What to Look for in a Software Vendor

Selecting the best software for your business can be a surprisingly difficult endeavor. With so many options to consider, it can be difficult to distinguish between the most reputable software vendors, and companies who are just good at marketing themselves.

If you end up with a software vendor that doesn't suit your needs, this can be a costly mistake, since it can take a lot of time and money to transition to a different solution.

We'll walk through the various details you should consider when looking for a software vendor.

How long has the company been in business?

Generally, the longer a company has been in business, the higher the probability that the company will continue to stick around for years to come. This is a particularly important consideration when it comes to smaller niche software companies, as there can be some risk that they go out of business, which would leave you with several problems: finding a suitable replacement software, learning how to use the replacement, and working out a way to transfer your data from your previous solution to the new one.

All things considered, it’s generally safer to select a reputable vendor that has already gained a strong client base and has a proven track record. There are some advantages of going with a newer software vendor, namely that they may pay more attention to your needs than more established companies, and they may also be more responsive to your specific feature requests. However, it’s also important to weigh the risks of going with a smaller or less experienced company, as they may be more likely to go out of business and/or lack the resources to update and maintain the product as often as a larger, more established vendor.

How many employees does the company have?

Generally, more reputable companies will have more employees. Software is complicated and costly to make and maintain, which requires hiring expensive software engineers and an extensive salesforce. The stronger the company’s workforce, the higher the chance that the company can attract talented engineers capable of building a desirable product for users. When researching companies, we suggest looking them up on Linkedin to find out if they hire top-notch employees with strong credentials.

Should you select a vendor specializing in your industry?

Many software vendors make solutions that can apply to multiple industries -- after all, it makes economic sense that a larger company would want to invest in developing software that can apply to as many use cases as possible. Large companies like eClinicalWorks, Epic Systems, and athenahealth are giants in the medical industry. However, if your business focuses specifically on physical therapy, or if you run a chiropractic clinic, it may be overkill to go with one of these software vendors, even though they may suit your needs. Their software may be prohibitively expensive, and they probably also include many features that won’t apply to your specific needs.

In contrast, if you select a software vendor that specializes in your industry, you can get a lightweight solution that is more tailored to your needs, and at a better price point. The downside is that companies that develop software for a specific industry may not be as well-known, so you must do your due diligence to make sure that they’re reputable. If they’re reputable, smaller software companies can often provide higher quality customer service and support, since they’re knowledgeable about your specific industry.

Security / privacy

If the software stores sensitive information, you’ll want to make sure that the data is stored securely. Nothing can be more costly to your business’s reputation than having to inform your customers that their sensitive information has been lost or stolen. For medical software, you’ll also want to make sure that the software is HIPAA-compliant.

In addition, not everyone in your business needs to access all information. Some software vendors enable you to restrict certain reports or features (such as being able to delete patient information) to prevent certain members of your staff from accidentally making a costly mistake or accessing sensitive information you may not want them to view. For example, you may want to make sure that you can restrict certain information, such as financial performance reports, only to employees who need to see it.

Free demo and/or trial

Ideally, we recommend that you ask each software vendor for a free trial of the product before making the decision to invest. Virtually every software vendor offers a free demo, in which a sales representative will walk you through the product’s features and capabilities. Demos are often designed to gloss over the software’s weaknesses, so make sure that you don’t just sit back and let the salesperson run the show—use the demo as an opportunity to ask about the features that you’ll be using most frequently. Describe what features you’re looking for in a software solution, and see if the representative is able to highlight areas of the product that can address those pain points. Many businesses fall into the trap of falling in love with an impressive demo, only to learn that the software is deficient in the functionality that the business really cares about. Make sure to use the demo as an opportunity to learn about how the product might address your business’s specific needs. Ask if it would be possible to gain access to a free trial of the product so you and your staff can try it out in your own environment, in order to see if it’s compatible with your office equipment (e.g. image sensors, operating systems, touchpads), and to gain a sense of how easy it will be to learn.

What’s the price, really?

Many software vendors will charge a one-time startup fee, and they may also charge for additional modules/capabilities in addition to the quoted price. Therefore, it’s important to clarify what the total “all in” price will be, once you factor in the extra cost of any additional modules that you’ll actually need. You’ll also want to make sure that you’re not paying extra for functionality/modules that you don’t plan to use.

Many vendors don’t publish their full pricing schedule. Though it may not be obvious, this often means that the price is negotiable. As such, it is particularly important to speak with multiple vendors before you make your final decision, so that you can make sure that you’re getting a competitive price. Though software is an important investment that will generate more profits for your business, you still don’t want to pay more than necessary.

Customer support

Many companies will charge for customer support, or for training. It’s important to clarify if any training or support will be included in the quoted price, and if not, make sure to account for this in the final cost of the product. Many users make the mistake of thinking that once they learn how to use the software, that they won’t need any additional customer support. However, in reality, questions can arise even after using software for years, as you discover new use cases and may find yourself unsure how to handle them. As such, it’s important to choose a software vendor that has gained a reputation for offering top notch customer support, and will respond to your needs quickly and effectively. You’ll also want to make sure that the company is open to your feature requests, and is willing/able to add them to the product in a reasonable timeframe.

Cloud vs Local Hosting?

There are many benefits to cloud-based software. In particular, cloud hosting can save you the trouble of managing expensive servers yourself, and puts the burden of storing and backing up your data on the software vendor. In addition, cloud-based software gives you a lot of flexibility by enabling you to access it from anywhere you have an Internet connection. Many of the top software vendors offer cloud-based solutions, and many newer companies in the industry focus strictly on developing software for the cloud, since they believe it's the way of the future.

What SLAs (Service Level Agreements) will they agree to?

Some software vendors offer a Service Level Agreement (SLA), which functions as a contractual agreement to provide a certain level of service to their customers. These agreements generally spell out what will happen in the event that they fail to meet those levels of service (e.g. offering customers refunds or service credits for each period of unavailability). Generally, these agreements are related to uptime/availability or customer service response time. If you decide to invest in a cloud-based software solution, you should ask the company about its track record of uptime/availability, and if they would be willing to offer a service level agreement that promises that you will be able to access the software no less than X percent of the time.

Though there are many benefits to cloud-based software, one of the most common concerns is that if a cloud-based software vendor’s servers are unavailable, your software will be inaccessible, too. As long as the cloud-based software is experiencing issues, you won’t be able to access or use the software in any way to look up appointments, view patient data, or complete other important tasks. Therefore, if you choose a cloud-based software solution, you need to ask the company if it would be willing to provide you with an SLA that clearly spells out how much uptime you can expect from them. You can also ask the vendor if they would be willing to provide you with a track record of their uptime/availability over the past year. Some cloud-based software vendors will even publicize their uptime statistics to put their customers at ease. For example, Curve Dental maintains a live status page, which states that, as of January 2017, it delivered 99.90% uptime over the past 365 days. WebPT offers a 99.9% uptime guarantee on its website.

Even if you select a locally hosted/installed solution, you may want to ask the vendor if they offer any kind of SLA that pertains to its quality of customer service (for example, a company may guarantee that a customer service representative will respond to any customer query within 24 hours).

Will the software be able to meet your needs as your business grows?

Many small businesses make the mistake of selecting software based on their current needs, without factoring in their future needs. This can be a costly oversight, since switching software vendors is often expensive and time-consuming. You can avoid this problem by trying to anticipate what kinds of features you may find useful as your business grows and evolves. For example, if you currently operate a single-location business but have the desire to expand to multiple locations in the future, you may want to consider software options that enable you to scale and can help provide you a consolidated view of your financial performance across all of your locations. Many software solutions are designed for single-location businesses, so these solutions wouldn't be ideal choices, since you'd have to switch to a more scalable software as you build out additional locations.

What happens to your data after you decide to switch to another vendor?

If you ultimately decide to switch to a different software, it’s important to understand what will happen to your data. You need to make sure that you’ll have access to your data after you switch, and that it will be accessible in a format that’s easy to interpret and/or port over to your next software solution. Many vendors will either charge you for the data, or give it back to you in an encrypted or proprietary format that is virtually unusable, unless you pay them to convert it. Therefore, we encourage you to ask your software vendor what will happen to your data in the event that you end your relationship with them.

Bottom Line

Selecting the right software is one of the most important decisions you will make for your business. To avoid feeling overwhelmed by all the options, you need to take a systematic approach--starting by going through each of the considerations listed here and determining your most important priorities. Once you've narrowed it down, you should be able to dive into a trial or demo in order to weigh the pros and cons of remaining choice in further detail. By taking the time to thoroughly research each option, you can rest assured that your software will be able to keep up with your business's current and future needs for many years to come.

Bruce Hogan

Bruce Hogan is Co-founder & CEO of SoftwarePundit. He leads the team's research and publishes content about software products and trends. Bruce has experience investing at multi-billion dollar private equity firms, leading teams at venture-backed technology companies, and launching new businesses. You can connect with Bruce on LinkedIn.

Bruce is an expert in several software categories including:

  • Dental software
  • Mental health software
  • SEO software
  • Social media software

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