements, customizations or configurations you need. Notice the different acronyms for the same thing. Some companies claim in marketing materials that they don’t make modifications—they have configurations. Either way you are changing the software component from base to something that customer service won’t recognize. Highly configurable software becomes a nightmare to support long term (and usually becomes a consultant’s dream in added revenue on services). Go on site visits to see the software in practice. More than one is usually a good idea.
 
On the beauty pageant days (or demo days), the sales teams are on their best behavior. Advise all of your team to avoid talking to anyone outside of your core team. Software sales teams are trained to divide and conquer and learn what your team thought about pricing, rankings, etc. Usually, they will successfully find a mole and be able to tailor their responses to what the team desires. This is a good selling technique but usually not helpful in selecting the best partner. Also, the salesperson, if a good one, will strive to become a good friend of the team, taking them to ballgames, buying dinner, etc. Remember, the salesperson normally goes away at signature of contract, so don’t fall for this game.
 
Software companies make money on license fees and implementation dollars. Do not pick a partner on price. You’ll be sorry. Negotiating the best price with your favorite solution is the best route. Ask for a fixed fee implementation. You’ll be glad you did. Be wary of software that is thrown in at the last hour; if there is a throw-in, ask for implementation dollars also and get them written into the contract. Ask for penalties for a late implementation. Remember, you have a responsibility to make deadlines also. When you select a new partner, it’s like a marriage; communication, respect for each other strengths and collaboration are of the utmost importance.
 
Susan Rider is President of Rider & Associates, specializing in Supply Chain, Operations and Marketing Consulting. She was previously an executive of two of the leading supply chain software companies after over 20 years experience in the material handling industry. Rider is the past-President of WERC and serves on the board of CSCMP, Editorial Advisory Board for Modern Material Handling, Distribution Center Management and University of Louisville Logistics School. Contact her at 270-324-4762 or 847-910-6288, or visit the company online at www.riderandassociates.net.
 

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