What Are Vendor Guarantees Really Worth?

By: Sheldon Needle
Submitted: 2007-01-17 16:10:05
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Normally astute business people often think they are protected against software failure by buying a package which comes with some kind of guarantee. Normally these guarantees will say something like you can get your money for the software refunded within 30 days (occasionally 60 days) of purchase.

Sounds pretty good doesn’t it? After how can you go wrong when you can get your money back through a contract guarantee.

But consider this.

If you are going to be installing even a relatively simple program, say a construction program with job cost, AP, AR, etc, are you going to be able to realistically evaluate it within 30 days? Considering the amount of time it takes to convert date, train on the system and troubleshoot early glitches in using it, you are more than likely going to be at least 60-90 days from the initial purchase before you know whether it will really meet your needs.

Consultants will tell you that implementing a full ERP system will take nine months to a full year or more before everything is ironed out, hardly enough time to take advantage of a 30 or 60 day guarantee.

So before you sign on the dotted line you had better be sure you are buying a system that will work for you. How do you get that assurance? Unfortunately, it’s about more than you and your staff watching mind numbing demos conducted by salespeople who will razzle dazzle you with the well rehearsed mouse clicks they can perform..

In order to establish a real comfort level with your purchase, you have to spend some serious time with test scripts and doing hands on testing of the system. Many small companies will skip that step since they do not have the time or expertise to really validate its capabilities and, besides the software comes with that reassuring guarantee.

But how much does the refund cover? You won’t get the time your company has spent implementing and learning the system, data conversion, consulting or training expenses. This often adds up to an amount equal to the cost of the software itself so, in effect, you are going to be out the amount of the software cost itself even if you did pull the plug within the guarantee period. Now how smart does that purchase look?

What to do to protect yourself

• do a thorough needs assessment of all possible requirements and how you want them to work
• test the software yourself with scenarios from your own business. If you don’t know how to do this get a consultant to help you. At minimum provide a script for the vendor to follow when they demo the system to you.
• get multiple references from the vendor on companies similar to your size and specialty who have installed their system within the past 12 – 18 months. Older references aren’t as meaningful since they have long since found a way to coexist with the software.
• be sure the vendor/reseller helping you has competent staff who understands your type of business in detail. It’s not unusual for a buyer to get a system which is fairly capable but have it fail because the software dealer did not have the specialized expertise to install it properly for their particular type of business.

It’s important to understand that short term software purchase guarantees are not going to cover the vast majority of installations due to the length of time it takes to fully install new software.

Due diligence on your purchase is more than watching vendor controlled demos.

The true cost of your software investment is probably going to be two times the software cost.

The right software purchase can be your company’s best investment ever, just be sure you thoroughly understand what you want it to do and validate that with thorough test scenarios, before you sign on the dotted line irrespective of any vendor guarantees.

Article source: Expert Articles