Pin Down Your Software Procurement Plan

12/19/2012 9:32:21 AM

Don’t get stuck with end of life solutions

Software procurement is a part of every company's day to day opera­tions, whether they realize it or not. Regularly, businesses must make choices as to which programs to up­date and upgrade as well as decide whether it's time to put wind in the sails and move on to something dif­ferent. This is sometimes a quick de­cision and at other times a daunting task, often depending on the com­pany and the software, but however you look at software procurement, it isn't something to be ignored. There are many factors related to deciding what software to buy and when, so it's imperative to put something down on paper.

"If you fail to plan, you are plan­ning to fail," says Mark Bartrick, se­nior analyst at Forrester Research (www.forrester.com). "Failure to do proper due diligence on the vendor, product, contract, support/helpline, maintenance, product roadmap/ upgrades, compatibility to other software it may need to connect to, hardware it will run on, maintenance costs and training will leave any cus­tomer exposed operationally, techni­cally, financially and legally."

It's sobering to think that a soft­ware purchasing decision you make right now could put your company in a technological rut three to five years down the road, but it's exactly the type of wake-up call that will pre­vent you from making a potential mistake. We'll discuss some things to keep in mind as you wade through the waters of software procurement and show you why it's so important to put a plan in place and follow it as closely as you can.

The right people for the job

Software procurement starts with the employees in charge of the process-those with experience with purchasing software-regardless of the company's size. "Large organizations should have dedicated software procurement staff, medium-sized organizations will typically have procurement staff who are experi­enced enough to negotiate a software contract, and smaller organizations just buy software as required," says Bartrick. "But because software is ubiquitous in almost every business today, all companies should take some time to ensure they understand how to buy the right software for what they need."

Your company's specific needs should be a recurring theme in your software procurement plan. And your procurement team should be able to analyze your current software titles, as well as emerging ones, to deter­mine whether those offerings will meet company needs.

When it comes to programs that are already running on company com­puters, Bartrick recommends taking ad­vantage of a software asset register. An asset register is a comprehensive list of every program a company has bought that also explains "how it is being used, what price the company paid for it, what the ongoing support costs are, and when the next maintenance renewal is due," according to Bartrick. Using this type of management tool will also help your procurement employees determine whether it's time to update or upgrade your existing software.

Software procurement starts with the employees in charge of the process-those with experience with purchasing software-regardless of the company's size.

Software procurement starts with the employees in charge of the process-those with experience with purchasing software-regardless of the company's size.

Updates & Upgrades

Some companies may have a policy that requires the installation of up­dates and upgrades as soon as de­velopers release them. But for larger organizations with hundreds or thou­sands of software licenses to manage, this amounts to a costly proposition in terms of both labor and the overall IT budget.

Andy Woyzbun, lead research an­alyst at Info-Tech Research Group (www.infotech.com), says that many companies "postpone or defer upgrades for as long as possible" due to labor costs and other financial factors, but he also points out that this approach to software procure­ment isn't necessarily a bad one. "An update makes sense to you only if you're going to actually achieve enhanced functionality that's valu­able to you," says Woyzbun. "And most organizations avoid making changes, except when a vendor threatens to withdraw support for older versions, which could be in as few as three releases."

For instance, Woyzbun points out that some companies are still using Windows XP and will continue to do so until Microsoft discontinues its support for the OS. In response to sit­uations like this, Microsoft has begun adding new features and function­alities to each update or new release to entice companies to make the next leap. Still, Woyzbun recommends that businesses wait until a potentially costly update or upgrade adds new functionality that pertains directly to the company's needs.

However, companies should also be on the lookout for instances where a software manufacturer's updates and upgrades are no longer viable for the company. In this case, Bartrick says it may be time to look beyond your comfort zone for new alterna­tives. "If a vendor's future release roadmap begins to differ from the requirements of the company, then that will be a signal that the com­pany should start looking to replace the current software with something more suitable from another supplier."

Mind the gaps

If your software procurement team looks at your company's cur­rent solutions and determines that it may be time for new software, then you need to change the way you look at software in general. Woyzbun recommends looking at every piece of software as part of a portfolio. This portfolio should encompass everything your com­pany needs including security, videoconferencing, internal/external messaging, and any other software that's pertinent to your business operations. When you can take an in depth look at your application portfolio, it will allow you to spot gaps in functionality and eventually take steps to close them.

"If companies took a portfolio view of existing applications and the gaps that they have, then they would probably be much smarter about how to allocate the applica­tion dollar," says Woyzbun. "They would start shifting money away from applications where the incre­mental investment is not needed in favor of the investment for those things that are needed."

In essence, Woyzbun says that software procurement can be simpli­fied to "closing functionality gaps." And if your installed software is un­able to fill those gaps, you need to research new alternatives that will do the job. Woyzbun recommends finding new modules that are compatible with your existing software and can add new functionality. But if that isn't an option, you can look at SaaS (software as a service), which he says has applications that "require less effort and can be de­ployed faster with less upfront in­vestment."

From there, you may need to con­sider investing in standard pack­aged software solutions, which will mean essentially starting over from scratch and learning a new system. This is where having a well-estab­lished portfolio and software pro­curement plan in place will help you determine which choice is best for your company.

Plan now, benefit later

If you continue to pour funds into obsolete applications or update and upgrade software without a func­tional reason, then "you won't be able to get the money to purchase new software when you need it," says Woyzbun. But if you act with due diligence up front and put your­self in the best possible position for making decisions in the future, you can save money on software purchases as well as save time and money related to labor, non-com­pliance, and contract negotiations, according to Bartrick.

Woyzbun suggests viewing soft­ware procurement as a way to close functionality gaps and make sure your company is performing at the highest possible level. If you can use your application portfolio to forecast the potential end-of-life timeline for certain programs, then you can be ready when the time comes to incur the costs of pur­chasing new software. In the busi­ness world, it's easy to fear change and instead hold onto the familiar, regardless of how it may negatively affect the company. But if you can keep up with the software industry and make your move at the right time, it will result in smoother sailing in the future.

Key points

Understand the impor­tance of having a software procurement team in place to handle your existing software as well as possible future purchases.

Consider updates for existing software or upgrades to newer ver­sions only when it makes practical and financial sense to your company.

Beware of potential functionality gaps in your applications because they indicate it's time to invest in new software that better suits your needs.

If you can plan out your software procurement process now, you'll be in a better position in the future to take advantage of new software advancements.

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