Understanding the importance of product selection
The impact of enterprise technology purchase decisions tends to persist until long after a solution is sourced. The evidence of this lies in the fact that many companies continue to operate with ERP solutions that were implemented a decade (or sometimes two decades) ago. While some organizations have found a competitive edge with thoughtful selection of the right products, others still struggle to mitigate the downward impact of erroneous evaluations.
What makes enterprise technology product selection central to the success of digitization and transformation initiatives are the following three factors:
- Enterprise products tend to be expensive, with some solutions, like ERPs, costing higher single-digit percentages of the organization’s revenue. Therefore, there is no room for course correction later on. Executives need to get their product selection decisions right the very first time.
- The upgrade cycles for key technologies span anywhere between 5-10 years. Once a product has been implemented, users will likely be stuck with it for that period – or even longer, until the budget permits another shift. The impact radius of product selection, therefore, extends far into the future.
- Third, enterprise products operate in a context – they must work well with other components in the enterprise tech stack. Any friction raises the maintenance costs, turning technology into a damper on profitability.
Lastly, the gap between which teams use a product and who selects and implements it creates further room for poor decisions. While IT and technical teams typically lead the implementation, some products may serve business teams like demand planners, supply chain personnel, or sales and service.
All these factors indicate that enterprise product selection is an inherently complex process. This explains why buying teams often take multiple months to finalize their decisions – and why only 13% of purchases don’t end up in buyer’s remorse.2
Getting enterprise product selection right
So, how can buyers ensure that their product selection decisions are aligned with their organization's present and future objectives and strategy?
What causes buyer’s remorse in enterprise product purchases? Gartner research indicates that enterprise tech buyers who regret their decisions later on, typically take 7-10 months longer to select the product.3 The delay results from three key factors:
- Conflicting objectives amongst team members (89%),
- Revisiting sub-decisions throughout the evaluation process (79%), and
- Decision makers overruling the analysis of buying teams (81%)4.
This makes it crucial to accelerate buying cycles while avoiding hasty decisions at any point in the process. These factors call for a systematic and targeted approach to selecting enterprise products.
Bringing method to enterprise product selection
To find repeatable success with enterprise product selection initiatives, decision-makers need to employ a proven product evaluation method. Such a method should consider all the facets of a solution, bringing each stakeholder into the decision-making journey at the right point.
Based on our work with numerous clients in such initiatives, we have identified the following factors as critical to ensuring the selection of optimal enterprise technology products:
- Functional needs: These are primarily determined by the needs of the business users. In the case of a Warehouse Management Solution, functional capabilities will include shipment tracking, inventory management, route optimization, and so on. The buying teams must evaluate how a solution makes these capabilities accessible. Are they available out-of-the-box, or will they require significant customization to activate?
- Non-functional fit: Here, the solution is evaluated from the perspective of how well it fits within the larger technology landscape of the organization and whether it aligns with future business strategy. For instance, will the solution integrate easily with other elements of your enterprise tech stack? Does it meet your compliance requirements? If automation and AI are on your strategic agenda, will the solution be able to support these objectives?
- Financials: Unstable financials are one of the key factors that harm the business case of a transformation. This typically stems from not being able to foresee the total cost of ownership (TCO) of a solution. When evaluating a product, it is therefore necessary to consider its implementation costs, support costs, and how licensing costs will vary with the growth of your organization.
- Vendor profile: Lastly, it is crucial to evaluate the solution vendor thoroughly. Looking into their clientele and finding customers from your line of business in their user base is a strong signal for a good fit. But
other factors matter too – for instance, does the vendor offer training support? How good is their documentation and can your users find support in the community forums?
