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8 Things to Consider When Choosing a Software Vendor

David Adamick

Jul 27, 20216 min read

Startup challengesStartupsGrowing companies

Table of Content

  • Questions to ask in the software vendor selection process  

  • The Importance of Software Evaluation

  • FAQs on Software Vendor Selection Process

Whether you’re a project manager, product manager, CTO or CEO, choosing the right software system (or licensed SaaS) involves a huge commitment. It is not a decision easily taken. In fact, it can be one your entire business hinges upon. And it’s not just avoiding an inappropriate software package, but ensuring you implement the right one in the right way. What’s more, there’s a wilderness of software vendor competition out there to negotiate.

So to choose the right software, you need to know how to choose the right software vendor. How to choose the right partners for whom the relationship is also a good fit going forward. You’ll also need to analyse your current business processes - does your software meet your current and future requirements, for example? This is why many prospective clients will first implement a software vendor evaluation process - something crucial when landing the right software vendor.

It's also a process that can be quite helpful when choosing a software vendor like Startup House, so here’s a guide to help you make those important decisions.

Questions to ask in the software vendor selection process  

Before evaluation, however, is the vendor selection process. To choose the right software vendor, you must access and shortlist potential partners so as to clarify and define those elements that are most relevant to your current working systems. This way, you take a more informed decision for your team and better assure the possibility of finding the right outfit for your business.

Consider the following:

  • How will the new system integrate with your current ones?
  • How manageable is the setup procedure?
  • What training is needed and/or provided?
  • What support will there be?
  • How are updates and upgrades managed? 

Once you've addressed these, it’s time to move on to the evaluation process.

The Importance of Software Evaluation

Here’s the really crucial part. Here is where you draw up the criterion for applying to that shortlist of prospective software vendors. Integrating the following considerations into your process will ensure you get closer to the SaaS system that is right for your business.

1 Define your business needs

Be clear on what you’re after. Avoid the extra whistles and bells that often - and unknowingly - go off later on.  Above all, consult your team. As they will be the ones using any new SaaS implementation, determine the ‘must-haves’ and ‘nice-to-haves’ that will make their working lives easier and more efficient. If you’re in need of a particular upgrade, for example, ask them what they like and don’t like about the current system’s functionality, and why.

2 Additional fees

Caveat emptor for those ‘whistles and bells’: as often, these are manifested as hidden or additional fees. Typically, product training, setup/onboarding, info management and annual maintenance will appear as such, so do clarify before committing that contract signature!

3 Client Feedback

Then take a further step by consulting current or past users of the software vendor you’re considering. Ask them for references in your industry. Query their likes and dislikes; find out the length of their history using the software vendor and be sure to establish a sense of services rendered. How responsive and how thorough was/is their support? There’s also your industry media to consult for client reviews and case studies; of course, you can also find some excellent ones at Startup House. 

4 Check vendor credentials

This goes hand-in-hand with feedback. Investigate the software vendor’s business background and its present health. Are they expanding? Downsizing? Further to client relationship histories, how long have they been in business? What size is their service team vis a vis your support requirements? 

By establishing these capacities and competencies, you will minimise what can be common, unpleasant surprises when an unforeseen crisis develops.

5 Trials and tribulations

It would seem natural to expect a trial run from of anything obliging the size of commitment as does a SaaS contract. With so much at stake, you need tangible assurance through a thorough engagement with your team. Here is an opportune time to both gain feedback and compile a list of corresponding questions and requirements to the software vendor to ensure the product is properly streamlined for your business.

6 KPIs - Gauge your success

So: you’re getting a shiny new software system with high expectations typical of such a commitment. But expectations of what, exactly? Here is where the proverbial proof is found in the pudding.  For which you’ll need to establish some KPIs (key performance indicators). Is increased traffic paramount? The retention of new customers? Click-through rate or closed sales?  Whatever you decide, the criterion must naturally flow from your list of defined business needs, without which your new investment will be in danger of seeming a superficial one. 

Above all, clear-cut KPIs are crucial to your software vendor if and when corresponding refinements to your new system are needed to fulfil your initial expectations.  

7 Be clear on the data clause

All things must pass, including software vendor relationships (sad to say). Therefore, you must be clear on your software vendor data policy when the time comes. Agree beforehand on what will happen to your data and what obligations there will be for getting it back. 

Unfortunately, it is not unknown for clients to be suddenly leveraged into paying a noteworthy extra for this to happen. In any event, it is quite likely that some levy will be applied for the transaction, so before entering any contract, do ensure you agree on what that amount will be. 

8 Understand your contract

It goes without saying, but I’ll say it anyway: understand your contract. Limited comprehension of written agreement means the limited scope for negotiation. A contract will invariably involve terms of:

Ownership - confirms the software vendor ownership of the software; however, it is crucial to clarify the ownership of intellectual/data property here 

Term/Termination - defines the agreement’s duration and procedures upon its ending

Fees (see ‘whistles & bells’) - is usually located on the order form and often non-cancelable/refundable; will usually include late payment fees and punitive measures

Indemnification - sets out the terms of liability in the event of a breach of data

Usage & Restrictions - this deals mainly with right-to-use terms and conditions and their limitations 

Further comments on contractual matters are worthy of another post unto itself, so I will hold off the topic for now. But whatever you do, leave no stone unturned before signing on that dotted line: there are enough cases of businesses suffering as a result of insufficient due diligence.

And there are many who have put in the time and effort to ensure an optimum product for their business. They’ll be the first ones to tell you what a satisfying experience it is.  

Startup House can help you be one of them. As award-winning leaders in product design/development/management, MVP, web development, Cloud technology (the list goes on…), we’re here to help define, refine and realise the right system to take your business forward.

For more information, don’t hesitate to contact us at

FAQs on Software Vendor Selection Process

What is the software vendor selection process?

 The software vendor selection process involves evaluating and choosing a software provider for your business needs. It includes identifying potential vendors, assessing their capabilities, comparing their offerings, and ultimately selecting the one that best aligns with your project requirements and organizational goals.

What are the key steps in the software vendor selection process? 

Key steps in the software vendor selection process include: defining your software needs, researching potential vendors, evaluating their solutions against your requirements, conducting vendor interviews or demonstrations, checking references and reviews, and negotiating terms before finalizing the selection.

How important is compatibility in the software vendor selection process? 

Compatibility is crucial in the software vendor selection process. It ensures that the chosen software integrates seamlessly with your existing systems and workflows, minimizing disruptions and maximizing efficiency. It's important to consider both technical compatibility and the vendor's ability to align with your business culture and values.

What criteria should be considered during the software vendor selection process? 

During the software vendor selection process, consider criteria such as the vendor’s experience, reputation, technical capabilities, support and service quality, cost-effectiveness, scalability of the solution, and feedback from their existing clients.

Can you describe the role of due diligence in the software vendor selection process? 

Due diligence in the software vendor selection process involves thoroughly researching and evaluating a vendor's background, financial stability, product performance, customer service record, and compliance with industry standards. This step is vital to ensure that you partner with a reliable and capable vendor.

What common challenges are faced during the software vendor selection process? 

Common challenges in the software vendor selection process include identifying the exact needs of the business, balancing cost and quality, understanding the technical aspects of the software, and evaluating long-term scalability and vendor reliability.

How does the software vendor selection process impact business operations? 

The software vendor selection process has a significant impact on business operations. Choosing the right vendor can lead to improved efficiency, competitive advantage, and growth. Conversely, a poor choice can result in operational setbacks, financial loss, and negative impacts on customer satisfaction.

What role does budget play in the software vendor selection process? 

Budget plays a critical role in the software vendor selection process as it determines the range of vendors and solutions you can consider. It's important to have a clear budget that aligns with your business objectives and provides room for future scalability and additional costs like maintenance and support.

Remember, the software vendor selection process is a critical business decision that requires careful consideration and strategic planning to ensure that the chosen vendor meets your specific needs and contributes to the overall success of your organization.

8 Things to Consider When Choosing a Software Vendor

Published on July 27, 2021


David Adamick Content Editor

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