How to buy software in an enterprise company

Aug 15, 2024

Buying software as an enterprise company is a pain in the ass. There's no playbook, everyone has different objectives, and the whole process is littered with surprises. If this is your first time doing this, these are some things you may not realize:

• Buying software at big companies can take an insanely long time. It typically takes six to twelve months to go from deciding you need the software to actually closing the deal.

• Negotiating internally with your team is much more important and difficult than negotiating with the salesperson.

• The standard enterprise software buying process involves eight to twelve people – it’s not just you and a finance person who signs it off.

• Your salesperson can do so much more for you than just show you the product and negotiate pricing.

Are you a software buying newbie at a large company? Have you bought software before and it went terribly and took way longer than you expected? Have you been handed something called an RFP and have no idea WTF to do with it? Do you enjoy reading enterprise software buying guides in your spare time?

This guide is for you! We'll break down the entire process - everything you need to do to look good internally, but also how to handle your salesperson. As a bonus, we've also thrown in the seven final bosses you'll (probably) need to beat at the end.

The 5 levels you need to clear

Buying enterprise software is a game, and games have levels (wait, haven't we done this before?)

1. I think I need software to solve a problem
2. Shortlist the ones that could do the job
3. Get demos and test the ones I like
4. It’s time to negotiate
5. How do I actually buy this thing?

You need to complete all five levels to win. At each stage, we'll outline what to do internally, what to do with your salesperson, and a common trap to avoid.

Let's go!

Level 1: I think I need software to solve a problem

Internal process

At this point, you either have a problem and you start looking for software solutions or you already know which software you want to use because you’ve used it before. These are the questions you need to answer:

1. Does this problem just affect me? My team? The whole company? If it just affects you, you should probably bail now because you’re unlikely to build a business case internally. Your sweet spot is something that affects your team – you’ll be able to convince the business to buy it, yet keep control of the process. If it affects multiple teams, be careful – you may not be able to get internal traction at all, or you can kick the process off but be prepared for it to be taken out of your hands.

2. How am I going to convince someone to give me the budget? In 2024, large companies define budgets for software projects based on their impact on business metrics like revenue, cost savings through efficiency, productivity increase, risk reduction, etc. You won’t win if you just say ‘this is cool’ (unless you are super senior). Don’t put tons of effort in now, but you need a sense check. Not sure what your company cares about? Read your 10-K or annual report, or look at recent internal comms from your exec team, then tie your problem back. Your salesperson will help you make this really strong later.

3. What did it look like the last time our company bought a new tool? What went wrong? Do people still use it? Who drove the process? Who signed off? It’s worth doing a bit of digging here first, as large companies have largely repeatable processes around this stuff. This may seem too early, but will save you a lot of headaches later on.

4. Was there an RFP? Who decides if there is an RFP? RFP’s typically slow down the process, but can be helpful for narrowing down the search for vendors, especially if the requirements are complex, typically Procurement will want to be involved in an RFP process.

Managing your salesperson

Avoid! Don’t get in touch with anyone now, you will just get bugged and railroaded into a demo before you’ve figured out what you actually need.

It's a trap!

Check your company doesn’t already have a solution for this. You’ll be surprised how often you think you’re the first person to identify a problem, only to find out that a different team on a different continent has already solved it. If that’s the case, talk to them first. Maybe they can just add you to the existing company account and you can skip this whole thing. Nice.

Level 2: Shortlist the ones that could do the job

Internal process

If you don't already have a product in mind, ask your peers for recommendations first. Consider those who work at similar companies to yours and ideally in a similar role, not your friend who is the cofounder of a five-person startup.

Once you've got a few options:

• Read the product case studies. They are marketing fluff, but you want to check whether the company typically serves large companies like yours. Avoid if all the customers they highlight are super small, as they probably aren’t set up to sell to you.

• Check the pricing page. Spoiler alert, this typically won’t contain actual pricing. But it will tell you if they offer enterprise features and enterprise plans. The features might not be relevant to you personally, but certain things like SAML, RBAC, etc. will be super important to other stakeholders you’ll be bringing in like infosec people.

Managing your salesperson

Start by filling in the ‘contact us’ forms for the options that you like – it might take a couple of weeks to get a demo scheduled in. Put in a fake phone number, but real details for everything else.

You might be pressured to have a separate initial call with a BDR/SDR to do what salespeople call ‘discovery’. This is where they ask you lots of questions to determine whether you have enough money to buy the software. There will be no demo in this first call. To try and get around this, send them as much info by email in advance and ask to go straight to demo.

Send over the following info by email in advance of any call to make the best use of your time too – not only will you spend more time actually in the product, but the demo you get will be more relevant:

• What’s the problem you have, and what you’re doing today to address it.
• Must-have requirements, though make this as short as possible.
• When you want a solution in place.
• Who you are and if you have the ability to purchase yourself. Be honest here, they will still want to talk to you even if you don’t have authority to buy software, as you will be their deal ‘champion’.

It's a trap!

Review websites are a waste of time. Any company that has a good presence on them has either paid for them or gamed the system by only asking happy customers for reviews. But reading bad reviews can be insightful.

Level 3: Get demos and test the ones I like

Internal process

It's time to bring in the right people for the demos. Your manager might be interested, but unless it’s really business critical there's no point bringing someone very senior to this demo.

If you're relatively new and don’t have a huge amount of internal influence yet, bring along a senior teammate who also feels the pain of your problem, as they can help you build a case internally.

Narrow down your choices to two or three and ask to trial them for a specific period of time. Define clear goals for this testing period – don’t just log in and mess around, try and actually solve the problem. Ask yourself if the software fixes the problem you are facing. Avoid being upsold into other products as you can always upgrade later. It’s easier to get a smaller budget approved now and add more stuff in the future than to pitch for big bucks at the beginning.

Managing your salesperson

This is where the good stuff starts. It's time to put your salesperson to work!

1. If you haven’t already sent them your requirements in advance, do so.

2. Provide context to who is coming with you to the demos and what they will want to see, so you don't waste their time. Most people who attend a demo zone out within a few minutes if it’s not relevant to them.

3. Your salesperson can be of most value during the testing period. Ask them to help set up your trial account, and to set up a Teams/Slack channel with your team to improve the comms during the trial period. This is where most deals fall through for salespeople, so they will be very keen to get this part right, especially if you are showing signs of being eager to progress through this stage. Get them to do some grunt work for you.

4. Your salesperson will start to see if their tool actually fits your problem. Remember, it’s okay if it doesn’t, and they will appreciate you just saying, “No, this isn’t for us." Ghosting isn't cool, and you may end up coming back a year later if the tool you go with turns out not to be the right one.

5. The level of support you get during this process is the best you're going to get with this company, so bear in mind the only way is down. Don’t assume massive vendors have good support.

6. If they don’t have a feature you want, do not trust their roadmap – assume by default that thing you want will never get built.

It's a trap!

The demo you see is a very polished version of the product and often not reflective of a real customer account. Get your actual data into the product as you might run into performance issues or weird edge cases that a demo account won’t highlight. Only playing around in a sandbox or demo environment is risky business.

Level 4: It’s time to negotiate

Internal process

The most important thing here is to know the boundaries that you are allowed to operate in. Does your company do multi-year contracts? Do they require an SLA? Whose contract terms will you use, yours or the vendor’s? If you have a procurement team, you almost certainly will need to let them negotiate the contract at this point as anything you agree without them involved is likely to be thrown away when they get involved.

Check that the budget you thought existed at the beginning of this process still exists – by now you may be a couple of months in, and things can change. You should also make sure that you have exhausted the chain of seniority for approving the purchase, i.e. there is nobody more senior who could swoop in and block the deal. Now is also a good time to strongly discourage any more ‘looping in’ by other people involved in the process. No, that stakeholder does not need to weigh in, stop it.

Managing your salesperson

Get them to help you build a deck to use internally that includes the business case, the alternatives considered, intro the product, some good outcomes from the POC, reference customers of similar size to your company, and obviously pricing. A good salesperson will already have proactively done this for you, or offered to do so.

Some specific terms to negotiate:

• Waive the implementation fee (they will onboard you for free anyway)
• No multi-year
• No auto-renewal, as you'll forget to give notice to cancel if you hate it
• Similarly, no 'automatic 10% price increase next year', as you should treat each year as a fresh negotiation
• Ask for payment in installments (finance people love this one weird trick)
• Ask for payment terms (net 90 days, you bastard)
• Make sure that you can terminate the contract under reasonable circumstances

If you tell your salesperson ‘this is my budget’, they will give you a price that is 20% over that anyway, so don’t do this – let them come with a number first. The best way to drive down the price is competing quotes. Do not bluff here. Send the actual quote as they will know more about their competitors than you do anyway. Most sales teams operate in quarters, so if your deal comes in at the end of the quarter, you’ll get more flexibility on pricing.

It's a trap!

Don’t rush into a decision based on a false sense of urgency led by the salesperson.What typically happens is someone in your company will go, "Wait, why are we rushing so much, let’s pause here" and then the whole deal will stall. Let your internal timeline drive, not the salesperson’s.

Level 5: How do I actually buy this thing?

Internal process

OMG WE'RE NOT DONE YET.

Your top priority is getting the contract signed, and you should already know who actually does this. Be conscious that execs are signing contracts every day, so be ready to defend yours again even if you think the deal is done and dusted. This is the riskiest bit of the whole process.

Be prepared for this bit to take four weeks, as buying teams can have huge backlogs of contracts to process, set up on their system, etc. Your company will likely only use something like Docusign, or even a third-party software purchasing service.

Managing your salesperson

Do not let your salesperson nudge the signer – they will annoy them. You need to manage this sensitive bit. They will get desperate because they’re now thinking about closing the deal, hitting quota, and picking out the color of their new Tesla.

It's a trap!

Don’t sit and wait for stuff to happen because you are not the person signing. Stay alert, check for updates, and make friends with the person who actually signs if you can (or their assistant).

We did it! Or did we?

Hooray, you’re done! Except you’re not. You’re still responsible for making sure the software is actually working and useful at your company. The salesperson will tell you that implementation usually takes about X months. Take that number and double it and you’ll be in the right ballpark. Churning software is bad for everyone. Wasted resources, lost data, broken hearts.

Your salesperson will dump you the microsecond the deal is closed, so you'll now need to make friends with a customer success person of some sort. This is okay because they are product experts and are usually a lot more chill to deal with because they don't have the time pressure that classic salespeople do.

The 8 final bosses you’ll (probably) need to beat

As you go through this process, you will probably encounter one or more of these people. Here are some quick tips on how to deal with them.

The procurement person who actually has a personality if you get to know them:

• When to engage: When you’ve picked your preferred option.
• What they care about: Following the proper internal process, and getting the software for as cheap as possible.
• How to win them over: Frame your request as asking for their expertise, not telling them what to do. Come prepared with all the notes on the evaluation so far.

The engineer who implemented the current solution and is taking it personally that you’re suggesting something else:

• When to engage: Right at the beginning.
• What they care about: Saving face if you replace what they implemented, and not losing any important functionality by changing software.
• How to win them over: Blame the software they implemented, nerd out over technical details.

The anxious infosec officer who has GDPR PTSD and hates buying outside the Fortune 50:

• When to engage: when you’ve picked your preferred option.
• What they care about: Being careful about sending company data to some random software company.
• How to win them over: Send them a SOC 2 or ISO 27001 report, it’s like catnip.

The “in the weeds” legal person who loves a redline and hates compromise:

• When to engage: After you have agreed commercial terms.
• What they care about: Liability, ability to terminate the contract, general legal point scoring.
• How to win them over: Thank them profusely for taking a ‘commercial’ angle and not being overly legalistic.

The CEO who thinks we should go with something else because they met the founder at Davos:

• When to engage: You probably won’t get to engage them, but be prepared to justify your choice at no notice.
• What they care about: Their LinkedIn following.
• How to win them over: Presentation deck, ten slides, few words, legible on mobile.

The CFO who thinks we should use spreadsheets for everything:

• When to engage: Bizarrely, right at the beginning – if you can even reach them.
• What they care about: The share price.
• How to win them over: Make the economic case, put numbers against time saved, revenue generated etc.

The generic loud person on a totally different team who will only sign in once but give lots of opinions:

• When to engage: Whenever they spring up, you’ll need to be reactive.
• What they care about: Having their voice heard.
• How to win them over: Get on a call, reassure them their feedback will be taken seriously, then throw away your notes.

The digital transformation guru whose responsibilities are incredibly vague, but their solution is always AI:

• When to engage: Whenever really, they are good for helping you build hype internally.
• What they care about: Getting the company to do new stuff.
• How to win them over: Sympathize with them about how resistant to change the organization is.

Surely there's a better way?

There is! We're trying to do things a little differently at PostHog on the sales side at least...

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