Gather vital information about the vendor, and build a team to advocate for your software needs.
Your company needs new software, and you’ve been tasked with finding it. The platform you choose could help your business succeed, or it could pose even more challenges than you’re already facing.
If you’re spearheading the software-buying process for your business, you want to make sure you’ve identified the right technology to avoid buyer’s regret. If you’re worried about this, you’re not alone: According to Capterra’s 2024 Tech Trends Survey, identifying the right technology (44%) is one of the top challenges when buying new software.*
Here’s how to enter the software-buying journey with confidence, and choose a platform that will set your business up for short- and long-term success.
1. Assemble a software-buying team
According to our survey, the two main changes buyers would make to avoid future software purchase regret are ensuring alignment among their stakeholder group about the evaluation/selection criteria (38%) and clarifying goals (37%). But both aligning stakeholders and clearly defining goals requires a team of people; it cannot just be you alone.
Representatives from teams that will be using the new software should always be included in the software-buying journey, but members from other departments will have expertise that may be needed in different stages of the buying process. The members of this team will depend on your business size and resources—the table below shows the various focus areas and things to consider for each focus area:
Focus area | Things to consider |
|---|---|
Procurement | Negotiation strategy Request for proposal creation Price checklist |
Contract development and review Legal terms and requirements Terms and conditions checklist Contract review and database | |
Business needs | Business need communication Challenge software will solve Process performance Hardware and software requirements Technology standards |
Application development | Project management Build versus buy Customization efforts |
Finance and accounting | Budget Total cost of acquisition (TCA) Total cost of ownership (TCO) analysis Financial and accounting impact |
Relationship Performance measurement Consulting services offered to clients | |
Information security | IT security policy Data privacy Regulatory compliance |
Use this table as a checklist for your team members. Of course, not every company has individuals for each of these focus areas—if that's the case, select the most appropriate team members to take on multiple responsibilities.
2. Capture fees and hidden costs
The top product-related factor that leads to an organization’s software buyer’s regret is that the technology investment is more expensive than the buyer is led to believe (35%).
To go into the software-buying process with a true cost assessment, ask questions ahead of time about these pricing aspects:
Software | Maintenance and support | Services and training |
|---|---|---|
Fees: List and net price Type: License or subscription Metric: Per user vs. per month Delivery: Cloud or on-premise Integration: Fees for vendor assistance | Warranty: Length and expiration Options: All coverage types and prices Descriptions: Coverage details Discounts: Options for reduced prices | Options: Pricing and time/materials Rates: Blended or role-based Methods: On-site, remote, or online Payment: Timing of payment and travel fees |
You’ll need to do a deeper dive into the software pricing metrics to get the most accurate costs. Depending on your specific business setup, certain vendor pricing models can be a “win-win.” For example, a company that is rapidly hiring new employees can get more value for their money with a software subscription model that allows unlimited users for a set price.
Be sure to review the trade-offs for each method of software pricing to avoid overpaying and to understand the true cost of software.
3. Understand your T&Cs
The terms and conditions (T&Cs) of your software agreement describe the risks and rewards of the contract. Each software provider includes different terms, so it’s simpler to craft your own checklist of items that are must-haves for your business.
These terms will change depending on the deployment method—whether you install the software at your location or use it through a web browser.
Here are examples of terms and conditions typical for both types of software deployment:
On-premise software | SaaS and cloud software |
|---|---|
Defined pricing metrics Clear service recovery plan Cap on maintenance renewal increases Right to perform audits Cost of changing hardware Bundling and renaming protection | Renewal price protection Acceptable penalties for vendor service failure Rights to customize, test, and develop Clear data privacy and security terms Defined support services Rights to convert to on-premise |
4. Uncover vendor motivations to gain leverage
The vendor is likely to gather information about your budget limits, how the software will be paid for, which executive will approve the deal, and who makes the final decision.
This gives the vendor more detail to leverage the deal in their favor, but you can ask questions to reveal the vendors’ motivations to make sure you have the same advantage.
Consider questions such as:
How do you get paid—straight commission, or salary and commission?
Do you get bonuses throughout the year? When do you get your biggest bonus?
Are you more highly compensated on some products and services than others—which ones, and how does the compensation incentive program work?
After gathering this info, see if these factors can give you a greater advantage:
Consider fiscal year-end. Do you have any vendors pushing you to close on a deal soon? Sales teams are normally aggressive, but they ramp up the pressure near their company’s fiscal year-end, and so should you.
It’s always best to stretch software discussions into the end of a fiscal quarter or year to leverage the vendor’s urgency to get a better deal—special pricing and discounts are easier to obtain when the sales team really needs to close the final deal of the quarter or year.
Fiscal year-end | Vendors |
|---|---|
January | Autodesk, Salesforce, Workday |
February | Dell |
March | BMC, Compuware, Fujitsu, Hitachi, Lenovo, Symantec |
April | Infor |
May | Oracle |
June | Microsoft |
July | Cisco |
October | Broadcom, HPE, Micro Focus |
November | Adobe |
December | Amazon, ASG, Citrix, Google, IBM, Informatica, SAP, SAS, ServiceNow, Software AG, Tableau, Unisys |
5. Use a scoring template to identify your best options
According to our research, another one of the main changes software buyers would make to avoid future purchase regret is to update or change the initial list of vendors (36%). Use the criteria listed in the table below to score your top few software options against each other—this way, you’ll know exactly how invested in the deal you should be and identify the products that best match your requirements.
Score the criteria from one to five, and give important considerations more weight when calculating winners. Use as many or as few of these as needed for your software vendor options:
Pricing license fees, customization and implementation costs, maintenance fees, and training costs.
Required (and nice-to-have) features and functionality.
Operating requirements (compatibility and mobility).
Integrations.
Support and training capabilities.
Terms and conditions (T&Cs) risks.
6. Be prepared to walk away
After scoring each vendor, reviewing terms and conditions, and understanding the stakes for both the vendor and your company, you know whether you can afford to walk away toward other viable options.
Your list of requirements and valid alternatives gives you the ability to walk away with lower-scoring vendors when they don’t progress in a favorable direction. If you do walk away from negotiations, take the time to reset with your team:
Reframe your expectations.
Strengthen your negotiation tactics.
Determine if the next best software option is really worth pursuing. Remember: The wrong software is worse than no software at all.
You’ll learn from each discussion how to better leverage your research and how to best respond to tough questions and tactics from vendors.
Make sure your company is prepared for the software-buying journey. To recap, gather your software-purchasing team, understand the hidden costs and acceptable contract terms, then develop an effective game plan that identifies the right platform for your business.
If you’re getting a headstart on the process, you should analyze real user reviews and schedule a few software demos, then follow these steps from the beginning so you can tailor your negotiation plan to each vendor when it comes to that stage.
