Updated: Aug 24
Most businesses that are looking for a new software solution are not fully prepared for the evaluation process, which can lead to unexpected costs, project delays, and an overall poor experience.
Building upon our recent discussion in “7 Questions to Answer Before Hiring an Agency", the importance of preparedness in your 3rd-party software evaluations must be stressed. Coming into the evaluation process with a solid understanding of your wants and needs leads to a smooth buying process for both you and the 3rd-party.
To adequately perform this task, you'll need to create the criteria by which each option will be evaluated - a bit more complicated task. We’ve seen far too many evaluations that break down in the end because of a misalignment that could have been avoided from the start. Especially if your decision-making process involves multiple people, INTERNAL ALIGNMENT FROM THE BEGINNING IS KEY.
BEFORE your software evaluations begin, you must determine:
Requirements the software needs to satisfy
MVP (minimum viable product)
What is your Budget?
Who is going to oversee the project?
What is the Go-Live date for your software?
Third-party vs. Self-hosted
Use an existing solution or find a developer to make one from scratch?
Let's explore these further.
You need to be meticulous about what your requirements are in the solution that ends up [hopefully] solving your business operations woes. When anyone in the business determines there is a need to make a significant change, they should:
document the reason WHY this change is necessary,
brainstorm potential solutions to the problem,
do preliminary research,
schedule a meeting with your team to walk through all the above,
and determine as a team what the next steps should be.
Throughout the evaluation process, some solutions may be easily ruled out before you even get to a discovery call, while others will be evaluated through discovery phase likely be directed by the sales representative who was assigned to your lead.
A good rep, (and yes, they do exist) will only sell you something that makes sense for your needs. The key here is NEED. Many sales reps are put in a position to be a consultant. This happens when the business doing the evaluating does not have a predetermined set of requirements and/or has a knowledge gap.
If you do not come to the table as prepared as possible, your evaluation process is at the mercy of a biased sales rep, and your ability to make quick decisions is hindered due to limited information and knowledge. If this is you, it’s worth seriously considering a consultant to guide you through the process.
2) Minimum Viable Product - or MVP!
In the technology world, MVP refers to the Minimum Viable Product (MVP). Think of the MVP as, at bare minimum:
“What do I absolutely NEED this software to do for me?”
A great practice here is to break your desires into a list of WANTS and NEEDS.
Don’t worry, this can be an evolving list.
Personally, we think it is extremely valuable to share this list with both your consultant and the vendors you are evaluating. The more information you can share, the easier it will be for you to be on the same page and rule out solutions that aren't the right fit.
Here are some helpful things to consider when creating your NEEDS vs WANTS list:
What features you LIKE about your current solution?
What do you DISLIKE about your current solution?
What features do you currently have that you could live without?
What additional features do you NEED?
Determining budget can be difficult, but getting early alignment internally will make this conversation much easier. When it comes to budgets, you must keep in mind the ROI the software should bring.
Adopting a new software should be a carefully considered investment. You’re putting time - and money - into finding a solution that should produce more value than the dollars spent acquiring or implementing it.
Calculating ROI is easy with the right data points. Here are a few to consider:
How much time will this software save the business? (labor, production, etc.)
Do I stand to make additional profit as a direct result of the new software?
Will I be able to cut back on staff, or better utilize existing staff?
What is the cost of the current solution(s) vs. the new one(s) being evaluated?
What am I gaining as a result of the new solution compared to the current solution?
A new company might be considering a software that can automate bookkeeping and sync inventory data across various sales channels with their accounting platform.
Let’s say that new software will cost you ~$4,000/year.
Currently, you have an employee making around $20/hour. That employee is spending at least an hour every week keeping up with the books, and an hour-a-day updating inventory to save you from overselling your products. That's 312 hours per year.
With 52 weeks in a year, you are paying that employee ~$6,240/year just for these two simple tasks (and the figures of time-spent on bookkeeping tasks are extremely conservative in this example).
The ROI of a software that automates your inventory tracking and accounting is automatically +$2,240, or +56% in the first year, and this doesn’t even begin to include the impact of that employee now being able to focus on bringing value to the business in more productive ways.
4) Who’s going to oversee the project?
Depending on what’s being evaluated, you are either adding a completely new piece of technology to your operations, or replacing something that no longer satisfies the needs of the business.
Determining who should manage the project should be the easy part.
The person who would be most responsible for using the software after its adoption is often the best suited for the job. This person is likely already familiar with the dated solution you're looking to replace, and will be able to ensure that new software candidates will provide the necessary functions, tasks, and processes to adequately replace your existing operations.
It’s totally acceptable if there are larger decision-makers (DM's) involved in the process, but the person doing to vetting and grunt work in the eval process should probably be the same person who will ultimately own the day-to-day work in the software.
Do you need a consultant?
The decision-making process for a new business solution is often the most successful if the end result achieves harmony between disparate systems, teams, or processes.
Who better to manage those decisions than the people who use these systems day-in-and-day-out?
While internal input is a critical component of a successful strategic business decision, we would also argue that an outside perspective - specifically, one that has experience, and knowledge in the area your project is centered - is often invaluable, as they may have time, knowledge, and resources to make your decisions more informed and more effective.
This is not to suggest that a consultant is always required for a project to be successful, but these questions can help determine if bringing in a consultant would be valuable:
Do you have the time to devote quality effort to the project?
Do you have the industry knowledge needed to execute this project efficiently?
It’s worth pointing out that a knowledge gap doesn’t necessarily mean you can’t learn what you need to know. In our experience, many evaluators are learning as they go. However, a gap in knowledge will mean a bit more time is required for the evaluation phase, so, if you insist on boot-strapping, just make sure to account for that.
If you are interested in a consultant to help connect the dots you don't know about, FOMO agency can help you find the best retail software solutions to satisfy the unique needs of your brand.
From automation and digital strategy, to product merchandising and inventory planning, we help SMB's grow and scale their online business.
5) Go-live date
It’s important to determine when you need this new software to go live for the business.
We’ve all heard it before, but: timing is key.
Many things can impact timing, so, be conscious of this (it’s part of the internal alignment process).
Here are some things to think about:
Is this change or new software vital?
If you have a current solution in place, when does that contract end?
Are there any other organizational changes actively taking place?
Do you have budget flexibility now?
Does this software require a new hire to manage it?
How will the software impact other existing business functions?
Will this software require anyone’s role to change?
Are there any other company projects taking place simultaneously?
There are many reasons that timing might be just right. There may also be urgent matters that need immediate addressing, or there may be a lack of budget or support that makes the timing not-so-great. If now isn't the right time to pull the trigger, it's probably not the right time to start the evaluation. Regardless, if you define these parameters from the get-go, it will only further support your goal of ensuring a smooth, efficient, and effective decision-making process.
6) Third-party vs. Self-hosted
Your cloud, or theirs? In most cases, you won’t have a choice.
To quickly catch anyone up-to-speed who may have missed the memo, software solutions used to be downloaded and maintained on the end user’s computer. If it wasn’t, it was installed on the business’s personal servers and accessed remotely by the end users within the business.
Today, however, most software solutions are hosted on the developer’s cloud and licensed out to individual users. There are some legacy systems that require the old type of setup, and for some, it may make sense, but for this conversation, we’re focusing on hosted solutions.
As new technology does, the “serverless” environment has ushered in a host (pun intended 😜) of conveniently efficient processes. As previously eluded to, you likely won’t have a choice between your server or theirs.
One of the few scenarios where this is even considered is if a developer is making you a custom software/application. Some developers will require you to run the software from your servers, theirs, or maybe they'll be flexible and let you decide your preference. In most scenarios, you will want the software hosted on the developer’s server.
Here are some things to consider regarding your app-hosting preferences:
Third-party hosted = third-party hosting fees ($$)
Billing options: monthly, quarterly, or annually
Do you have any internal personnel that you can lean on?
7) Existing Solution or Build one from Scratch?
Your budget conversation should help determine the answer to this question, as with a limited budget, you'd likely rule out the possibility of a custom-made solution. Also, if the solution already exists in some capacity, why consider expending the resources to, as they say, “reinvent the wheel?” The only caveat to this question would be, if you want more control over the software.
Due to the nature of business, most software is developed to serve the masses. In other words, most software is designed to be “cookie cutter” or one-size-fits-all. This is great for the developer’s scalability, but can be not-so-great for businesses with atypical problems to solve.
Most online businesses companies are using many different tools to run their business. Software Solution A might get them about 60% of the way there, so they take on Software Solution B to get that another 20%, and Software Solution C for another 5%...and so on.
Why consider a custom software?
Control, unique business needs, ownership, data are just a few great reasons. Let’s say for a moment, there is a valid reason to explore a custom software or application for your business. Should you do it in-house, or should a third-party to develop the software for you?
In-house software development can be costly. Some things to consider:
Do you have the technical ability internally to accomplish this?
Does your team have the bandwidth to accomplish the project?
What happens if the internal project is a failure?
Third-party custom software development can be convenient. Some things to consider:
Can you host the custom software on your own servers once completed?
Does their schedule and availability support your desired timeline?
Can you swing the budget?
What does their post-development project management look like?
Are they equipped to be a consultant, or just a builder?
There are many questions to ask yourself as you go through either process. All of which really depend on your needs, timeline, and resources. For example, it’s okay if the third-party development agency doesn’t have a consultative prowess, if they can deliver exactly what your desire, and you have either an internal or external resource to help with the architectural side of the project.
How to Evaluate Different Software Solutions
Let’s face it, evaluating software can be a chore. Sometimes, it’s because the rep you’re dealing with sucks; sometimes, it because you have no idea what you need; or sometimes, it’s just because with so many options out there, how can you possibly make the right decision?
There are many ways to go about a software evaluation, but unfortunately, there is no silver bullet. Instead, we will chat through a few ways to make the process easier on yourself.
Options, options, options
Let’s say you’ve prepared for this evaluation. AKA, you have appointed someone internally to oversee the project (this is for them), you have decided on a consultant, you have a detailed list of NEEDS vs. WANTS, a realistic budget outlined, and a desired timeline.
It’s hard to evaluate something you are not an expert on. If you are not prepared with relevant knowledge, you will either spend a bunch of time researching on-the-spot and hope to make an informed enough decision, or you will take a pause for the cause and go do some due diligence.
You don’t just need to learn about the software you are considering; there are also plenty of new concepts, terms, and things you will come across that make you scratch your heard throughout the process. Try to become as well-informed as you can when entering these decisions, even if that means bringing in someone with more expertise.
Options, options, options
It surprises me every time I encounter a merchant who is evaluating…one vendor. Why? Was this a great referral from another user? Is there just nothing else out there worth your time? Does this vendor have a monopoly granting them such power?
We would encourage you to come up with your Top 3 vendors to formally evaluate through discovery and scoping (FOMO agency is great at this - let us know if you'd like some help!)
You are bound to develop some bias early-on regarding your top choice; do your best to avoid this bias. I’d recommend coming up with a way to standardize your evaluation.
Here are some things you can compare:
Competition is healthy, and it doesn’t have to be secretive. It does not hurt to share that information with the vendors you are evaluating as well. I sure wouldn’t mind a [hopefully] more informed voice educating me on the differences. It’s on you (or your consultant) to do your due diligence and investigate.
As exciting as it is to know that “there’s an app for that,” one must ask, “will it work with the X, Y, or Z app that I use for this other related part of my business?” We’re talking about integrations - like how PayPal, Venmo, and Apple Pay all connect with your banking provider.
Regardless of being the evaluator or the vendor pitching your time-and-money-saving software, it is important to consider the other solutions in a business’s tech stack that depend on, or provide information to, the solution(s) being replaced.
In our ever evolving, inundated, world of software, businesses are relying on multiple systems, often as many as +20, +50, even +100 in some cases. Even more importantly, many of those apps need to communicate with one another in order to automate the flow of information, otherwise that data must be manually translated, recorded, and updated by someone on your team, which is excruciatingly time-consuming 🙄.
Obviously, doing it yourself can be much cheaper on paper, but automating these repetitive functions is critical to scaling success. Some smaller operations with modest order volume per month can handle the manual data transcription, but the value in automation is far greater than the monthly or annual cost of it.
Most software solutions these days are designed for the masses, which means, if it is valuable, it likely has pre-built integrations for some of your existing solutions and systems. Don’t assume; check the site or ask the vendor directly. Many SaaS companies are pretty transparent about this; you’ll often see a link in the header and/or footer for Integrations/Connections/Syncs. For a great example, check out the Klaviyo integrations page.
BAD NEWS ☹
Sometimes, the software you want doesn’t have the integration you need, or has one that will only get you part of the way there. What do you do? First thing: check with the vendor directly; email your internal contact or check their website for mentions of “API Documentation,” “Documentation,” or something along those lines.
PRO TIP! Sometimes on software websites, you will find API documentation hidden in a section called “Resources.”
Finding this information is just step one; once you confirm the data you need is accessible (via a format like API, Webhook, FTP, etc.) then you need to determine how you are going to integrate the two systems to start the flow of data.
Here’s another one for your savvy professional glossary: iPaaS, or “Integration Platform as a Service.” Like SaaS, except, more niche. This is software designed to integrate various systems with other systems to automate the flow of data.
Not all of the systems are created equal, and we will discuss this more in depth in a future post, but it’s worth mentioning that even when the systems you desire to use have no native connection with each other, there still might be a way to get the data you need.
These systems can range from as simple as Zapier, to as customizable as something like Mesa. Speaking of savvy professional glossary, if you haven’t already, I highly recommend checkout our robust “Retail Glossary” to add more to your vocabulary.
I am sure this is everyone’s favorite topic, billing 😅. I mean, who actually enjoys shelling out cash…or credit? When it comes to software, there are several ways billing can work, which will depend entirely on how the vendor supplying the licensed service chooses to structure their offering. Here are the most common options you will come across:
In the software world, features and volume are usually held hostage by pricing. It’s not the only reason, but part of the reason you run into so many feature-selling sales professionals. Often, you are offered a discounted price for committing to a longer-term agreement (ex. Quarterly or annually over monthly).
Sometimes this discount is advertised; sometimes it’s offered later as a closing tactic. Some companies don’t advertise pricing at all, while others are completely transparent. Regardless, you will want to get this one as they say, “straight from the horse’s mouth.”
At the end of the day, you need to decide which billing type is best for your business. If annual is out of the question, that may rule out certain vendors for you. If you can commit to annual, and you’re certain this solution satisfies your needs, at least for the length of the commitment, don’t be afraid to save the extra money – take the discount!
If you have any concerns at all, I’d recommend monthly bill at first to test those waters; they’ll always be happy to upgrade you to annual later if you want.
The ALL-IN-ONE System you’ve been Dreaming About
We’re not talking about unicorns 🦄 ; one software solution that can do-it-all is an elusive thing; dare I say, fictional.
Every day, we hear about unicorns - Uber, Facebook, Airbnb - but none of these companies are a one-stop-shop.
Business owners must understand that in the world of retail automation, there are lots of existing solutions that work well together
There are countless decision-makers out there who have their eyes set on finding that one piece of software that will “do it all.”
To make things worse, many of us, especially the ambitious business folks who bear the weight of being the decision makers, have a fear that “nothing is ever good enough”, or “the grass is greener on the other side.”
Sometimes, that gut instinct is right; hell, it’s probably what got you where you are today.
IT’S OKAY if the all-in-one doesn’t exist. Frankly, there is great value in today's cloud-hosted environment. There is something to be said about focused and specialized software development. You tend to get a higher quality, better performing software product.
There is software for just about any function of a business (accounting, inventory, website, email, social, customer management, it’s endless). The more valuable an area of the business is to you, the more you will want its software solution(s) to be specialized. However, the less critical data is to your overall operation, the more acceptable it is that this function doesn’t have to be fully specialized.
Consider this example:
Software A is an accounting automation solution for your specific accounting software. Software A can connect to hundreds of sales channels (your website, POS, and Marketplaces), and can help sync your inventory across all your sales channels and the accounting system.
Software B is an inventory management system, but cannot handle your accounting needs. If it is critical to your business that your inventory and books all be synced together, it would not make sense to select Software B for your tech stack, unless you have another integration solution.
If your needs are fully met by Software A, then that is what you should get. But, what if Software A meets most of your inventory needs, but is going to leave you still doing some manual work; maybe it gets you 90% of the way there.
If that is the case, you now must weigh the options:
Go with Software A and learn to live without that last 10%
Find a complementary solution to fill that other 10%
Look for another solution altogether in search of 100%
Keep Software A and add software B to the tech stack as well, implementing any necessary integrations between the two to reach 100%.
Of course, to make this call, you need to think about your current situation. Does the manual work you are left with cost more or less than the value of the additional solution? If more, it’s a pretty easy decision; if less, think about how much value the person doing the manual work will be able to add with those tasks off their plate. Now, what is the delta between the two? This leads me to my final thoughts, inspired by my time spent at university obsessed with psychology.
I’ve always been inspired by the learnings of psychology. The breakthroughs we have had in human understanding (in labs, by accident, and through lobotomy…🧠) have taught us quite a bit about how our minds function. our thought patters; feelings; personal opinions and biases. How biased is our decision-making process?
All throughout our lives, we’ve been affected by cognitive bias. A cognitive bias is an internal bias that affects our judgment. It is a blessing and a curse that our brains function the way they do.
When we make decisions, we are leveraging what cognitive psychologist call heuristics. If you’re not familiar, you can think of heuristics as mental shortcuts; they allow us to make decisions quickly.
When you are faced with a decision, your brain relies on these mental shortcuts that refer to your unconscious and consciously biased ways of thinking/acting. While these processes and concepts are often helpful, they can also put us in a position of weakness at times when making an informed, but unbiased decision is critical. We must find ways to recognize biases when faced with a decision, and discern whether a fresh perspective is in order.
I’ll be following this post up with a series of pieces covering inventory management solutions, warehouse management systems, product information systems, reporting and analytics systems, and much more.
Just remember, there’s an app for that!
Happy retailing my friends 👊
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About the Author:
Dustin D. Thede has spent over a decade in retail with a foundation on the front lines as a sales leader and has been helping retail businesses adopt new software and pursue custom development projects since 2016.
Today, Dustin focuses his efforts on helping small to medium businesses (SMB’s) make more informed business decisions in the age of Digital Transformation.
“There is a lot of opportunity online and in stores for retailers. The ability to develop creative, data-driven strategies is key to success in an ever-evolving retail world. A plan today is a vision for tomorrow.”
Dustin D. Thede
President | FOMO agency™