How to Choose Software Vendors: Hidden Red Flags You Must Know Today

Poor software vendor choices can affect your business negatively for years beyond just the setup phase. For instance, the system does not scale with your business as it enters the growth phase.

Why is this a problem? Scalability issues can quickly escalate to productivity issues as the system does not have the necessary capabilities to perform newly added business demands. It can disrupt operations if the software slows down and cannot handle the increased workloads.

Ineffective vendors cost businesses more than just time. Identifying bad ones from good ones might take some trial and error. Want to know some tips from TRG? Watch out for the red flags mentioned in this article.

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#1 – Red flags in vendor behaviour and communication

Many overlook the power of effective communication. Successful vendor relationships depend on not just effective communication but also consistency in customer experience. It is no surprise that inconsistencies in communication can damage brand credibility by over 50% [1]. Fortunately, there are telltale signs for you to spot early and avoid making pricey mistakes during the software vendor selection process.

Delayed responses or inconsistent communication

A vendor’s communication patterns often reveal deeper organisational issues during evaluation. The vendor should be most attentive during the sales process (that does not mean they should be any less committed to your case after signing the contract). If they take days to reply to simple questions at this stage, the pattern will likely get worse.

Inconsistent communication patterns to watch for:

– Lengthy delays between communications

– Unresponsive periods followed by sudden bursts of attention

– Complete “ghosting”, where all communication suddenly stops

– Irregular updates and delayed risk reporting

The optimal frequency for project communication, preferably, should be once per week [2]. If the duration is longer, it might be a warning sign about the vendor’s dedication and capacity to provide timely support.

Undoubtedly, poor communication causes endless issues, not just frustration. It slows down support, reduces customer satisfaction, or worse, disrupts operations, and these can be just the tip of the iceberg.

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Overpromising without understanding your needs 

Software vendors naturally make optimistic assumptions when requirements lack clarity. This creates a dangerous pattern of overpromising and underdelivering.

The Project Triangle model emphasises a fundamental truth: scope, cost, and time determine the quality of the project. A vendor who promises exceptional results across all three without adjusting the original plan shows unrealistic expectations.

Image credit: Asana

When the project goals and requirements are vague and loosely understood, this creates ambiguity, significantly impacting the project scope. The software vendor might assume certain features are needed, thus cranking up the time and cost levers. Alternatively, they might overpromise on what the software is capable of based on their “optimistic assumptions,” thus underestimating the time and cost needed to deliver the project.

And you may have guessed it, when the project is delivered, the software underdelivers because it does not meet the actual standards of the business.

Watch out for these signs from potential vendors:

– Making bold claims without showcasing concrete evidence

– Promising features that do not yet exist or may never exist

– Presenting unrealistic timelines or cost estimates

– Offering generic solutions without tailoring to your specific needs

Read more:Why Vendor Due Diligence Is a Must in IT Solutions Selection

Another thing to keep in mind is to give in to the “Fear Of Missing Out” (FOMO) mentality created by competitive pressure. FOMO can rush the vendor selection process, increasing the risk of choosing a “low-quality” vendor with inadequate support or a lack of long-term vision.

Every business has unique workflows, processes, and goals. Therefore, take your time doing research and evaluation to avoid being vendor locked in or incurring any unwanted technical debt.

Tips: Look for vendors that have a defined implementation process and methodology

A vendor with a defined implementation process and methodology can help increase the success rate of your IT project. Not only do they help make the implementation process more predictable through concrete expertise, dedication, and commitment, but they also add value to your business process, making it worthwhile.

Consider asking these questions:

– What is the standard for the vendor’s implementation process?

– Is the vendor’s implementation methodology based on a specific framework or best practices? (e.g., agile, waterfall, their own developed processes, etc.)

– Does the vendor have documented templates, checklists, or standard deliverables for each phase of deployment?

– How can the vendor’s methodology be tailored to accommodate your company’s needs?

#2 – Red flags in vendors’ proposals and demos

The proposal and demo phases are highly vital. Not only does it provide businesses with tangible insights into the potential IT partner’s expertise, but it also unveils possible flaws beyond the initial conversations and marketing talks.

Some vendors often choose to show pre-packed demos instead of presenting their careful research and understanding of your business. Generic materials are not at all bad, but if the proposals and demos are not improved, this shows the vendors do not invest time in understanding your requirements.

Watch out for these signs:

– Poor responses to both general and specific questions about the project (implementation methodology, migration strategy, change management, etc.)

– Vague language, inconsistencies or missing key information (e.g., pricing breakdowns, service level agreements, customisation, training, etc.)

– Feature-focused demos rather than problem-solving approaches

– Presenters skipping technical details relevant to you

– Rigid, scripted presentations and not willing to go off script or answer unplanned questions

– Demos exposed software limitations (e.g., missing features, confusing interfaces, frequent errors/ crashes, etc.)

Read more:8 Steps in Selecting the Right Planning & Budgeting Software

Tips: Ask targeted questions during both the proposal review and the demo session

Fortunately, vague or generic demos are quite easy to spot. While there are a plethora of enquiries to raise, businesses can utilise the following for starters:

– How will the solution address a specific pain point the business is facing?

– What are the expected and measurable outcomes from the proposed feature?

– What will the pricing breakdown look like, including XYZ (any specific areas you want to highlight, such as customisations, migration, training, etc.)?

– What will the security protocols and data privacy policies look like, particularly concerning specific data types or compliance requirements the business must follow?

– How does the proposed solution integrate with the business’ existing system? What is the integration method used? What is the cost?

– What is the pricing model for ongoing support post-implementation?

When the vendor mentions something ambiguous or makes an ambitious claim, consider asking them to elaborate more or share specific case studies to back up their claims. Strong vendors will adapt their presentations to show how their solutions tackle your challenges. Be wary of those who resist customising their demos; they might struggle with the actual deployment later on.

Read more:10 Key Questions for CEOs to Ensure Financial Management Implementation Success

#3 – Red flags in post-implementation customer support

Poor support after implementation can turn a promising software into a pricey nightmare. No business wants to be left suffering from a technical bug alone.

A lack of support from the vendors can cost the business valuable time, resources, customer satisfaction, trust, and ultimately, the financial bottom line. Early warning signs can be identified by paying close attention to the vendor’s responses during the sales process, such as:

– A general lack of proactive information, like the vendor’s support process, SLAs, escalation paths, etc.

– Inconsistent answers regarding support frameworks and escalation paths by different members of the vendor’s team

– Suspiciously low or unclear cost of support and generic support terms, thus lacking details about response times, channels, and escalation levels

– A lack of defined support roles and documentation, making you confused as to whom to reach out to when issues arise

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Tips: Reference checks and online reviews

When contacting vendor references, specifically ask about their experiences with post-implementation support. Don’t forget to raise questions about responsiveness, issue resolution times, the escalation process, and overall satisfaction with the support provided. In addition, researching online reviews might also reveal past issues with the vendor’s post-implementation support.

Avoiding this red flag requires a proactive approach, from asking the right questions and scrutinising their documentation to checking references and formalising support terms in the contract.

For starters, businesses can consider asking:

– How would the vendor describe their post-implementation support framework in detail?

– How many different levels of support do they offer? What are the response times and services included at each level?

– What are the standard support hours (9 to 5, Monday through Friday only, or 24/7 support)?

– Are there any knowledge bases, FAQs, or other resources available for end users after implementation?

– What does the process of software updates, security patches, and upgrades look like?

Vague answers, a lack of documented processes, or an unwillingness to commit to specific service levels should raise significant concerns. A strong vendor will have a well-defined and transparent support structure in place to ensure your ongoing success with their software.

Choosing the right software vendor is a make-or-break decision that shapes an organisation’s tech future. Many companies rush this process, but a careful look at warning signs helps prevent mistakes and build successful partnerships that last.