One of the most daunting decisions executives will face in 2003 – as the economy slowly rebounds and they begin to consider upgrading, enhancing, or replacing their business systems – is the selection of software partners. Decision makers are often preoccupied with trying to grasp the underlying technology instead of focusing on the key business issues that should drive the process.

At Graybar, the leading North American distributor of electrical, telecommunications, and networking equipment and components, we are preparing to launch a $90 million enterprise resource planning system.

Since initiating our ERP project, we've identified six factors that distribution executives might consider when selecting software partners:

1. Financial or Operating Condition: The financial or operating strength of your technology partner and its ability to remain independent are critical considerations. If you select a weak partner, it may mean having to go through the selection process all over again if the partner fails or is acquired by a rival firm. Consider size of the company, years in business, number of customers, and its profitability. Ideally, the company's R&D budget should be 10 percent to 20 percent of the company's total revenue. Financial condition was weighted at 20 percent in our overall decision.

2. Product Functionality: Functional needs and revenue-generating functions, such as inventory planning and customer relationship management, should serve as key selection criteria. Back-office business functions – accounting, payroll, human resources – should not drive the assessment. Importantly, it should be compatible with and easy for strategic customers and suppliers to use. Functionality was weighted at 20 percent.

3. Customer References: Ideally, the software companies being considered would provide references on projects with companies that match the size and scope of your company, impacting a comparable number of locations, total employees, transaction volume, number of customers, and number of suppliers. That project must have achieved a level of success, with customers clearly endorsing it. References carried a 25 percent weighting.

4. Commitment to Our Success: In today's still-soft economy, it is especially critical for software companies to turn promises into quantifiable commitments, such as frequent participation in team meetings. Demand their involvement and support, and hold them accountable through the project's conclusion. Commitment was weighted at 10 percent.

5. Technology: The evaluation of technology is typically seen as the driving force behind software decisions, but it should not serve as THE deciding factor. To be certain that there are no technical shortcomings or interoperability issues, consider seeking input from third-party consultants, such as Meta, Gartner, or other credible, independent analysts. Technology was given a 15 percent weighting.

6. Cost : The purchase of business software brings with it a complicated array of costs, including those associated with licenses, maintenance, installation, hardware, and ongoing support. Additionally, anticipated costs of internal staff maintenance and support and employee training should be factored in. Cost was weighted at 10 percent.

Finally, make sure all six factors are assessed objectively by a cross-functional team.