It's impossible at this stage to determine the actual cost of a system. However, you can determine if you are talking about an Opel or a Rolls Royce. For this purpose it's essential you get real list prices of the vendors you consider purchasing software from, not some prices that already contain some discounts (you can squeeze them out later).

Two numbers are important for your evaluation of the software selection:

• The expected amount for acquiring the software (licenses!)
• The expected annual maintenance fee

If you don't know the exact number of users, just take a guess; remember, you are not calculating exact numbers, you want to compare them relatively against each other.  

All kinds of stuff can make this simple task of the selection process difficult; the pricing structures are probably not the same:

• Seat licenses (per workstation) or site licenses (for the complete system)
• Concurrent users (users working simultaneously on the system) or named users (user that are configured to access the system)
• Differentiation to modules you can use, or other certain parts of the functionality
• Dependencies on the annual revenue

It's incredible how creative vendors can be when active in software selection. Just make some assumptions, and try to get a fix; it's ok if you are a few cents off.

Going for the next round

You have finally reached the final ranking of your long list. The top should go to your short list for the next round, the request for proposal. I would go for three vendors, but of course, that's not a rigid rule.

Don't forget to thank the other vendors for their effort. The will like and appreciate that sort of thing.

It's nice to hear some vendors chew on all this stuff you sent them, isn't it? Well, if they want to have a change of doing business with you, they have to sweat, they have to earn it… feels great!

But as the answers are coming in, the ball is getting back into your court. You have to work again. You and your team have to read the brochures and the answers to the questionnaire and make a judgement against the criteria you defined.

The evaluation has to parts, the soft and the hard one. The soft is making a subjective evaluation of what you actually think of the vendors and it's product. It's in fact the answer to if the vendor meets the selection criteria. The other one is just plain calculus: an estimate on the price of the software licenses (just using the list prices!).

8.1 Judging the selection criteria 

Let everybody involved in the evaluation sit down, and summarize the strong and weak points of the vendors / software. Throw them all together in a document.

Strong points

• Local support
• Used technology is standard in current market
• Great opportunity to link to other systems
• Large international firm

Weak points

• No core business in our market
• Second site to use the system live
• Limited knowledge of the local market

Map the results against your list of selection criteria, and presto, you have your ranking. I know, it's not rocket science, but let's face it, it isn't. It's all subjective and your gut feeling. If you want to go more scientific about it, you can always plot a great graph.

Stability of vendor  

7.3 The Questionnaire (part 3)

This survey is part of three pages. See the guide index to find the other 2 parts of this request for information questionnaire.

Escrow

Audit 

Planning

Implementation

Product  

Pricing  

7.3 The Questionnaire (part 2)

This survey is part of three pages. See the guide index to find the other 2 parts of this request for information questionnaire.

Operation system/hardware

7.3 The Questionnaire

The Questionnaire contains all the questions to the vendors. With asking a survey to vendors you should always keep one thing in mind: every question that starts with "can you do…" will be answered with "yes"; that means with enough money and time.

Save yourself some time by avoiding this type. I have included a short list I use for request for information. It's constructed from all kinds of lists and added and edited by all kinds of people. Left the questions, right the explanations why this aspect can be important to you.  

Company profile

7.2 The Information Sheet

You will not send the business case to the vendors. However, they must have some feeling about what you want in order to provide you with targeted information when you send them the request for information (like this sample). The business case, target process and legacy information we discussed earlier is mostly for your internal discussion to be able to judge the vendors and their systems, and for the second round; the request for proposal.

You can provide some kind of summary of your information hunt to satisfy the needs of the vendors in this stage. The main components are:

• A general answer to the "why you need a new system" question
• An overview of the organization of concern
• An overview of the global target process
• A description of the technological environment

Example Information Sheet

Current issue

The current information systems at WinDings Ltd. are at the end of their technological life cycle. It's getting more and more difficult to apply changes to the old systems to keep up with today's business needs. After some years of severe acquisition, the company has for all its five business units different order systems. It's difficult to have an integral customer view, and nearly impossible to do cross selling of the different products. The market of today and tomorrow makes it essential to change this situation.

Organization overview

Our organization consists of five business units (BU), each handling a part of the productlines. One centralized accounting department does the billing for all our clients.

Each business unit has approximately 30 employees. The billing department has a headcount of 15.

Target process

The target process for booking orders and billing is the following:

Each BU must handle all the orders for their own products. However, if a client want a product from a different productline, they must be able to book it themselves. The employee who had the first contact will maintain the client contact. All handling however will be done by the people involved with the ordered item. The billing will be handled still by the responsible department.

Technology

All current systems are currently running under either VMS or OS/390. Considering the relatively low number of users, WinDings performs to migrate to an Microsoft platform. The network is running TCP/IP and just 2 years old. All workstations are PC bought maximal 3 years ago and running Windows NT Workstation.

The vendors on the long list should provide you information to let you judge them against your selection criteria; that is the purpose of a request for information. It's still the first round in the selection process for buying software, you probably have more than one supplier on your list (I hope, otherwise you are now ready!), so you cannot go too much in depth at this stage. That's ok, we are just requesting information.

The package (Request for Information – RFI) you will send to the chosen ones contains three parts:

• The Invitation
• The Information Sheet
• The Questionnaire

In this section we will provide samples of such a Request for Information.

7.1 The Invitation

The Invitation is actually just the accompanying letter. You explain why you send the RFI (request for information) and that you want answers and brochures back. In exchange, they'll have a change of doing business with you…

Make sure you cover at least the following aspects:

• Who are you?
• From what company?
• What does your company do?
• What is your function within your company?
• What kind of system are you looking for?
• Describe the process: now Request for Information (RFI), then evaluation, followed by short list with Request for Proposal.
• Provide the timelines of the selection process
• Explain the Information Package and the Questionnaire
• When should answers be back? By who? Where? How?
• Who's the contact for more information?
• Thanks for the corporation.

Dear Sir

WinDings Ltd. is an independent business unit of Acme Corporation, a leading maker of little things in Europe. WinDings makes products like nose flutes, feet whistles and the famous Non Static Doormat.

We are currently looking for a information system which supports the booking and billing of our orders. For this, we are approaching a couple of suppliers, from which we want to select the system best suited for our purposes. You are one of these suppliers.

We kindly ask you to answer to accompanying questionnaire, and return it including some brochures about your product, to us before December 12^th 2010. Based upon the responses we will make a selection of companies for the next step in our project, a demo of the actual system and a request for proposal.

If you have any questions, you can contact Bas de Baar at +1 800-THE-MAN. He is the project leader for our selection process.

Thank you for your cooperation.

Best regards,

B.Eetlejuice

You know what information system you want to purchase, and even more important, why you need it. Now the tricky question is who to invite to participate in the software selection extravaganza; which vendors to pick for your first round?

The suppliers in this first round are put on a list: the long list. They will asked by you to provide some basic information (the request for information - rfi) by which you will determine who will be looked into more detail: the guys and galls that will make up the short list.

You need at least of small dozen vendors for your first round to have a fair overview. I prefer between 10 and 15. If you use less, you won't have parties to compare, and if you use more, you will drown in information overload, and won't be able to give them all enough attention anyway.

Who to pick? As I confessed, I'm an "early majority" myself, so I would look first of all to what my competitors are using; see what colleagues abroad are operating and inquire to what is common to similar markets, so not completely my own domain, are doing. Impressed by how another company is handling their process? Look at their system.

Being a pragmatist, I also look at industry organizations. Each industry has some overall organization that has information on vendors that make software for your domain.

If you are an early adopter, you go to seminars and cutting edge exhibitions; and you scan the internet for the latest developments.

Late majority people just ask for the market leader, and that's that. For this group of people it's difficult to have even two vendors on the long list.

This list is just for fun, it's really coincidence if one of these vendors does exist!

Very early at the start of the selection you should determine what the exact criteria are for selecting a certain piece of software. You will ask the vendors questions. They will answer you. And then what? Look who has the nicest handwriting? You have to think about this up front.

It's even worse… the questions you will ask are a result of the criteria you want to judge. How else could you say something about your software selection criteria? Ok, let's have a look at some criteria I personally use. There is no real definite list of selection criteria. They can very from company to company, from individual to individual. I included the following selection criteria for illustration purposes (and remember, I'm a prototype "early majority").

Stability of the vendor

I work for a large corporation. If we buy a piece of software it will probably be part of our primary operation for more then 4 years. It would be a big problem if a supplier went belly-up. We would have no more support, no more security, our life-line would be compromised. So, I would be looking for a vendor with some great stability.

Stability can be found in companies that operate already for a long time; that have a large customer base; have a steady income and revenue. Stability is also determined by company size (more people, means better equipped to handle people leaving), and, by looking at the people in charge: are they in charge, how are stocks divided, etc.

Proven track record within our industry

It's a fine line between amateurs and professionals, if you can judge people only superficially in very short time. You don't want to have amateurs fiddling with your company. Look for a proven track record within your industry.

Fit-for-purpose (least possible changes to the standard software as possible)

Changes to software are always a concern. They are difficult to specify, to develop and in general to plan. To reduce the amount of specific changes made for your company, is a way to reduce a project risk. You have a lower risk of schedule and budget overrun. If that's very important, you have to look for the software that comes close enough to what you actually want: fit-for-purpose.

Mature technology

I don't care how a certain piece of software is constructed. I just want to be sure that I'm not a kind of test case, a field study to see how "this cool stuff actually works". Having a new system is difficult as it is… using some technology that doesn't work quite yet, doesn't make it easier.

4.2 Target process

There is always some part of your organization affected by the software you want to acquire. New systems generate generally new ways of working, new process flows. You don't have to have the new software to envision the working process of the near future. It's essential for the selection process you put something on paper on this subject right from the start. First you write, then you buy!

You can use fancy diagrams or just plain text to create stories everyone can read. If it's a current process that has to be transformed, invite a few key players from within the process at hand, and first draw up a picture of the current way of working; identify the current problems, and try to draw the desired situation from discussing how to solve their current problems. In general, I try to avoid to much consultants in this process, people who perform activities in their day-to-day operation are mostly the best informed domain experts you can find!

4.3 Legacy Systems

Old systems never die. Even after you removed the brown, ugly, very large box which contains the old bits and chips, the legacy systems lives on in peoples minds, procedures and policies. Vendors, who replace systems for a living, know these things, and they can anticipate struggles while transforming to the target process. To assist them in their anticipation you have to tell them what you are currently using and how your operation is built around it.

Going from mainframe terminal emulation to a Windows-based environment? The vendor will tell you to put some extra effort in training just for the operating system (like putting employees on some PowerPoint course e.g.), instead of only prepare training on the business application you are looking for. By telling your legacy, the vendors can help you better solve your problem. If you do it right, it can even be free consultancy.

You also need a good description of your legacy systems. This is needed by the vendor to determine how the system should operate within the complex of systems currently running at your company. Aspects to specify are:

• Infrastructure used (network,telecommunications)
• Platforms currently used (operating system, hardware, clients and servers)
• Needed interaction (interfacing) with other information systems
• Data needed to take with you to the new situation (dataconversion)
• Organization of maintenance and support

4.4 Expectations: time and money

You are at the start of your selection process. All may not be crystal clear. However, time schedules may already be stated, without any one knowing what should be done in the first place. Budgets can be formulated without any basis. The sad part of it is that stakeholders have already formulated their requirements. They may not have told you, but in their minds expectations are already in a particular direction. You should sort it out. You should get on paper the expectation the key stakeholders already have in their mind.

For this purpose, it is wise to have a look at the budget for this year. Look how much is reserved for this investment you are about to select.