Choosing the wrong software solution is costly – businesses should avoid year-long contracts and unnecessary features.
The familiar arch of software solutions. You heard about the product at a conference, checked the third-party reviews, got a thorough demo, and maybe even spoke to a happy client. You did your diligence and all signs suggested that this software is the right solution. You signed the minimum year-long contract.
But five months down the road only a handful of your team uses the software. Some found it too complicated, some didn’t quite see the value in it, and some were too reluctant to give up the way they used to do it.
You’re left footing the bill for a tool that doesn’t add clear value to your company. Worse, the uneven employee adoption has left your department disorganized and misaligned.
Big Software Promises
New software solutions are exciting – their promises are big.
Sure, sometimes they make good on those promises. But too often, beneath the exhaustive list of features and integrations lies a product that, when it comes down to it, your team will not embrace.
Decision-makers are not to blame. Choosing the right software is difficult. No sales team is going to tell you their solution won’t work in the long run.
But there are two major red flags software buyers need to watch out for.
Red Flag: Long-term Contracts
First, businesses should not be forced to commit to long-term software contracts.
Software companies love annual contracts. It safeguards their monthly revenue and helps them map out longer-term budgets. It also grants them a full year to convince you that their software is valuable.
That leaves the buyer overexposed. If the product does not immediately live up to expectations or your team slowly starts stops using it, you’re not only committed for the long-haul but also you have little leverage to ask for better services until the contract is up.
Software sellers should be confident their product will immediately deliver value. If the relationship begins with your business making a long-term financial commitment, be wary. It’s difficult to predict how any software will function for your team before they’re really using it, let alone how it will function a year from now.
Red Flag: Product Tiers
Second, businesses should not pay for software features they don’t need. This seems obvious but is still quite common. Sometimes software companies make this unavoidable.
The most common way of overcharging is by offering unnecessary product tiers, generally built around the number of users, volume of data, frequency of use, or level of features. There are usually penalties when you breach that limit.
Tiers help software companies again ensure a minimum amount of revenue and force clients to pay for more product than they need.
If software sellers do require clients to entered tiered agreements, then they should provide clients with usage updates. Too often, as usage declines businesses are unaware they’re paying for services they’re not using or don’t need. With long-term contracts, sometimes there’s nothing businesses can do about it.
A Hard Look at the Software Stack
Businesses need to take a hard look at their software stack. How often is your team using the product? Has usage dropped off since that exciting first onboarding? Are you paying for way more features than you need?
Most importantly: does the software drive valuable business decisions or action? If not, it may be time to look for new solutions.