Buying software in an emerging category: the buying process

Jan 12, 2020  |  5 min read

We get it, your needs are unique. And while today you’re stuck using nightmarish spreadsheets or software with a buffet of plug-ins, you know there must be a better way to solve the problems holding back your business.

So what do you do? Take a chance on a new tool with a new vendor and unproven value? Tread water into generi-ware that you pour hours and dollars into customizing, or continue waiting while an in-house solution gets developed?

As a solution provider focused on solving specific workflows, at Alloy we think we make a strong case for the first option—buying purpose-built software that’s not yet an established category, like CRM has become, but holds a lot of promise already.

However, we recognize doing so comes with its unique challenges too. The buying process is less clear-cut and you need to do more due diligence. That’s why we wrote the Tell-All Guide to Buying Software (in an Emerging Category).

We wanted to share what we’ve learned guiding dozens of companies through the same journey, including “insider tips” to help you understand how vendors approach it. We’ll summarize the four main phases of the process below, and you can get the full breakdown by downloading the guide here.

Buying Process Overview

Phase One: Prepare 

Identify current problems

What’s keeping you up at night? What hurdles consume the most time and money? These are the questions that will dictate what use cases the software will need to enable. A good vendor can help you diagnose your biggest obstacles, but prepare yourself by thinking through these questions on your own first. You’ll avoid wasting time on solutions to problems you don’t have or aren’t critical, and companies who try to tell you otherwise.

Align stakeholders

After completing some triage to clarify your biggest issues, the next step is to get the right people in your organization on board to find a software solution. In smaller organizations, this can be as simple as getting a green light from a C-level executive; in larger companies, you’ll likely have to approach other departments like finance, IT, and beyond to see who might benefit. Without taking this step, you may find your peers knocking on your door later in the process, asking questions about your investment and knocking your progress back. 

Set an implementation date 

Coordinate your software acquisition around a major event for your business. Are you launching a new product? A new marketing campaign? A new channel? Such lines in the sand will help maintain momentum, and give you a firm timeline for implementation. 

Research potential options

With all of the above steps complete, you know what you need, who to involve, and when you need it. Make a list of the vendors who can potentially solve your problems, but keep your mind (and ears) open. The fact that there's no established solution to your needs means there's not yet a clearly defined set of providers or leaders.

Phase Two: Assess

Conduct initial meeting with vendors

During the first series of meetings with software vendors, don’t sweat the details—just make sure the vendor understands your needs and can (honestly) state whether their product can help. You’ve put in the work to diagnose your problem, and it’s time to see who can help solve it. 

After the first introductions, more in-depth meetings will follow to allow other stakeholders to see the software and come up with additional use cases. At this point, you should have whittled it down to a few contenders and can begin the process of deciding how their strengths and weaknesses compare. 

Evaluate functionality and technology 

Time to kick the proverbial tires of the software to see if it can support your objectives—present and future. Ask for demos for you and your stakeholders, proposing a few real-world scenarios the software could address and seeing how the vendor works through those examples. Invite IT to check the software for speed, stability, and scalability. This should be a safari into the depths of their capabilities, not a curated country ride!

Phase Three: Validate

Ready your deployment plan

After you’ve decided whether the software can technically level up your efforts, plan on how to evaluate the business complexities. One big consideration is Time to Value. It's not just how long it will take for the software to be installed, but how long until you can experience its full benefits and maximize its value. Will the software require any customization or will it be fully beneficial “out of the box”? Can it be implemented in phases? And technology aside, how long will it take to train users? What user support is provided?

Solidify your business case

At this point, you know whether a vendor is right for you or not. You know whether their solution aligns with your KPIs and if it can scale to meet the demands of your shareholders. But the big question remains: exactly how much can this software help you? This is where you run the numbers, quantifying the value of your potential acquisition to see how much it lifts your bottom line. Create a model to predict return on investment—vendors should be able to share typical results or conduct an assessment to help plug in some of the variables. 

Vet the vendor’s reputation and potential 

Especially in an emerging category, the people behind the software make a big difference in whether your investment succeeds. Take the time to discover their values and track record. 

In addition, two metrics can shed some light here. First, ask for the vendor’s Net Retention Rate (NRR), a great indicator of whether current customers are achieving value and renewing. Second, understand Weekly Active Users (WAU), or the number of users who log in to the software weekly. It’s another sign of customer satisfaction and value, as well as user adoption.

Phase Four: Finalize

Review and negotiate proposals

Take a deep breath. You’ve discovered an effective software solution to a confirmed problem, you’ve found a strong business case to adopt, and the vendor seems legit. It’s time to sign on the dotted line… almost. Before signing, consider any last-minute reservations, consult with others, and return with a counter proposal. Besides price, evaluate the terms and conditions of how you’ll work with the vendor, and whether the proposal will benefit you in the future. 

And most importantly...

Celebrate 

There were royal 18th-century weddings that required less hassle. Enjoy a beverage. Go to the beach (or the mountains). Appreciate what you just accomplished and the benefits it will yield tomorrow and into the future. 

Download the Tell-All Guide to Buying Software (in an Emerging Category)

GuideIn the guide, we walk through each step in more detail, including:

  • What you should consider when deciding whether to move forward with the process
  • Specific questions to ask vendors to evaluate and compare them
  • Insight on the vendor’s changing goals as you progress

In addition, it suggests resources to help you vet potential vendors and provides easy-to-reference checklists so you don’t miss a step. Buying software in an emerging category is not the shortest process, but the payoff when you have a purpose-built solution to meet your needs—and get ahead of the competition—can be well worth it! 

Download the guide on our website, and while you’re there, explore how Alloy’s retail sales and inventory analytics are empowering consumer goods manufacturers to take control.

Posted by Alloy