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The recent conviction of former Autonomy Chief Financial Officer Sushovan Hussain of accounting fraud should remind us all of the value of due diligence. However, practicing due diligence isn't just for acquiring companies. It’s the responsibility for those of us purchasing software too. Software due diligence is both a purchasing and a technology task. It's important to remember that the viability of the software itself is just as important as the vendor's viability.

Gathering customer references and analyst recommendations can go a long way for validation. In fact, the larger the vendor is, the easier it should be to find a reference. With that said, it can be hard for smaller vendors to get customer references. This is because some customers don’t want to share their competitive advantage or may want to avoid the commitments that come with the reference.

However, checking for references is just one of the items for software due diligence. Here are three other things to look out for.

1. If It Sounds “Too Good to Be True,” Then Maybe It Is

The challenge with technology is that it moves quickly. Something that wasn’t possible a few months ago may be true tomorrow. From a vendor perspective, there needs to be signs of progress. It’s a rarity that some vendor with a new piece of technology pops up out of nowhere and suddenly solves the major problems of the day. Maybe the vendor has been working in stealth, or maybe the solution is still vaporware. Make sure that the building block for the new technology is really there.

2. Too Many Buzzwords Can Sound a Warning

Sometimes, a vendor can make a sudden change in their marketing message, hitting on all of the latest buzzwords. This could simply be a new marketing person coming on board, but it may also be the case of rebranding an old problem with a new industry buzzword. Five years ago, you would have been hard pressed to find a software vendor that supported “robotic process automation” and “artificial intelligence.” Today, it seems like more and more vendors are starting to offer both. Make sure that the vendor’s definition of how their software fits within the latest buzzwords matches what you expect it to be.

3. Demoing Software Can Be Challenging

A demo crashing may not be a bad sign. Rarely do two customers have the same operating environments. Furthermore, the operating environment needed for the software may be too complex to make it demonstrable. However, a real warning sign to look out for may be a live demo that is too scripted or forced to stay within specific boundaries. A great way to see if a product really works is to self-guide the demo, ask for an evaluation copy, or a proof of concept (just don’t be surprised if you’re asked to pay for it).

When looking for the latest software solutions, software due diligence is key. While there may be some rough edges, the work your purchasing department does is just one part of software due diligence. As technologists, we need to do our own due diligence as well.

Marko Sillanpaa is Co-Founder of the blog Big Men On Content and the Founder of BMO Consulting. He has been working in ECM for over 18 years for vendors like Documentum, EMC, Hyland, and SDL Trados and systems integrators like CSC and Accenture. Follow him on Twitter @MSillanpaaBMOC.
 

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