Insights: Article

When (and How) to Successfully Select New Software

By   Tim McCutcheon

August 03, 2016

Not-for-Profit entities (NFPs) seeking to upgrade or modernize some or all of their software applications have a vast array of products and delivery systems available to them—so much so that the process can be daunting and fraught with potential pitfalls. However, armed with a little knowledge and some common sense, and informed by following a sound process for evaluation, selection, and oversight, migration to today’s best solutions can help NFPs achieve new levels of efficiency and control over their own destinies. 

Key to a successful software change is first understanding the NFP software market as it has evolved into what it is today—tiered by size and sophistication to match the demands of the market. From the lowest tier, the so-called “shrink-wrap” market, with its cellophane-wrapped out-of-the-box software, all the way to the top-tier Enterprise Resource Planning (ERP) solutions, with nearly unlimited, albeit costly, customization options, NFPs should study and understand where they are likely to find the best combination of features, capacity, and overall fit.

It is important to note that some software solutions may not be available across all delivery modes—on-premises, hosted, or software-as-a-service. This may be important to an NFP’s ultimate purchase decision. Staffing considerations, structure, customization, costs, and access to expertise all factor into the analysis. Costs over the life of the software likely will be similar regardless of the delivery system chosen, but the timing of cash outlays will be different. On-premises implementations require greater up-front expenditures, but have lower on-going costs over the remaining life cycle of the software, as compared to software in the cloud, which has lower up-front costs, but higher maintenance costs.

As with the prices of many items today, NFPs likely will experience “sticker shock” if they haven’t been in the market recently. While costs of hardware have continued to fall, software costs reflect the ongoing efforts of manufacturers to expand and improve their offerings, and the high costs of finding and retaining the most talented software development professionals is reflected in the prices.

Even more shocking to most NFPs is that they will need to spend 1-to-5-times the purchase price of software in order to implement it effectively. A poor implementation can be a disaster, costing an NFP money, time, operational focus, and energy. Software selection and implementation horror stories are legion; don’t become one of them!

NFPs should carefully develop a plan to optimize the due diligence and selection process, which includes developing an initial budget, defining the entity’s requirements now and for the next 5-10 years, identifying potential vendors, creating a thoughtful request for proposal, and developing a software evaluation process that takes control of the software demonstration process and ensures a consistent comparison across vendors. In addition, many software products require finding and hiring a separate implementation specialist, as the software manufacturer does not also provide the implementation services. Finding the right implementation specialist is as important as selecting the right software.

Intelligently approaching a software purchase requires planning, buy-in from all stakeholders in the decision, discipline in adhering to the plan, patience, and a commitment to persevering all the way through completion of a successful implementation. Most NFPs would benefit greatly from partnering with an experienced IT/implementation professional consultant with specific NFP software knowledge and experience to help guide them through this complex process. A good consultant will educate the NFP, help coordinate the overall process, and bring objectivity to the entire process, thereby helping to ensure an optimal outcome.

Latest Insights

July 19, 2018
Article
While it’s great to watch your team grow, hiring new employees can be a frustrating and grueling process.
July 19, 2018
Article
Often, human resources (HR) is over looked, but we’re here to tell you it’s an essential component of any organization and critically important to get right.
July 13, 2018
Article
Here are some idea for giving your new hire a smooth start into your business and alleviating stress for you.
July 13, 2018
Article
The impact of the recent SCOTUS Wayfair decision will continue to have a ripple effect on businesses and state sales tax compliance.
July 9, 2018
Article
The revenue cycle is a complex system and we have historically given much attention to the front-end and back-end while oftentimes leaving the middle functions of the cycle neglected.
July 3, 2018
Article
FASB Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, provides a 5-step framework for determining revenue recognition.
July 2, 2018
Article
As part of the Tax Reform Act of 1986, the “Kiddie tax,” a taxing regime designed to make the transfer of income items by wealthy parents to lower tax paying children less attractive, was implemented.
July 2, 2018
Article
When it comes to your employees, you likely conducted interviews on them when you first hired them.
July 2, 2018
Article
Nearly ten years after the release of the initial exposure draft, FASB issued ASU 2016-02, Leases - The standard may have been issued, but the conversation about this re-write of legacy guidance has not slowed.