The importance of data integrations and software enhancements when selecting a new software provider

By Thomas Whaley, President, Level One Technologies, Inc.

For many years, traditional software providers denied their users access to web-based applications, by limiting their ability to exchange data with them. 

These denials included users being told their provider’s staff was overbooked, and unable to complete the integrations they requested. Some providers denied integrations by telling their users that a future enhancement was planned for their system, and it was identical to the application’s current functionality. In those instances, users were asked to abandon their integration requests, and wait for the provider to complete the future planned upgrade. 

Other tactics included providers intentionally overbidding integration requests, and/or imposing unfavorable partnership conditions on the management of applications their members wanted to use.    

I can personally confirm that each of these tactics were actually used, because between the years 2004 and 2009, I was part of the design team that built and launched Epay Manager; and in that capacity, I witnessed each of these excuses being made. 

I also had first hand knowledge of the financial impact these delays had on brokers, who wanted to use web-based technology to lower their costs and improve their profitability, but were denied these benefits, by software providers who instead of protecting their customer’s interests, chose to protect their own. 

For those who are not familiar with Epay, the application is a web-based, self-invoicing system that uses data stored in a broker’s management software, to reduce a broker’s cost to process and pay its carriers’ invoices, and generate its customers’ bills. 

One of the system’s defining features is its ability to create and send highly accurate invoices to a broker’s carriers, by repurposing data in the management system, that was originally used to create carrier rate agreements. Epay’s use of this data is the key factor that allows brokers to replace traditional invoicing systems, with far more efficient methods based on self-invoicing principles. 

Over time, Level One was able to demonstrate the value of using repurposed data, when a number of enterprising software providers experienced the benefits of having more satisfied users, after creating data integrations with Epay. This success encouraged other developers to take a similar approach, and it paved the way for new applications to be introduced, many of which were designed to assist brokers in achieving operational efficiencies.  

As the number of these applications grew, software providers began experiencing significant pressure from their users, to develop integrations with them. 

More recently, additional pressure was placed on these providers, when brokers who hire large carriers to serve high-end customers, were asked to use data exchange methods favored by their customers and carriers, rather than the ones traditionally used by the broker. 

The growing number of these requests is forcing brokers, who are considering replacing their current management software, to only consider providers who have a proven track record for creating data integrations and software enhancements for their users. 

The trends are also forcing software vendors, who are interested in attracting and retaining new brokers to their systems, to support the increasing number of data integrations and workflow enhancements their users need, to remain competitive with other brokers in the industry.  

Because of these changes, brokers can no longer afford to associate with software providers who have outdated integration and software enhancement policies. These changes are also why in this article, I’m going to use my industry experience, to offer some specific recommendations to brokers, who are considering leaving their existing providers to find new ones.   

When a decision is made to look for new software, most brokers are inclined to explore the entire range of available options. But for reasons that will become clear, my first recommendation for these companies is to limit their search to no more than 5 of the most likely software candidates, that are within the broker’s price range and have an acceptable level of functionality.  

Although this number is not an exact one, the idea behind setting a reasonable limit, is to recognize the fact that no broker has an unlimited amount of time to spend vetting potential candidates. My concern is, if a larger group is selected, brokers will be unable to do a thorough job comparing and contrasting each candidate’s system.   

Once the candidates are selected, the next step will be to start interviewing as many current users of each system as possible. The importance of these interviews cannot be overstated. Because the objective of each conversation will be to gain as much insight into the user’s history with the provider as possible.  

One of the first questions that should be asked, is whether the user was given free access to the provider’s existing integrations, when it first joined the system. 

Based on my experience, the answer to that question should be yes. That’s because, most software providers are eager to attract new brokers, and one way to do that is to offer concessions that have no new costs associated with them.  

However, in the event a fee was charged, each user should be asked follow-up questions, such as whether the amount charged was equal to the original cost of the integration or enhancement or was it a discounted amount. 

It’s also important to ask whether each provider gave them written time and cost estimates for the work they requested. And if so, did the estimates include timelines, showing when the work would begin and when it would be completed. 

It’s also important to ask whether the proposals included penalties the provider would pay if the work they committed to, was not completed when it was promised. 

And finally, it’s important to ask whether the quotes were “true cost” estimates that could not change if additional hours were needed to complete the project. Or were they considered “ball-park” estimates, that were subject to change, if additional hours were needed to finish the work.  

Another area that should be explored, is whether the provider’s response to critical code or database “fixes”, were handled with the urgency they deserve. These issues are critically important to users, because when vendors do not respond to them in a timely manner, the user’s relationship with the provider can suffer irreparable harm.  

One way to avoid these problems, is to make sure that specific language is included in the provider’s licensing agreement, that defines what a critical issue is, and what constitutes an acceptable response time, should it arise. The agreement should also list the fines and penalties providers must pay if they fail to provide the agreed upon services in a timely manner.  

In addition to defining how critical issues are handled, it’s also important to find out whether a new provider is willing to integrate with external applications that have similar or identical features, to ones that are already built into the provider’s software.  

Similarly, questions should be asked whether providers are willing to integrate with competitive solutions if an application with similar functionality is already integrated with the provider’s platform. As an example, a provider who is currently integrated with “Macropoint”, should be asked whether it’s willing to integrate with “4 Kites”, if a user expresses that preference.  

To fully understand the provider’s attitude toward integrations, inquiring brokers should ask current users whether any of the integrations they requested failed to materialize, because the provider required the vendor to enter into an unsatisfactory fee sharing or partnership agreement with them. 

If any of their responses indicate this is the case, then my advice is to eliminate that candidate and focus on the remaining options. I say that because, when providers force vendors into fee sharing relationships, as a condition for exchanging data with them, the number of external applications integrated with the provider’s software will be significantly reduced. And that will cause the brokers using the software to be at a competitive disadvantage with other brokers in the industry.    

Another important question to ask, is whether the provider ever reduced or absorbed a portion of the cost it quoted, to complete a new integration, or enhancement for a user. This is an important question, if for no other reason than when a user pays to increase the functionality of a provider’s software, the platform itself becomes more valuable, because of the additional revenue that’s earned from new brokers who join the system. 

These are reasons why brokers should insist on some kind of cost sharing agreement with the software provider they select, for any new or additional features they require when they join the system, or at any other time thereafter.    

There’s one final question that should be asked on the subject of development costs. And that is to ask current users, whether they believe they were ever quoted an amount for custom work that was intentionally overpriced, as a way to discourage them from pursuing the integration or enhancement they were seeking.  

Although employing such tactics is rare, they’re most likely to occur, when providers are understaffed, and they overprice new development work as a way to avoid saying “no” to their valued customers.  

One way to avoid this from happening, is to ask current users about the quality or size of their provider’s development staff.  As part of this discussion, users should be asked whether they ever received an inflated quote from the provider; and if they did, whether they believe it was caused by a deficiency in the provider’s staff.  

If their response to either question is negative, then it may be necessary to eliminate the candidate from consideration, and focus on providers with larger staffs, or those who allow outside developers to interact with their software or databases.  

Finally, in the interest of making sure that your next provider is your last one, you should make certain that the candidates you’re considering, make regular updates to their systems. These updates fall into two categories.  

The first is the type that keeps software running smoothly at its current level of functionality. To accomplish this, software providers must be committed to quickly identifying and fixing breaks in their system’s database and code, whenever they occur. This type of update also requires providers to regularly update the version of their system’s database and its operating system, to make certain they’re both within an acceptable range of their current release dates.   

The second category is the type of update that keeps a provider’s brand competitive and in sync with the changing needs of the industry and its users. These updates occur periodically and are intended to expand the software’s functionality and utility. 

Although both types of updates are important to consider, in my opinion the most important quality that governs the decision to select new software, should be the provider’s willingness to support data integrations with the external applications brokers need, to lower their operating costs and increase their profitability. 

But, in addition to supporting these integrations, software providers who want to retain and attract new users to their systems, must also be willing to manage the growing number of proprietary data exchanges, that are occurring between brokers and their customers and carriers.