Seven steps of choosing software for your business

The AGContext software selection method is a reliable and repeatable process for choosing software for your business.

Choosing software for your business is a task that most managers will be involved throughout their career. The discovery, evaluation, and selection of business software can be a high stakes decision. Bringing new software into your business is something that occurs once every five to ten years. The decision requires a long-term view with a life investment often in the multiple millions of dollars. It is easy to be overwhelmed with options available and confused by sales gobbledygook of software companies.

The software procurement method outlined in this article will lead you to the lead you to the right product and supplier, no matter the specific or unique needs of your organisation.

The AGContext method for choosing software

The AGContext method of software selection ensure you choose the software that is best fit for your business.  When executed well, this method will also setup your teams and technology partners for a compliant and effective implementation and deployment of the new software.

The seven steps of the AGContext method of software selection are:

  1. Identify your needs and requirements.
  2. Define the criteria for evaluation.
  3. Market research and vendor shortlist.
  4. Request for proposal.
  5. Demonstration, assessment, and selection.
  6. Planning and negotiation.
  7. Contracting the agreement.

How long does it take to select the best software for your business?

For a small business of less than 50 employees, the entire process can be completed within a month. Two months for a medium size organisation of less than 500 employees.  For large organisations more than 500 employees the entire software selection process should take no more than three months.

Step 1: Identify needs and requirements

Whenever you make a major investment, such as buying a house or a car, you begin by doing your research and working out what you want.  Purchasing software for your business is no different.

The first step is therefore to conduct a thorough investigation of your organization’s needs and requirements. This means listening to key managers and potentially impacted employees to understand their pain points, goals, and desired functionalities from the software you have now. The goal is to create an accurate although high level requirements specification that describes the things that you need the software to do.

Your requirements spec is the shopping list that you will use to navigate the software marketplace.  It is your reference point in which with which you can compare options and explore new capabilities that you didn’t know existed.

The process of creating your requirements specification also plays a critical role in allowing people to have their say and give their viewpoint as to what is important and what problems the new software should solve.  By involving impacted employees and managers as early as possible gives time to consider inevitable changes to roles and processes. These conversations are not only valuable for choosing software, but can also identify barriers, issues and risks to the implementation phase that may need be addressed in Step 6: Planning and Negotiation.

The earlier you involved people in the digital transformation initiative, the better.

Step 2: Define criteria for evaluation

Based on the shopping list of needs, the second step is to establish clear criteria for evaluating potential software solutions. This means grouping the requirements into categories such as functionality, scalability, ease of use, security, integration capabilities, cost, vendor reputation, support services, and compliance with regulatory requirements.

Choosing software for your business is a game of trade-offs. When it comes to commercial software, you do not have the ability to choose the specific features of a given software product.  Keep your options open. If you begin by allowing, expecting and encourage negotiation and adjustment to the requirements as to match the software options available, things will go a lot easier for you.

Prioritise your requirements

It helps to place a priority rating on each requirement such as high, medium, and low.  This can help with applying a weighted scorecard calculation that can be used ding the evaluation and selection step.  I recommend staying away from using MoSCoW (Must Have, Should Have) prioritisation. This approach can introduce issues of stakeholder expectations because shortlisted products may not have all the mandatory functions.

Setup your evaluation panel for choosing software

The Evaluation Panel is your group of decision makers, who are ultimately responsible for choosing software for your business. The panel should be made up of at least three people:

  1. The initiative sponsor and senior manager who is dependent on teams using and reporting from the new software.
  2. An employee whose day-to-day job is dependent on the new software.
  3. The technology lead who will be responsible for maintaining the new software.

All members of the panel should have a vested interest in identifying and selecting the software that is best fit for the organisation.  The most effective way of ensuring this, is to choose members who are likely to be users and administrators of the system. Importantly, no member of the panel should have a relationship with any potential software vendor or implementation partner.

Step 3: Product discovery and vendor shortlist

You now have a list of prioritised and grouped requirements for what your business needs the software to do. It is now time to conduct a comprehensive search to identify potential software solutions that align with the defined criteria. This may involve consulting industry reports, online reviews, and seeking recommendations from peers or industry experts.

The goal of this search is to create a short list of potential product vendors that you can take to the next stage.  Begin by seeking out as many potentially relevant products as possible.  You do this by searching the internet and reaching out to your professional networks.  Initially, you do not want to evaluate products for their suitability.  Simply discover what is out there.

Product Discovery by Google Search

Google Search remains the most comprehensive internet search engine.  However, with so many optimised websites out there, first page search results are less likely to discover many potential software products.

When using Google Search, work your way through the keywords in your requirements specification.  For example, if you have a requirement of “The financial management software will manage Australian GST taxes for invoicing and billing.”  You may use three different google searches: “financial management software”, “tax management software in Australia” or “invoice and billing software”.  On each search result, you should look through to at least page five.  If a result looks like it might be promoting a product, open the link, check for a product and if found, add it to your list.

Repeat this for as many of your requirements as you can, or care to do.  Do you best to avoid losing time by falling down internet rabbit holes about individual products or industry trends.

Software Review Sites

Software review sites such as Capterra, G2, and Software Advice are useful for discovering potential software products for your business.

Use the review sites simply as a reference for discovery.  Do not trust the descriptions, ratings, or reviews on these sites. They are often paid, outdated, and do not consider your specific needs and context.  When choosing software, you will always be better off to make your own judgement about which is best fit for your situation.

Peer recommendations

Peer recommendations are often a great way to discover products that are highly relevant and worth looking at.  Your professional network is likely to be made up of people like you, who work in a similar industry to you.  If the product works for them, it’s likely to work for you.  Your professional peers may also offer some helpful advice as to the barriers, risks, and issues that they have experienced and overcome.  These can be valuable lessons in the planning and negotiation steps of the procurement process.

Getting to the vendor shortlist

Your product discovery will result in a list of potential products. Before moving to the next stage of choosing software for your business, you need to create a shortlist of product vendors that you can engage in the next Request for Proposal Stage.

The short list is created, not by talking to the vendor, but exploring their online presence. This includes the company website and any social media presence such as YouTube, LinkedIn, or Facebook. 

The game here is to compare what the company’s say the software can do with your list of requirements. You should look for products that promote themselves as delivering on 50% or more of your priority requirements. Doing this will likely narrow your potential options to less than 10 viable options.

Don’t be concerned if the product website doesn’t promote all the features you desire.  Websites have limited space, and software companies only promote the features, they feel are most appealing to their potential customers. If feature isn’t on the product website that doesn’t mean the product doesn’t do the things you want.

When creating your product shortlist, do not consider pricing as a criterion. Do not assume that a software company doesn’t have a special offer or option that may fit your budget.  Pricing is considered at length throughout the remaining steps of the evaluation process.

Continue with your investigations until such time as you have between three and five products on your shortlist. If you have more than this, be harsher with your prioritisation and feature selection. If you are having trouble narrowing this down, then you may need to review your requirements from Step 1, and Evaluation criteria from Step 2. 

Step 4: Request for Proposal (RFP) or Quote (RFQ)

The procurement process should leverage the previous steps to facilitate a formal Request for Proposal (RFP) or Request for Quote (RFQ) to shortlisted vendors. This document should outline the organization’s requirements and expectations, allowing vendors to submit detailed proposals or quotes.

Once your shortlist of potential vendors is compiled, each vendor and product must be evaluated based on your requirement groupings such as product features, pricing models, customer support, and reputation. In this step we request demos or trials to assess the software firsthand and gather feedback from relevant stakeholders.

In government and large organisations, it is necessary to facilitate a formal procurement process. These processes are about ensuring financial compliance and mitigating risks of corruption.  They are important but shouldn’t be used a barrier to effective software procurement and digital transformation.  In my experience, when procurement rules prevent you from considering potential vendors on your shortlist, the issue is not with the rules, but rather their interpretation by risk-adverse managers.

One of the biggest barriers is many procurement processes assume that the software market is open and competitive. The hyper-competitiveness of software marketplace has forced company providers to target a very specific niche. Within each niche there are usually only a handful of genuine competitors that will align with your business requirements. Choosing software is about aligning your business and requirements with the best product niche, and not the other way around.

Do not assume that a software vendor is out there actively seeking you. This is especially true for Government organisations. Most software companies are small businesses. They are very good at what they do but often have very limited marketing resources. If a vendor has made it to your shortlist, directly engage, and invite them to participate in the software demonstration and selection process.

Step 5: Demonstration, Assessment and Selection

Evaluate the proposals or quotes received from vendors against the established criteria. Compare factors such as cost, features, customization options, scalability, vendor reputation, and alignment with organizational goals. Engage with stakeholders to gather input and consensus on the preferred solution.

Software vendors are incentivised to have you select them. In searching for the sale, you can expect the salespeople to stretch the truth of what their software is capable off.  You can mitigate for this by asking the magic question of software selection, “Show Me”.

If a vendor salesperson is unable to show you the product doing the thing you want it to do, then assume that the product does not do that thing. If a salesperson says something like “that feature is on our roadmap”, then assume the product doesn’t do the thing.  In this case, you can ask follow-up questions such as “when will the feature be available?”, or “are you able to add this feature to your product roadmap?”.

Be aware that when you give the software salespeople the freedom to demonstrate their product, they will show you a scripted walk through.  They will show you the features that they believe will wow you. They will not focus on foundational features that are boring but critically important to the success of your organisation.

Choosing software requires two demonstrations

Each product demonstration should involve two demonstration meetings. The first is led by the software company. They walk through their scripted demonstration of the product.  The second meeting is led by your tech team, and is a deep dive into how the vendor product satisfies your list of requirements.  

When choosing software for your business, do not expect an individual product to do everything you would like or need. No software does everything.  What matters is that it does the core things you need.  If a feature is missing, ask the vendor representative if they have it on their roadmap, or would they be prepared to work with you to get the feature into their product roadmap.

Free trials and demo instances

You never truly know a product until you have used it.  Therefore, if a product offers a free trial or access to a demonstration instance, take the opportunity to use it.  Free trials and demonstration instances of products are perhaps the best inputs you can have when choosing software for your business.  If you have business analysts available, work with them to create testing activities for people to work through.  Collect and include the feedback to the evaluation panel to consider in their assessment.

Choosing software that is best for you

It is the responsibility of the evaluation panel to come to consensus and select the software of preference.  This team will become the partner of your organisation and you can move into the next stage of planning and negotiation.

The evaluation panel should score the performance of the product against your software shopping list. The assessment should include quantitative scoring, qualitative feedback, and financial assessment.  More often than not, these three forms of assessment will result in a standout leader.  This will be the software product that is best fit for you.

Step 6: Planning and negotiation

Once you have made your choice as to the software that is best for you, it’s time to begin negotiating terms and pricing. This is where you discuss factors such as licensing agreements, pricing structures, implementation timelines, support services, and any customization or integration requirements.

This will require some high-level planning about what is needed to configure, deploy and setup the software so that your teams can begin using it.  The plan should outline the steps, timelines, responsibilities, and resources required to deploy the software within the organization. Consider factors such as data migration, user training, customization, testing, and ongoing support. 

The degree of planning and negotiation will depend on the relationship between your organisation and the software vendor. Software vendors will often seek to leverage the relationship in their favour. Placing as much of the effort and risk as to the use of their software upon you. Software vendors are often reliant on the too-often truth that their customers (that’s you), have a low digital maturity, and don’t know what they are getting into.  This is why having an experienced professional who can help you is such a valuable and worthwhile investment.

Step 7: Signing the user agreement

Once negotiations are finalized, formalize the agreement by signing a contract with the chosen vendor. Ensure that the contract includes all agreed-upon terms, deliverables, pricing, warranties, service level agreements (SLAs), and any other relevant provisions.

The process of choosing software for your business ends with a signed user agreement.  From here, the deployment and implementation initiatives begins. Responsibilities are handed to the respective implementation teams of your organisation and if appropriate, the vendors.  It is in this phase that the software is configured, data migrated, users trained and all the other things that are needed to ensure a smooth transition from existing systems to the new software.

Need help choosing software for your business?

By following the seven steps of the AGContext software evaluation method, your organization can streamline the procurement process and select a software solution that best meets their needs, ultimately driving efficiency, productivity, and innovation within the organization.

Carl from AGContext has almost 20 years matching software to organisations.  He can help you if you would like some guidance or mentoring, or by being your in-house advocate and facilitator of the entire process for your organisation.

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Carl has over 15 years of industry experience helping the next-generation of executive leaders to deliver strategically aligned, cloud-first, digital-transformation initiatives for the benefit of people and planet. Carl is passionate about why and how organisations can overcome their legacy technology and digital delivery problems to create easy, fair, and personalized services for customers, and more flexible and inclusive workplaces for employees.


Carl has over 15 years of industry experience helping the next-generation of executive leaders to deliver strategically aligned, cloud-first, digital-transformation initiatives for the benefit of people and planet. Carl is passionate about why and how organisations can overcome their legacy technology and digital delivery problems to create easy, fair, and personalized services for customers, and more flexible and inclusive workplaces for employees.
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