There are literally hundreds of software vendors that an accounting firm can choose to provide solutions for its many needs, and they will all talk about how much any firm worth its salt absolutely needs their product. Sometimes they're right, sometimes they're not. How does a firm leader tell the difference and effectively vet their vendors?
Joe Woodard, head of accounting coaching firm Woodard, suggested looking at different aspects of the vendor itself. He said to ask about their growth rates, install base and programming team, which are all questions software companies are used to answering. If they balk, he said, that is a red flag.
"How long has the company been around? What's your current install base, user base, all of those are their questions when you're screening. And if it's a larger company, then you can ask about the size of their customer support team, and where they've added their capitalization," he said.
The stability of the platform and company itself are also important factors. Is the entire company run by one guy out of his garage? Is it in a category ripe for disruption and will likely get either displaced or bought out in the future? Will the solution itself soon be obsolete or even disappear from the market? These are all questions firm leaders should consider.
There are also technical matters to explore, according to Woodard, such as where they are storing user data and how. Most people, he said, will say it's on Amazon or Azure or one of the other major providers, which he said is preferable to running a server farm somewhere themselves.
"You will still get answers like, 'Yeah, we're running this thing on a server farm.' What server farm? 'Well, you don't know the name of it.' Well, maybe the server farm meets all the security and on premise requirements. Maybe it doesn't. But what it tells me is this product may not be ready for prime time yet," he said.
If the vendor is on one of the major platforms, he said that firm could also ask about backups and their ability to access those backups. He added that it would also be worth it to explore their "uptime record" and security protocols.
Finally, Woodard advised paying attention to the future of the company as well. Ask how many price increases they've had over the last 24 months, as well as what new features will be on the roadmap, including integrations. Firms need to think about their future as well as their present, and this means making sure their solutions not only meet their needs now but will continue doing so for the foreseeable future.
Roman Kepczyk, director of firm technology with accounting-focused cloud services provider Rightworks, pointed out the importance of talking to other people who've used a solution before, especially if they're from similar kinds of firms who have the same kinds of challenges.
"Meeting with other people, a peer group of people who have already solved the problem that you're facing, is significant," he said.
What's more, it is important to talk to people who have not only used the same application but have done so for at least a few years. People's impression of a solution can change over time as novelty gives way to the system's day-to-day frustrations, as well as show how the tool has evolved over time to understand how it might evolve further.
"Before I recommend any product, I want to talk to at least three users who paid for the software and have used it for more than a year. It's rolled over to a second year, because that's when we see a lot of tools like engagement binders or practice binders fail. I want to talk to other people who are using the software the way [vendors say]. I don't want to be a pioneer on something," he said.
He noted that unless someone is looking to get into a new niche, there's little need for a firm to be on the bleeding edge.
Randy Johnston, co-founder and principal at K2, an accounting tech consultancy, stressed the importance of understanding your own firm's needs. When a firm reaches out to a vendor, he said they should have a "shopping list" of what specific problems they are looking to solve. He said that if someone is using a minimum viable tech stack, it is likely there won't be a deep vendor relationship as "they have bigger fish to fry" and so the main thing to consider is how something fits the firm's particular needs.
"You have to be thoughtful about what you need. And I think you can approach a vendor saying, 'I believe I have these needs in this area, and I believe you have a product that fits this, and I'd like to consider buying it from you, and I'd like to affirm that all of these features are there.' So the vetting is about what it is you think you need," he said.
He advised against pushing too hard on price, as vendors tend not to like getting pushback from someone they can't sell much to in the first place, which could lead to even fewer concessions. At the same time, don't be afraid to be honest and open about the firm's needs, and the degree to which an individual vendor meets them.
"I think it's perfectly fine to say, 'I appreciate your consideration. This competitor seemed to do a better job. I'm going to go with them for now, but I'll keep you in mind for the future.' If you have to make a switch, they know that you know you treated them right along the way," said Johnston.
