CRM, ERP, document management — companies rely on all sorts of tools to keep their business running, even when they’re dissatisfied with the software. 93% of organizations plan to renew their incumbent software vendors, even though two-thirds wouldn’t recommend the very tools they plan to renew. The perceived cost and effort of switching software keeps companies stuck with the same underperforming systems, and they go through the same software license renewals each year. Without visibility into your software licensing agreements and renewal deadlines, organizations risk auto-renewal traps that lock them into contracts they’re unhappy with.
What if the grass was greener on the other side of the stack? Here’s a look at how often companies hesitate to switch their software licenses, how much that hesitation is costing them, and why it’s worth it to make the switch.
Key Takeaways
- Companies often hesitate to switch software vendors, even if 93% plan to renew subpar tools.
- Switching vendors can increase satisfaction, as 80% of organizations experience improvements after the change.
- Many businesses fear high costs and complications of switching, despite potential gains from better efficiency and support.
- A systematic approach to software renewal, including audits and automation, can help companies make informed decisions.
- By evaluating options and planning for implementation, organizations can avoid being locked into unfavorable contracts.
Table of Contents
Switching Vendors Increases Satisfaction
According to a recent study by Info-Tech, 80% of organizations are more satisfied with their software after changing vendors. Not only did these organizations see a positive change when they adopted a new software vendor, but the change was ranked as “Significant” or higher.
The degree of satisfaction the companies experience often depends on the cost and ease of implementing their new software, so make sure your organization is well-positioned to make the change. However, if your current tools aren’t meeting your business needs, the message is clear: Don’t let sunk costs keep you from chasing a solution that works for you.
Why Not Switch?
Over 90% of businesses renew their current software, even if they wouldn’t recommend it to others, instead of looking for an alternative. That gives incumbent vendors a market advantage, whether they’re making a product that works for their clients or not.
Companies often assume the cost of a switch will be too high, despite bloated software spends or subpar vendor performance. The two biggest reasons companies don’t try to switch vendors are the difficulty of implementation and the time it takes to make the jump. Some also don’t believe it would add any real value to their operations. For most organizations, the idea that new software will make a big difference feels too good to be true, which is why they need a clear business case for changing software providers.
The Benefits of Switching Software Vendors
Legacy tools may be familiar, but they could also have limited functionalities that slow down your staff. Some tools are also overpriced, and support teams may be unhelpful, leaving you paying too much for too little. Switching to a new vendor can help your team streamline their operation, offering benefits like:
- Greater efficiency. New software may offer better functionality, letting your team get more done. Switching software can boost productivity.
- More savings. Renewal costs for current customers continue to rise, but new customers often get a discount for signing up. Volume purchases, long-term commitments, and usage data optimization can all yield significant discounts, depending on the size of your organization. Switching vendors gives you access to these discounts, saving you on your software costs.
- Better support. Prospective customers sometimes get more attention from vendors than long-standing clients. If you need better support when you run into an issue with your software, it may be time for a change.
While the immediate outcome of these benefits is typically better operability and a higher ROI, the increase in user satisfaction also makes a positive difference. Implementation is often smoother than expected, and lower support costs cause organizations to realize more savings over time.
Five Steps to Switching Software Vendors
Companies depend heavily on their software to perform their day-to-day processes, so a seamless switch is a must. It takes careful planning to ensure that all systems are online when you need them. Consider this five-step roadmap to make sure the transition goes as planned.
1. Identify Switch Opportunities
Perform a vendor audit of all the applications in your environment. This will help you assess your vendor relationships, evaluate your current software licensing agreements and renewal process, and identify any underperforming software you may have. Consider implementing automated alerts tied to your software contracts to flag upcoming renewal deadlines and ensure you have adequate time to evaluate alternatives before committing to another year.
Info-Tech suggests evaluating vendors across two dimensions: business importance and effectiveness. Applications having a high business importance and low effectiveness are deemed hazardous, and are typically where you can realize the most short-term gains from a switch. Prioritize replacing or modernizing them first, then consider applications with a lower importance and slightly higher effectiveness.
2. Evaluate Your Software
Before you decide to switch, ask why you’re dissatisfied with your incumbent software. Is the software itself the problem, or are you failing to take advantage of what it offers?
If you find that some of your software is in the hazardous cell, dig deeper before making the switch. What’s keeping these applications from working for your company? Changing vendors often helps, but if you can solve the problem without switching and instead focus on building your team’s proficiency with your current tool, that saves you time and money in the long run.
3. Build the Business Case
What will your business gain from implementing new software? Limited functionality, high costs, changing business needs, and poor service are the leading factors that drive organizations to switch, so evaluate these as you decide which pain points you’ll be solving.
Based on the data you gathered from your vendor management audit and your reasons for dissatisfaction, build the business case for making the switch by defining which metrics will measure success. This will let you bring your stakeholders on board with your plan.
4. Optimize the Selection Method
The number of people involved in selecting a new tool, the amount of time spent on the decision, and the method used to decide all factor into the success of switching to new software. Having more people involved in the selection process reduces the effectiveness of the software, regardless of organization size. It’s generally best to have three to five decision makers involved to reduce time and effort; more than that, and you end up consuming too much time in committee negotiations.
5. Plan Implementation
It’s one thing to have easy-to-implement software; it’s another to have internal processes that can support that implementation. Some important steps you can take to ensure a smooth software implementation are:
- Align end-user expectations with reality by providing clear, consistent, and frequent communication.
- Pilot your chosen tools with a group of early adopters to see what works and what doesn’t. Then, promote your champions to help support others as you deploy.
- Engage end-users by giving them use cases to show how the software fits into and improves their everyday workflows.
Organizations that described themselves as highly satisfied or delighted with the ease with which their new software was implemented reported more than a 50% change in satisfaction over their previous vendor. If the implementation isn’t smooth, it’s not the right choice for your team. Aligning stakeholder expectations, gradually deploying the new tool, and giving evidence of actionable benefits can help you switch to the new software with speed and confidence.
The Grass Can Be Greener
When companies automatically renew their software at the renewal date without reviewing their options, they risk missing out on significant cost savings and operational gains. The better strategy is to create a software license renewal management pipeline with automated alerts for renewal deadlines and periodically evaluate the health of your software environment. This structured approach to your renewal process ensures you’re making informed decisions about software contracts rather than defaulting to incumbent vendors.
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