Don't Buy Software on the Best Demo

The best demo isn't the best product. And the cheapest quote isn't the cheapest choice.

Most business software - the CRM, the ERP, the help desk, the HR system - gets chosen in roughly the same way. A few vendors give demos. One is noticeably slicker, or offers a discount if you sign by the end of the month, or is the one someone used at their last job. A decision is made. The real costs turn up over the following year.

Here's how to choose more deliberately.

Decide what you need before you see a demo

Write your requirements before any vendor is in the room. Demos are designed to make you want what they show, and once you've seen one, your list starts to look like that vendor's feature list.

For each requirement, decide how much it matters:

• Must have: you won't buy without it.
• Important: it matters, but you could live without it.
• Nice to have: a tiebreaker.

Be strict. If everything is a must-have, nothing is. Five or six genuine must-haves is plenty, and one of them should almost always be: we can export all our data, any time, in a standard format.

Score every vendor the same way

After each demo, score every requirement - say 0 to 5 - for that vendor. Score what you saw, not what you were told. If they couldn't show it, it scores low until they can.

Weight the scores by how much each requirement matters, and add them up. And if a vendor fails a must-have, it's out, however well it scores everywhere else.

This sounds mechanical, and that's the point. It stops the decision being made by whoever ran the most charming demo.

Make them show you

In the demo, ask them to:

• Use your data, or data like yours - not their perfect sample company.
• Walk through the three tasks your people do most often.
• Show the admin side: adding a user, changing a field, setting permissions.
• Export everything, and show you the file.
• Show what isn't included in the price you've been quoted.

How they handle the last two tells you a lot.

Count the three-year cost

The subscription is the number on the quote. It's rarely most of the cost.

Add up, for each option, over three years:

• One-off costs: setup and implementation, moving your data, connecting it to your other systems, training - and your own team's time, which is real money even though nobody invoices you for it.
• Yearly costs: the subscription, with its price rises at each renewal, support, add-ons and extra users you'll need as you grow.
• The cost of leaving: exporting your data and running two systems for a while. A high number here is lock-in.

Sometimes the cheapest subscription turns out to be the most expensive choice.

Watch for the red flags

• They won't put the full price in writing.
• They push for a quick decision with a deadline discount.
• They can't give you references from companies like yours.
• They're vague about where your data is held, and how you'd get it all back.
• The contract has a long term, automatic renewal and no cap on price rises.
• Features you need are "on the roadmap".

Talk to their customers

Ask each finalist for two customers your size, and call them. Ask:

• Why did you choose them, and what else did you look at?
• How long did it take to go live, compared with the plan?
• What did it really cost, compared with the quote?
• When something goes wrong, what happens, and how fast?
• How have prices changed at renewal?
• Would you choose them again?

That last question is the one that matters.

Then read the contract

Choosing the vendor is half the job. Before you sign, read the contract for the things that cost money later: renewal terms and notice periods, price rise caps, what happens to your data if you leave, and what they're liable for if it goes wrong.

The bottom line

Decide what you need first. Score everyone the same way. Count every cost over three years. Talk to their customers. Then read the contract.

It takes a few more weeks than signing after the best demo. It saves years of living with the wrong system.

Want the scorecard? The Vendor Selection Scorecard gives you weighted requirements, a three-year cost for each option, the red flags, a demo script and reference calls - with a verdict for each vendor.

Free guide: The 45-Minute Tech Spend Checkup - a one-page meeting agenda for finding out whether your technology spending is working.

Related reading

• The "Later" Tax: What Deferred Technology Decisions Really Cost
• The 45-Minute Tech Spend Checkup Every CEO Should Run

Choosing a new system and want a second opinion? Let's talk. An outside view before you sign costs far less than unpicking the wrong choice later.