Software Selection for Behavioral Health & Social Service Organizations: Assessing & Selecting Software to Meet Functional Business Needs (Part II)

Technology in general, and software in particular, is a “top of mind” issue for many executives in the behavioral health and social service field. In this article, we continue our discussion from the July issue on our recommended eight-step process for software selection.

Last month, we outlined the three core areas that organizations consider when evaluating software: customer responsiveness, functionality, and total cost. Customer responsiveness is complex. It can include a variety of factors, and it incorporates the notion of the vendor as a partner, rather than that of simply a merchant. Software functionality is how well the vendor’s product meets the specific business needs of your organization. To evaluate this properly, you need a clear understanding of what functionality is available in the marketplace, as well as a detailed understanding of your business’ needs and operational goals. And the third key area of vendor evaluation is total cost. Note that this phrase is “total cost” and not just “price.” In assessing total cost, software price is considered along with maintenance fees, customization costs, installation costs, training costs, implementation costs, and more. With these three factors, the new value equation for software selection is:

Functionality + Responsiveness
Total Cost

While all three of these factors should be given consideration in making this decision, it is important to understand that these areas of evaluation are not the sole criteria for selection. Rather, they are used to narrow the list of potential vendors to a group of finalists that will be evaluated further. To use this approach for software selection, we recommend including eight key steps in the selection process:

  • Step #1: Identify current and future required and desired software functionality
  • Step #2: Develop and release a request for proposal
  • Step #3: Conduct preliminary vendor screening based on knock-out factors
  • Step #4: Conduct current customer reference checks to gauge customer responsiveness
  • Step #5: Analyze vendor functionality and total cost
  • Step #6: Conduct software demonstrations and select finalists by focusing on functionality “fit”
  • Step #7: Conduct additional research and evaluation to make a final selection
  • Step #8: Contract and implement

The first step in the process is identifying what functionality your organization needs now – and in the future. The second step is to incorporate the specifics of your current and future needs assessment in a request for proposal (RFP) for a technology solution. Both of these steps were described last month. We pick up with Step #3, conducting a preliminary screening of the vendors that respond to the RFP.

Step #3: Conduct Preliminary Vendor Screening Based on Knock-Out Factors

Once you have received the responses from the software vendors, you can begin your evaluation process by scoring the vendors on how well they meet your functional needs. For this preliminary screening of vendors, we recommend using “knock-out” factors that are driven by your organization’s business needs and management and purchasing choices. Potential “knock- out” factors include the following:

  • Price
  • Lack of “mission critical” functionality
  • Vendor size and customer base
  • Vendor experience with specific local market or specific service type(s)
  • The vendor’s software technology platform and database
  • Whether the vendor has or requires a hosting or offers an application service provider option
  • Whether the vendor offers wireless or disconnected database technologies

Determine which of these knock-out factors, along with others you determine, apply to your organization and use them to reduce the list of vendors – ideally eight to ten vendors.

Step #4: Conduct Current Customer Service Reference Checks to Gauge Customer Responsiveness

The next step is to conduct reference checks for the remaining vendors to measure customer satisfaction and service. Make a point to contact at least ten references for each of the vendors. You should consider eliminating vendors who score poorly in the reference checks, but do keep in mind that good or bad customer service cannot be concluded from a single good or bad reference. The field is full of great software, poorly implemented. With preliminary screening and an assessment of customer responsiveness complete, you can invite the remaining vendors to conduct a software demonstration at your offices and analyze these vendors’ price proposals.

Questions That Help Measure
Customer Responsiveness to Customers

  1. Does the software meet the functional needs of the business office and administrative staff?
  2. Does the software meet the functional needs of the clinical staff?
  3. Is report generation easy and sufficient?
  4. Was the training and implementation on-time and effective?
  5. Does the vendor respond promptly to help desk requests?
  6. Does the vendor respond promptly to requests for new reports or software features?
  7. Overall, does the software ‘function’ as expected?
  8. In retrospect, has the software and the software vendor assisted you in achieving your strategic goals?
  9. Would you choose this software vendor again?

Step #5: Analyze Vendor Functionality & Total Cost

Take the time to develop a three- to five-year budget for each of the vendors (including any required technology infrastructure upgrades and changes in staffing) so that you can accurately compare pricing. Issues to consider in addition to acquisition of software are related maintenance, hardware, and training costs. Also, keep in mind the effects of growth on infrastructure costs.

Step #6: Conduct Software Demonstrations & Select Finalists by Focusing on Functionality “Fit”

Most organizations end up inviting six to ten vendors for half-day software demonstrations. Now is the time to focus more intensely on how well the vendor’s software solution meets your organization’s current and anticipated functional needs. Develop some sort of Likert scoring tool for your team to use during the software demonstrations based on the core areas of functionality laid out in your RFP. The goal in this step is to narrow the vendors down to two to three finalists, based upon both functionality and price. In most instances, organizations come to a very quick consensus about finalists at this point in the process.

Step #7: Conduct Additional Research & Evaluation to Make a Final Selection

The last step in actually selecting a vendor is to determine what other information, if any, your organization needs to select from the finalists. Sometimes your staff may need to follow-up with the vendors with some specific questions regarding functionality of the software applications that could not be covered in the demonstrations. You may want to visit customers who are using the vendors’ technology solutions to aid in the final decision making or check additional references. In some instances, you may use price negotiation and financial due diligence as a factor in selecting between your first and second choice candidate.

Step #8: Contract & Implement

Once you feel that you have selected the best system available to meet your needs, you can move onto the process of finalizing a contract and beginning implementation. When moving to the contracting phase, be certain to address the following critical areas in the written contract:

  • Linking payment terms to key milestones
  • Ensuring that all agreed upon functional specifications are included in the software
  • Compliance with HIPAA and other regulatory and reporting requirements
  • Pricing for additional users and price locks or caps for a specified period of time for upgrades and support, if possible
  • Availability of up-to-date user manuals
  • Software escrow


Have the final contract reviewed by your attorney before it is executed and then you can begin the next real challenge for using technology – implementation. Success with implementation will require a good plan, effective project management, operational changes, and close partnering with the vendor. But you will be off to a good start, knowing that you have conducted a thorough vendor evaluation and selection process, and that you have selected the best possible software for your organization.


To read the first article in this two-part series on Software Selection for Behavioral Health & Social Service Organizations, go to


By Joseph P. Naughton-Travers, Ed.M., Senior Associate, OPEN MINDS & M. Colleen Elmer, MSW, Vice President & Consulting Practice Leader, OPEN MINDS


For more information contact Joseph P. Naughton-Travers, Ed.M., Senior Associate, OPEN MINDS, 163 York Street, Gettysburg, Pennsylvania 17257; 717-334-1329; Fax: 717-334-0538; E- mail:; Web site:; or M. Colleen Elmer, MSW, Vice President & Consulting Practice Leader, OPEN MINDS, 163

York Street, Gettysburg, Pennsylvania 17257; 717-334-1329; Fax: 717-334-0538; E-mail:; Web site:


Elmer, MSW, M. Colleen, Naughton-Travers, Ed.M., Joseph P. (2006, August). Software Selection for Behavioral Health & Social Service Organizations: Assessing & Selecting Software to Meet Functional Business Needs (Part II). OPEN MINDS, The Behavioral Health & Social Service Industry Analyst, 18:5, 2-3.


© Copyright 2004, OPEN MINDS

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