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Strategic Steps to Selecting Software Vendors

9 Nov, 2004 By: Darrell Amy imageSource

Strategic Steps to Selecting Software Vendors

The challenges faced by dealers trying to transition to software solutions
sales can, at times, seem endless. As a dealer you must first decide to make the
move, then you have to ensure you get the right technically-minded employees on
board and you also have to get the word out to the marketplace to generate new

But, quite possibly, the toughest decision confronting most dealers during
the progression into solutions sales is selecting a software vendor that best
fits their customers and long-term goals.

In the hardware world, the selection of OEM partners is relatively simple.
There are a dozen or so copier manufacturers, limiting the field of choice.
Plus, other than some minor differences, hardware vendors typically offer the
same product.

The software world presents a totally different reality. There are hundreds
of vendors offering software packages with thousands of features. Potential
software partners exist as large companies or innovative start ups. While a
software package may compliment one dealer’s set of clients, it may not be a
good fit for another dealer.

Developing competency in the solutions field is necessary to effectively
evaluate software partners. One dealer that is learning about this evaluation
process firsthand is Tom Pease, president/owner of e/Doc Systems, an independent
dealership in Memphis, Tennessee. Pease recognized the necessity of
differentiating his dealership by providing value added document solutions. 

Pease changed his dealership’s name from Corporate Copy to e/Doc Systems to
reflect his new direction in the solutions business. However, he understood that
it would take more than a name change to successfully enter the solutions

“We knew we had to fundamentally change our sales model to add new value to
our clients,” Pease said. “At the same time, we needed to find software products
that were aligned with the needs of our client base.”

The selection of software vendors is a critical step to entering the
solutions business, according to Glen Coutts, national sales director for
SentryFile (www.sentryfile.com), an
electronic document management software company.  

“Many dealers experience challenges in their first solutions implementations
because they don’t take the time to determine if the software is a good fit for
their dealership,” observed Coutts. “As a result, they end up selling software
that may not be a good fit for the dealer or the client.”

The Strategic Process

Due to the fact that choosing a vendor is a key part of a dealership’s success
in the solutions sector, the selection process should be strategic.

Steve Boone of Docustrategies (www.docustrategies.com),
a document management solutions provider, organizes strategic planning seminars
for dealers transitioning to the solutions business. He stressed the importance
of having a solid strategy.

“Due diligence is important, especially considering how quickly the solutions
industry is evolving,” he said. “Dealers must continually watch the industry for
new opportunities, changing competition and evolving client demands.” 

Four steps should be taken in the planning process.

1. Develop a Vision

For years, the vision of an independent office equipment dealer has been simple:
create a reputation of outstanding service on office equipment. Combined with a
strong sales culture, creative packaging and effective management, this vision
carried dealers through years of consistent growth and healthy profit margins.

A vision for the next 10 years must acknowledge the changing climate in the
office equipment industry, the technology industry and the business world at
large. The commoditization of hardware has created price competition that leaves
clients asking if the excellent service you provide them is worth enough to
justify your price. Clients want a dealer to add value, which means software
solutions that solve larger business problems.

“We realize that to continue to grow profitability, the vision of our
business needed to shift to discovering and solving client problems that were
real sources of pain,” remarked Pease. “Our vision is to evolve from being a
vendor that kept our customer’s office productive to being a partner that really
helps our clients deal with key business issues.”

2.  Analyze the Market

Important questions to ask when analyzing the market include: 

  • What opportunities exist? 
  • In the business world as a whole, what trends are you seeing?
  • What threats are there to your current business? 
  • Are there threats outside of traditional competitors that you need to

Next take a close look at your dealership. Relative to the opportunities and
threats that you see, take a look at how your dealership stacks up.

  • What are the strengths of each area of your organization? 
  • What are your weaknesses? 

This analysis provides guidance in selecting solutions partners that
compliment your strengths and shore up your weaknesses.

At the same time you analyze your dealership, it is helpful to take a fresh
look at your competition. 

  • How are new competitors and distribution channels impacting your market?
  • Is the solutions business primarily an offensive move to differentiate
    your dealership or is it a defensive move to remain competitive?
  • Look at deals you lost this year. Why did you lose them? Why did clients
    put off buying decisions?

Finally, look at your current client base. The solutions business by
definition requires that you understand client problems. Each vertical market
has specific challenges with information management, competitive issues and
regulatory compliance. It makes sense to choose software vendors that can
address issues in your core client base.

  • Where is the core of your client base? 
  • What industries is your dealership strong in? What is happening in those
    industries that impacts their management of information and documents?
  • Are there industries that you would like to grow market share in? 
  • What are your clients saying to you and your sales reps? (If you don’t
    know, get out in the field and ask them.)

3.  Choose Solutions Categories

Common document solutions categories include electronic document management,
electronic forms, variable data printing, and print output management. Depending
on the client base, a dealer may even go outside traditional document solutions
categories to serve the needs of a core base of clients. These categories could
include solutions for network security management or inventory management/bar
coding. Opportunities also could exist in scaled down ERP solutions that help
clients manage their accounting, inventory, shipping and service departments. 

The categories you choose need to be aligned with the vision of your
dealership. In selecting software categories, Pease said, “It is important that
myself, the sales reps and the clients readily understand what the product is
for and how it fits with our dealership’s overall package.” 

Understanding software categories requires that you are educated to the
options available. This can be done in a number of ways. Industry tradeshows
like the upcoming ITEX show in Las Vegas in February 2005 features numerous
software vendors and educational forums. Dealership owners should bring along
sales managers and solutions specialists. The show can be leveraged to learn as
much as possible.

Other sources of information are the software vendors themselves. Russ
Johnson, sales director for InfoDynamics (www.infod.com),
an electronic document management software provider, is more than willing to
demonstrate his software over the Internet. 

“Web-based meetings allow us to demonstrate software quickly using the
Internet and a conference call,” he said. “Dealers should leverage these free
opportunities on a regular basis to learn as much as they can about the software

An OEM partner can also provide guidance through its solutions programs. Many
OEMs offer online training in different areas of document solutions. Toshiba
America Business Solutions, for example, provides Web-based training to keep
dealers updated on the applications of its software offerings. You should take
advantage of these training opportunities. Some software companies also offer
trial downloads to their clients. 

“As a former dealer, I know that most people in our industry are hands-on,”
said Coutts of SentryFile. “We have found that our free trial downloads allow a
copier dealer to really experience what the software can do.”

Several industry organizations also provide guidance. Organizations such as
DocManagement Online (www.docmanagementonline.com)
and AIIM, the Association for Information and Imaging Management (www.aiim.org),
send out informative email newsletters. 

“We know that it is critical for us to stay on top of the software industry,”
said Paul Ginn, solutions specialist at e/Doc Systems. “It is clearly impossible
to know everything, but by taking some small steps you can expand your awareness
of options in the software industry.”

4.  Develop Criteria for Solutions Vendor Partnerships

The final step in the strategic software selection process is to develop
criteria for choosing software vendors. Key considerations are (a) the software,
(b) the source and (c) the support.

A. Software

Below are five key issues a dealer should consider when evaluating software

1. Fit - Does the software fit the dealership’s core clients’ needs? Mike
Beard, director of sales and marketing for U.S. operations at Objectif Lune (www.objectiflune.com),
explained: “A software solution should allow a dealer to mine new business out
of their current customer base. Choose a software partner that allows you to
offer a solution that will bring workflow improvements to your current

“As we evaluate software partners at e/Doc Systems, we always try to do it
through the eyes of our clients,” said Ginn. “We want to make sure that the
partners we choose are a natural fit for our clients.”

2. Differentiation - Will the software differentiate the dealership from its
competition? Brian McCurdy, a solutions specialist at Imaging Systems for
Business, an independent dealer in Middlesex, New Jersey said: “First and
foremost, we ask a software manufacturer to explain to us what differentiates
them from their competition.” 

Look at the offerings from other dealers and their OEMs. Your software
partners need to offer a competitive advantage. Otherwise, you will find
yourself in the same place you are in the hardware market—undistinguishable from
your competitors.

Differentiation can be particularly challenging in markets where OEMs have
multiple dealers, multiple brands or multiple channels. If other dealers in the
market are offering the same software, this is a good reason for you to look at
software outside of your OEMs offerings. 

3. Integration - Software needs to be evaluated in the context of integrating
with your hardware line. Most hardware OEMs offer a portfolio of solutions that
are tested to integrate with their hardware. An OEMs software solution may not
always be the best choice. 

“Dealers should acknowledge that hardware manufacturers are involved in
solutions for purely selfish reasons. They want to sell more boxes,” said Boone
from Docustrategies.  “Just because a particular solution is a fit for the
hardware manufacturer doesn’t mean it is the best choice for the independent

4. Ease of Use - Pease considers ease of use a fundamental consideration in
his vendor selection.  “We knew if the software was easy for us to use, it would
be easy for our clients to use,” he said.

As a rule of thumb, if the software is too complex for you and your employees
to use, it is probably too complicated for the bulk of your clients. One danger
is many software companies engineer software for Fortune 1000 applications. Even
though these applications may be scaled down for small business and departmental
applications, the operation and configuration might be overly complex.

One way software vendors are making software easy to use is by building the
applications on a Web-based platform. This means that the user interfaces with
the software through a standard Web browser like Internet Explorer. 

“By building SentryFile as a browser-based product, end users can learn to
use it quickly with minimal training,” Coutts said. “Dealers also don’t have to
invest days of time to install the product.” 

The software should also be easy to support. Tony DeSimone, solutions
specialist at Copytronics  in Jacksonville, Florida found that many of their
small business customers do not have a full time IT person to support a document
management application.  “Ease of support is a big focus for our customers,” he

5. Scalability - Finding a software package that can be installed in a
department and then scale up to cover the entire business is important. Greg
Schloemer, president of Docuware, a document management and electronic filing
company, considers scalability to be a vital component of a software offering.

“The software should be scalable and have the ability to reach a variety of
company sizes,” he said. “The solution should provide a bottom-up rather than a
top-down approach, meaning it can be installed at a department level and then
move throughout an organization.”

In addition to scalability, the software should be customizable. Pay special
attention to the software vendor’s ability to modify the code to meet specific
client needs. Some software companies provide integration and customization
services. This can be particularly helpful in providing solutions to clients
that want to integrate with existing software.

B. The Source

As mentioned earlier in the article, software can come directly from the
software company or it can be provided through an OEM. “We feel that the direct
model is better unless it is a software product that our OEM has developed,”
Pease said.

Getting software directly from the software vendor has its advantages. If a
dealer carries multiple hardware lines, dealing directly with a software vendor
allows a dealer the ability to offer one solutions package. This eliminates
confusion on the part of the sales staff and the customer. 

Regardless of whether the software comes directly from a software company or
is passed through by an OEM, it is important to look at the stability of the
software company.  There are a few areas to consider when looking at the
software company. 

Consider how long the company has been around. Is it financially stable? 
Norm McConkey, general manager of MultiLaser, recommends dealers closely
evaluate the stability of their software partners. “Do they have the ability to
support you and will they be around next year,” he said.

Some clients may actually ask you for financial information on your software
partners.  In the banking industry for instance, banks are required to get
information on the financial stability of software vendors before making a
purchasing decision. It makes sense for a dealer to ask for this information as
well. A dealer should also ask if the software company has a contingency plan in
place in case it goes bankrupt.

Also, take a look at the software company’s development process. Is it
releasing new versions? Is the software constantly evolving to meet emerging
client needs or is the software company maintaining old code? An ideal software
partner is always innovating to add new value. A software provider that is
staying on the cutting edge can provide the dealer with a tremendous source of
competitive advantage. In the evaluation process, also ask the software company
for references of other office equipment dealers that carry the same brand of

C. The Support

Perhaps the most important area when moving into the solutions business is
support from software partners. Pease considers this to be crucial. “We are
going to lean heavily on our software vendors to provide help as we enter this
business,” he said.

Software companies can provide useful support throughout the sales and
implementation process. Johnson from InfoDynamics finds that getting dealers
started on the right foot is important. “Initial sales and technical training is
very important and should be part of any reseller sign-up,” he said.

Other companies like SentryFile offer training that goes beyond just using
the software.  “We feel it is important for our resellers to understand the
entire solutions sales process,” Coutts said.  SentryFile provides training in
areas like workflow analysis and software demonstration skills.

Once the software is sold, vendors can provide support on the implementation.
“Ideally, we would like for our software vendors to come install the first few
packages and do a little hand-holding if need be,” Pease said. “It is important
that our first few solutions sales are successful.”

Help from the software company can ensure that you get off on the right foot.
Ask potential software vendors how they can help make the first few
implementations successful. 

Ongoing technical support is also critical. Ask software vendors how they
handle ongoing support. Is it led by the software company or by the dealership? 
What are the annual fees? Can you profit from a software maintenance agreement?

“A long-term relationship is established for updates, upgrade and expansions,
well beyond the life of the lease,” Schloemer said. “Therefore, it is important
for the technical support base to be solid.”

Moving into the solutions business is a key strategic move and the selection
of software vendors should be done in a precise and strategic manner.

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