Software Implementation

6 Steps for a Successful Software Purchase

Toby Cox - Guest Contributor profile picture
By Toby Cox - Guest Contributor

Published | Updated on
7 min read
CAP_Header_1200x400_12132022_Steps-for-a-Successful-Software-Contract-Negotiation

Gather vital information about the vendor, and build a team to advocate for your software needs.

Your company needs new software, and you’ve been tasked with finding it.  The platform you choose could help your business succeed, or it could pose even more challenges than you’re already facing. 

If you’re spearheading the software-buying process for your business, you want to make sure you’ve identified the right technology to avoid buyer’s regret. If you’re worried about this, you’re not alone: According to Capterra’s 2024 Tech Trends Survey, identifying the right technology (44%) is one of the top challenges when buying new software.*

Here’s how to enter the software-buying journey with confidence, and choose a platform that will set your business up for short- and long-term success.

1. Assemble a software-buying team

According to our survey, the two main changes buyers would make to avoid future software purchase regret are ensuring alignment among their stakeholder group about the evaluation/selection criteria (38%) and clarifying goals (37%). But both aligning stakeholders and clearly defining goals requires a team of people; it cannot just be you alone.

Representatives from teams that will be using the new software should always be included in the software-buying journey, but members from other departments will have expertise that may be needed in different stages of the buying process. The members of this team will depend on your business size and resources—the table below shows the various focus areas and things to consider for each focus area:

Focus area

Things to consider

Procurement

Negotiation strategy

Request for proposal creation

Price checklist

Legal and contracts

Contract development and review

Legal terms and requirements

Terms and conditions checklist

Contract review and database

Business needs

Business need communication

Challenge software will solve

Process performance

Hardware and software requirements

Technology standards

Application development

Project management

Build versus buy

Customization efforts

Finance and accounting

Budget

Total cost of acquisition (TCA)

Total cost of ownership (TCO) analysis

Financial and accounting impact

Vendor management

Relationship

Performance measurement

Consulting services offered to clients

Information security

IT security policy

Data privacy

Regulatory compliance

Use this table as a checklist for your team members. Of course, not every company has individuals for each of these focus areas—if that's the case, select the most appropriate team members to take on multiple responsibilities.

2. Capture fees and hidden costs

The top product-related factor that leads to an organization’s software buyer’s regret is that the technology investment is more expensive than the buyer is led to believe (35%).

To go into the software-buying process with a true cost assessment, ask questions ahead of time about these pricing aspects:

Software

Maintenance and support

Services and training

Fees: List and net price

Type: License or subscription

Metric: Per user vs. per month

Delivery: Cloud or on-premise

Integration: Fees for vendor assistance

Warranty: Length and expiration

Options: All coverage types and prices

Descriptions: Coverage details

Discounts: Options for reduced prices

Options: Pricing and time/materials

Rates: Blended or role-based

Methods: On-site, remote, or online

Payment: Timing of payment and travel fees

You’ll need to do a deeper dive into the software pricing metrics to get the most accurate costs. Depending on your specific business setup, certain vendor pricing models can be a “win-win.” For example, a company that is rapidly hiring new employees can get more value for their money with a software subscription model that allows unlimited users for a set price.

Be sure to review the trade-offs for each method of software pricing to avoid overpaying and to understand the true cost of software.

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3. Understand your T&Cs

The terms and conditions (T&Cs) of your software agreement describe the risks and rewards of the contract. Each software provider includes different terms, so it’s simpler to craft your own checklist of items that are must-haves for your business.

These terms will change depending on the deployment method—whether you install the software at your location or use it through a web browser.

Here are examples of terms and conditions typical for both types of software deployment:

On-premise software

SaaS and cloud software

Defined pricing metrics

Clear service recovery plan

Cap on maintenance renewal increases

Right to perform audits

Cost of changing hardware

Bundling and renaming protection

Renewal price protection

Acceptable penalties for vendor service failure

Rights to customize, test, and develop

Clear data privacy and security terms

Defined support services

Rights to convert to on-premise

4. Uncover vendor motivations to gain leverage

The vendor is likely to gather information about your budget limits, how the software will be paid for, which executive will approve the deal, and who makes the final decision.

This gives the vendor more detail to leverage the deal in their favor, but you can ask questions to reveal the vendors’ motivations to make sure you have the same advantage.

Consider questions such as:

  • How do you get paid—straight commission, or salary and commission?

  • Do you get bonuses throughout the year? When do you get your biggest bonus?

  • Are you more highly compensated on some products and services than others—which ones, and how does the compensation incentive program work?

After gathering this info, see if these factors can give you a greater advantage:

Consider fiscal year-end. Do you have any vendors pushing you to close on a deal soon? Sales teams are normally aggressive, but they ramp up the pressure near their company’s fiscal year-end, and so should you.

It’s always best to stretch software discussions into the end of a fiscal quarter or year to leverage the vendor’s urgency to get a better deal—special pricing and discounts are easier to obtain when the sales team really needs to close the final deal of the quarter or year.

Fiscal year-end

Vendors

January

Autodesk, Salesforce, Workday

February

Dell

March

BMC, Compuware, Fujitsu, Hitachi, Lenovo, Symantec

April

Infor

May

Oracle

June

Microsoft

July

Cisco

October

Broadcom, HPE, Micro Focus

November

Adobe

December

Amazon, ASG, Citrix, Google, IBM, Informatica, SAP, SAS, ServiceNow, Software AG, Tableau, Unisys

5. Use a scoring template to identify your best options

According to our research, another one of the main changes software buyers would make to avoid future purchase regret is to update or change the initial list of vendors (36%). Use the criteria listed in the table below to score your top few software options against each other—this way, you’ll know exactly how invested in the deal you should be and identify the products that best match your requirements.

Score the criteria from one to five, and give important considerations more weight when calculating winners. Use as many or as few of these as needed for your software vendor options:

  • Pricing license fees, customization and implementation costs, maintenance fees, and training costs.

  • Required (and nice-to-have) features and functionality.

  • Operating requirements (compatibility and mobility).

  • Integrations.

  • Support and training capabilities.

  • Terms and conditions (T&Cs) risks.

Download the Software Vendor Scorecard

DOWNLOAD

6. Be prepared to walk away

After scoring each vendor, reviewing terms and conditions, and understanding the stakes for both the vendor and your company, you know whether you can afford to walk away toward other viable options.

Your list of requirements and valid alternatives gives you the ability to walk away with lower-scoring vendors when they don’t progress in a favorable direction. If you do walk away from negotiations, take the time to reset with your team:

You’ll learn from each discussion how to better leverage your research and how to best respond to tough questions and tactics from vendors.

Gather the best resources when buying new software


Make sure your company is prepared for the software-buying journey. To recap, gather your software-purchasing team, understand the hidden costs and acceptable contract terms, then develop an effective game plan that identifies the right platform for your business.

If you’re getting a headstart on the process, you should analyze real user reviews and schedule a few software demos, then follow these steps from the beginning so you can tailor your negotiation plan to each vendor when it comes to that stage.


Methodology 

Capterra’s 2024 Tech Trends Survey was designed to understand the timeline, organizational challenges, adoption & budget, vendor research behaviors, ROI expectations, satisfaction levels for software buyers, and how they relate to buyer’s remorse.

The survey was conducted online in July 2023 among 3,484 respondents from the U.S., U.K., Canada, Australia, France, India, Germany, Brazil, and Japan, with businesses across multiple industries and company sizes (5 or more employees). Respondents were screened to ensure their involvement in software purchasing decisions.

This report displays results based on 700 respondents in the U.S.


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About the Author

Toby Cox - Guest Contributor profile picture

Toby Cox is a guest contributor for Capterra, covering software trends and stories of small business resilience. Her research on business trends and corporate social responsibility has been featured on Clutch.co, The Manifest, and PR.co Blog. Currently, Toby is based in Boston, MA, where she is a graduate student at Harvard Divinity School. She loves nature and learning new languages.

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