Software investment decisions are expensive. One wrong step and you risk losing not only the money incurred on software purchase but also the time spent on training and implementation. The failure of some systems can even impact critical business functions and hurt productivity.
With stakes this high, it’s important to identify risk areas before buying any software. We’ve created an assessment tool that calculates the level of investment risk associated with purchasing a specific software tool. We’ve also provided recommendations and best practices to follow based on your identified risk level.
Let’s first understand the factors assessed by the tool to check whether a particular product offers value for money.
Data security is one of the most important considerations when selecting software. Data security breaches can not only result in penalties from government authorities but also damage your brand reputation and lead to loss of customer trust. This parameter becomes more crucial if the software you’ve chosen requires access to sensitive business data, such as financial and employee records.
Payment plans play a vital role in assessing the actual expenses you’ll incur for software usage. For instance, if you’ve opted for an annual subscription but later realize that the software isn’t a perfect fit, you risk losing the money you’ve paid upfront. Our tool suggests a pricing model that’s the most likely to minimize losses in case you plan to shift to another tool.
Software training and implementation require significant time and effort. A well-defined training plan ensures that every team member gets hands on with the software and learns all the required features. Our tool helps select training and implementation support options that minimize software failure risks.
Failure of some software systems can impact critical business functions. For instance, choosing a wrong ERP system can put core manufacturing and supply chain processes at risk and even lead to business losses. Failure in the ERP system at Nike resulted in losses of $100 million in sales along with a 20% decline in share price. Our tool helps assess the impact software failure will likely have on your core business functions as well as suggests the right approach for mitigating the identified risks.
Our risk assessment tool requires you to feed in product-level data as well as answer certain specific questions to identify if a software solution is the right purchase for your business. Following are the key points to consider:
The tool provides an indicative level of risk using three labels: Low, Medium, and High.
The tool also requires inputs from software vendors.
Click here to download the tool. Make a copy of the sheet, and answer questions related to each cost parameter.
The tool covers the following questions. To get an accurate assessment report, we recommend reading the instructions given below for each question.
Most cloud-based software solutions have monthly and annual pricing plans (subscription fee). However, with on-premise software, there’s a one-time software licensing cost. Based on the deployment type you’re planning to adopt, select Monthly, Annual, or One-Time License on the assessment sheet.
Comparing the price of a product against your budget helps assess its cost effectiveness. If the software costs more than 80% of your budget, select High; less than 60%, select Low; and somewhere between 60% to 80%, select Medium.
In this question, you’ll need to mention how many individuals (as a %) in your organization will be using the software. An exact percentage isn’t required; a logical estimate will be sufficient.
To answer this question, segregate all your business data as “critical” or “non-critical.” If the software will require access to and store critical data, select Yes on the assessment sheet. For more clarity, we recommend asking this question to the software vendor.
This is another question that’ll require inputs from the software vendor. Check if the vendor offers migration support in case you decide to move to a new system. Also, check if the support service is free or you’ll need to pay for it. Select an answer accordingly.
Perform due diligence to identify the likely impact of software failure on your business. Discuss these risks with the software vendor to ensure that your daily operations won’t be disturbed. Based on your evaluation and discussion, select a suitable answer on the assessment sheet.
In this question, you’ll have to rate the technical expertise of your IT staff in troubleshooting software issues. You can select “We don’t have technical staff” in case your business doesn’t have a technology team.
Contact the vendor to get an estimate of the time needed for onboarding new users, i.e., learning core software features. Select a relevant answer on the assessment sheet.
Check with the software vendor if data is encrypted on the servers. Encryption will protect your business data from malware and breaches.
Based on your answers, the tool will predict the level of investment risk a software solution poses for your business. Let’s discuss what you should do once the tool identifies your investment risk level: Low, Medium, or High.
A low risk level means that your decision to invest in the software involves minimal risks. It also indicates that if you migrate to another software, you’ll face minimal challenges. That said, you should still be careful when making a purchase. Visit GetApp to evaluate the software and read user reviews about usability/functionality.
A medium risk level suggests that you need to be careful when investing in the said product, as its failure has fair chances of impacting your business performance and productivity. Before making a decision, perform due diligence and ask the vendor for case studies from users in your line of operation/industry to weigh the pros and cons of the product.
A high level suggests that the product in question can prove to be a high-risk investment for your business, and in the unfortunate event of software failure, critical business functions and profitability are highly likely to get impacted. If you wish to purchase this product, you’ll need to implement strict measures. Attend vendor demos and use a free trial version before deciding to invest. Instead of implementing the software across processes, use a phased approach. Start with a few functions and decide on expansion based on the success of the previous phase.
You can choose to upskill your IT staff or expand in-house technical capabilities by hiring more people. You can even opt for the vendor’s support services or hire an implementation consultant to get expert advice. We recommend comparing at least two other products before finalizing this software.
Visit GetApp’s software directory to find top-rated software alternatives. You can also read user reviews to understand the experience real buyers have had with the software you’ve selected.