By Kristin Parshay, Brown Smith Wallace, and Christopher Gaia, DataServ

Part 4 of our blog series on “Building the Right Approach to Paperless AP” concerns the selection of the right technology and vendor. The following criteria provide a broad basis for evaluating available technology options as well as individual vendors. The criteria we suggest you include in your evaluation are:

  • Technology framework and suitability

  • Functional fit with your needs

  • Vendor adaptability to your needs

  • Cost benefit analysis or Total Cost of Ownership (TCO) modeling

Technology framework and suitability AP automation solutions generally fall into three categories:

  • On-premises software solutions – Licensed, installed, and maintained on premises.
  • Hosted software solutions – Software that is licensed, installed and maintained by the client, but hosted by a third party. (You may see this sometimes referred to rather derogatorily as “fake Software as a Service [SaaS].”)
  • SaaS solutions – True multi-tenant solutions, built for the Internet and accessed by users in your organization through a browser. Below is a table that helps identify some of the main points of difference:
  On-premises software Hosted software SaaS

Client owns the data center and is responsible for all associated costs.

Software hosted in a third-party location. Many data center responsibilities handled by vendor. Client responsible for application. Platform hosted on vendor’s data center. Vendor responsible for all data center and application performance issues.


As part of broader/major new releases, usually includes additional cost for upgrade.

Same as on-premises.

Regular updates released throughout the year, usually without additional upgrade cost.

Total Cost of Ownership

Investments include: software licenses, hardware and associated infrastructure costs, IT resources, annual maintenance fee for customer support, training. Additional fees for upgrades/new releases.

Same as on-premises, with the exception of hardware. There are some IT and infrastructure charges.

Some vendors charge a one-time startup fee, monthly user license (usually a concurrent licensing model). Training and support is included in monthly service fee from some vendors.


Not muti-tenant – you are responsible for your application and customization charges are borne by you.

Same as on-premises.

Upgrades and enhancements shared across clients using the platform, saving you money.

User interface 

Designed for Windows machines/standalone processing environment. Not web native.

Same as on-premises, but requires an additional presentation layer (example: Citrix).

Web native – built for the Internet. 

Client services 

Administration and user support are handled internally.

Same as on-premises.

Administration and user support are provided by the vendor.

The choice of your technology platform should happen prior to selecting vendors, as vendor selection will depend on your technology choice. The choice of the technology platform has significant implications for your organization in terms of technical staffing needs, startup and ongoing costs, speed to implement and support. Making this decision up front will greatly simplify your vendor selection process. Here are a couple of our blog posts that discuss the cost implications of each: “To SaaS or Not to SaaS” and “5 Reasons SaaS Beats On-Premises Software."

Functional fit with your needs – Using the information you gathered during your value stream analysis to create your future state process design, you will have a detailed list of functionality requirements for your business. This analysis will have identified various activities according to the value-added, control-focused or no-value-added categories. These activities form the basis for evaluating various vendor offers.

We recommend using scripted demonstrations for all proposed vendors, allowing the project team an environment to compare “apples to apples” of the demonstrated system functionality. Upon completion of the demonstrations, the project team should score how each vendor met the criteria. The team-scoring approach makes it easy to identify the top candidates and also highlights any differences of opinion within the project team which can then be further understood and resolved prior to selecting the finalists. Taking a thoughtful, team-oriented approach to your vendor selection allows for a formal check against your decision criteria while also providing you some additional insights into how well the vendor will mesh with your team and organizational culture. In addition, it helps ensure that the team is on board with the final technology decision.

Vendor adaptability to your needs – In addition to the functional requirements, you will want to evaluate the vendor’s capabilities in regards to the following:

  • Technology solution roadmap and timing (many times available through the vendor or as part of industry coverage from an outside analyst or technology consulting firm.)
  • Resources – Make sure the vendor has adequate resources dedicated towards:
    • Continued technology development/their roadmap
    • Post-sales support/implementation
      • Available project management leadership/support
      • Help desk resources to solve system questions or concerns
      • Quality of training and ongoing training resources
      • System updates for new releases

The availability of vendor resources in these areas will have a big impact on how much…

  • Training your team and organization will need to develop and support
  • The challenges you will face with change management and support/communications
  • You will need for future technology expenditures and upgrades
  • Your team is involved in ongoing user support and administration 
  • Vendor financial standing – Do they pay their bills on time? Are they stable and/or growing? Are they at risk for acquisition?
    • Client references – Look for references from companies that had similar challenges and process design considerations
    • Demo of how their product addresses the various functional requirements identified in your analysis
    • Ability/flexibility to tailor their solution to your business rather than forcing you to bend your business to their technology (remember the DNA strand!)

Investment return or Total Cost of Ownership (TCO) – TCO is a useful metric for comparing the benefits between different technologies. We touched on some myths around TCO as it relates to SaaS in “Debunking Some Myths Surrounding SaaS,” a blog post from 2014. In addition, there are a number of useful articles and sample calculators, and one such calculator can be found at The following table, prepared by the Software & Information Industry Association (SIIA), might also prove useful to you.

TCO comparison matrix

These tools can be used to help you understand the various criteria you should consider when building a model that works best for your organization.

Completing the vendor review

Many clients reduce their criteria to a form or checklist that is completed by the project team leader or done in concert with a third-party consultant. The core project team and representative users should also play a role in reviewing the vendor’s answers, being present for all product demonstrations, and performing more in-depth reviews of working installations with the vendor’s client base prior to choosing finalists. 

Completing these steps provides you the foundation for final vendor selection while also helping the project team become more fully invested in the decision. These steps set the stage for your final selection and move the project from investigating/talking about automation to planning and implementing! 

Subscribe to our Blog