blog/this-mistake-costs-businesses-millions

2024-05-23

What does ChatGPT and review platforms Capterra and G2 have in common? Most people are either misusing it or misunderstanding the value that it provides.

Review platforms like Capterra and G2 aggregate user experiences and ratings for various software solutions. While these reviews can provide valuable insights, they also come with limitations.

For one, other people’s solutions do not necessarily reflect your own needs.

Reviews reflect the experiences of other users, whose business contexts, requirements, and challenges might vastly differ from yours. Just because a particular software worked well for one company doesn't guarantee it will meet your unique needs.

Additionally, the people who leave reviews are those with either very positive or very negative experiences, which can skew the perception of the software's overall effectiveness.

For Chat GPT, and AI in general, users may be unaware of incorrect answers, statement, and facts or rely too heavily on it for tasks that require nuanced understanding and critical thinking.

Businesses that select software based on high ratings and positive reviews are more likely to find that the software doesn't align well with their specific operational processes or goals.

This is like to trying to fit a square peg into a round hole—forcing your business to adapt to the software rather than choosing software that fits your business model.

Just as businesses might choose software based on reviews without considering fit, users might apply ChatGPT in scenarios where its strengths are not fully leveraged.

For instance, using AI for complex decision-making processes rather than for generating ideas or drafting content.

Where Do Software Selections Go Wrong

If you’ve ever tried to find a software for yourself or for your business, you’ve probably been in a situation where you encounter an endless amount of search engine results.

These results showcase a vast number of different software, typically spanning across more than 5 search engine pages.

Yet most people don’t even go past the 1st page of results.

Software Selections are time consuming and intricate, requiring an unbiased attention to details, especially for organizations with complex processes.

When done improperly, it can cost you big time.

Much like Nike, who ended up incurring over $400 million in costs after a faulty software rollout that wasn’t properly configured for the complexities of Nike’s supply chain processes.

Or like any of the businesses that have ever chosen the wrong software.

Even seemingly simple choices like your website designer or CRM can have costly impacts.

Here’s 4 common ways software selections can go wrong…

1. Requirements Gathering

A few months back, we asked Red Pill Labs Project Manager, Tony Chen, about a few of the common mistakes he’s seen companies make when conducting a software selection.

3/3 of the aforementioned mistakes can be attributed to a problems within the requirements gathering process (among other reasons), which should right away let you know just how important requirements gathering is.

For a detailed breakdown of where requirements gathering goes wrong, check out this article.

2. Biased Selections

Companies often choose a vendor based on relationships, personal preferences, or other biases rather than an objective evaluation of the software's suitability for the entire organization.

Companies sometimes prioritize certain functions or departments (such as the finance department) over others, which is fine until it becomes unfeasible for other stakeholders to use any given system.

Smaller organizations, or decision-makers of any sized organization who aren't experienced in selecting software, often don’t recognize the associated risks and end up overlooking the selection process.

Instead of using an objective approach, decisions are based on the recommendation of a product champion: a person who finds software and becomes an advocate for it, without considering the key needs of the organization as a whole.

Decision-makers at medium-large enterprises that operate with complex processes or have experienced the significant risk and sunk cost of selecting the wrong software, take an objective approach.

The approach is objective because it uses a proven software selection framework that requires expertise and deep analysis.

Often, these decision-makers engage with third-party advisors to assist with the inputs of a software selection, including business case development, technology strategy, technical analysis, process optimization, and requirements gathering.

The output of this input is a shortlist of recommended vendors to select from.

This is especially common in enterprises with limited resources and capacity to engage in the intricacies of software selections.

However, if you’re selecting software on your own, it’s essential to understand how to best conduct a software selection because the software you adopt needs to fit your needs and requirements, and every business is different.

Just because business owners on Capterra or G2 rave about a product does not mean that it will be suitable for your own business.

Your software biases can exist without you even knowing it, which leads us to our next point...

3. Vendor Marketing Tactics

Another common mistake companies make when conducting a software selection is falling for the pretty brochures and marketing tactics of vendors.

Just because a company is great at marketing does not mean that that their products are the right fit for your unique needs.

If you need an example, look at the viral Humane AI Pin, which gained enormous traction online before flopping after it’s release date.

Great marketing does not mean great product.

A reliance on marketing hype can lead to misinformed selections, especially vendors knowingly exaggerate the capabilities of their solutions by using buzzwords or fancy terms that don’t actually carry the weight of your expectations.

Additionally, just because there are fancy features, doesn’t mean that it will be feasible or usable for your use case.

Take the iPhone for example.

As of January 2024, 33 million people rushed to get the newest iPhone packed with the latest features, the iPhone 15 Pro Max.

And out of those 33 million people, we guarantee that general users don’t even utilize all the features available to them.

However, unlike the iPhone, businesses that select a software based on cool features that won’t be used will typically end up paying a substantial amount more than needed.

4. Lack Of Buy-In

Team engagement is essential for software success because it ensures that the software selection process takes into account the diverse needs, perspectives, and expertise of all users, leading to a solution that is well-adopted, effectively utilized, and maximally beneficial to the organization.

In most cases, your chosen technology won’t make everybody happy, but involving key stakeholders throughout the selection process can help ensure that the final decision is well-informed, balanced, and meets the most critical needs of the organization.

Although Change Management typically starts once a software is definitively selected, organizations can benefit from being more transparent is the selection process, which will help with employee buy-in in the long-term.

Read More: Understanding the Root Causes of Lack of Buy-In

Key Takeaways

Below are 7 key takeaways that you hopefully will walk away with after reading this article.

But if there’s one lesson for you to take away from this article, it’s this: stop making your business fit a technology. Make the technology fit your business.

1. Prioritize Fit Over Popularity

• Evaluate Compatibility: Ensure the software aligns with your existing processes and goals. Avoid adapting your business to fit the software.

• Trial Periods and Demos: Take advantage of free trials and demos to test how well the software integrates with your operations and how stakeholders respond to the usability of the technology (UI).

2. Conduct a Comprehensive Search and Evaluation

• Go Beyond the First Page: Consider niche solutions that might better fit your needs compared to general products.

• Detailed Checklist: Create a detailed criteria and evaluate each software option against it. This should include functionality, scalability, user-friendliness, and cost.

3. Improve Requirements Gathering

• Engage Stakeholders Early: Involve representatives from different departments to gather comprehensive requirements.

• Document Thoroughly: Clearly document all requirements and use this document as a basis for evaluating software options.

4. Avoid Biased Selections

• Objective Evaluation: Ensure the selection process is based on objective criteria rather than personal preferences or vendor relationships.

• Use External Advisors: If possible, engage unbiased advisors to help with the evaluation and selection process.

5. Be Cautious of Vendor Marketing

• Scrutinize Claims: Critically analyze vendors’ marketing materials and claims. Look for independent reviews and case studies.

• Ask Tough Questions: During vendor meetings, ask detailed questions about how their product will meet your specific needs.

6. Ensure Team Engagement and Buy-In

• Inclusive Selection Process: Involve key stakeholders in the selection process to ensure their needs and perspectives are considered.

• Transparent Communication: Keep the team informed throughout the selection process to build trust and ensure smooth adoption.

7. Learn from Case Studies of Failure

• Analyze Failures: Study cases like Nike’s software rollout to understand their pitfalls and avoid similar mistakes.

• Plan for Complexities: Ensure that any software selected can handle the complexities of your business processes. Consider scalability and flexibility.