Software Selection

Overview
When I speak with clients and colleagues in the cannabis industry, more often than not, the discussion turns to software selection. It seems simple to accomplish, however, should not be oversimplified. Those of you growing, processing, transporting, or operating a dispensary can testify that these are not trivial endeavors. Likewise, neither is software selection. G’Stato has helped many companies successfully navigate this process. Continue reading to better understand the areas we consider.

Understanding the Challenge
Due to the nascent cannabis industry, software solutions in this industry are relatively new. We tend to expect robust features that are present in mature applications serving other industries but fail to remember that those were developed over many years, sometimes decades. Current solutions available to cannabis operators are varied, some might have minimal features, they could be complex and expensive, or target a specific aspect of seed to sale, may offer a complete end to end solutions, some have developed an ecosystem of complementary solutions and there are those that stand alone. The challenge is sifting through this array of options and selecting one or more products that satisfy your business requirements. That is, which products will support efficient operations, within your budget and aligns with your current and future business goals? Which vendors will be in business a year or two from now?

What to Consider 
Considering a software solution doesn’t start with scheduled demonstrations from a number of vendors but with a formal or informal business plan. A plan that outlines your business’s goals and strategy for success, which should, at the very least, consider the next 12 to 24 months. Your selection criteria should align with this plan and the technology you choose should support the efforts of other groups in your organization. This will ensure everyone works together in support of your goals.

Just as important is the type of product that’s suitable. Are you looking for a focused application, one that is designed for a specific license holder, such as grow, processing, distribution, lab, or retail? Or an end to end solution which addresses all areas of vertically integrated companies? I found that vertically integrated MSOs tend to look for an end to end solution, however, a handful of pinpoint solutions may be a better alternative. We’ll explore the pros and cons of each In the last section of this article.

Budget, skills of your staff, and the application’s ability to exchange information with other systems are also important. The price for the application shouldn’t be your only selection criteria but should be carefully assessed. And your staff should have proficiency in using software applications. This sounds trivial, however, I’ve seen failed implementations due to inexperienced employees. Don’t overlook information exchange.  It’s critical, even for true ‘seed to sale’ applications. There is always a benefit in exchanging information with analytics packages, Customer Relationship Management (CRM) platforms, Financial solutions, and other peripheral services which together, weave into an optimized network of information that all operations benefit from.

Lastly, don’t be turned off if the application will disrupt or change current operational processes. In most cases, the change is for the better given that the vendor is deploying best practices that are benefiting all their customers. Needless to say, however, the changes should be vetted.

Due Diligence
There are several sources where you can identify suitable vendor applications. Once a shortlist of vendors is compiled, the final vetting process begins. Typically, a series of questions are drafted and forwarded to vendors ahead of your call with them. This provides them time to understand your requirements, ensures your time with them is productive, and mitigates ambiguity with a written record of their responses.

Typically, these areas should be covered:

• The vendor’s company profile: This is an opportunity for you to explore the stability of the organization which addresses years in business, # and type of clients using the application, and a general idea of their organizational structure.
• Their application’s profile which focuses on the hosting provider, uptime statistics, security framework, which states they are compliant, their integration capabilities, and the application’s future roadmap
• Several sections should be devoted to each function of the ‘seed to sale’ process that are relevant to your business. For example,
  • Cultivation: the basics of planting thru harvest, will your operations be completely supported by the application?
  • Processing: do they support a bill of material for manufactured products, including non-cannabis components, track all inventory and calculate a true Cost of Goods Sold?
  • Distribution: Are deliveries tracked in real-time, compliant manifests available, and daily routes optimized, is a comprehensive Order Management module available, do they offer a Mobile application with electronic Proof of Delivery?
  • Retail: does the application support purchasing, inbound receipt of goods, both recreational and medical use, labeling, inventory control, eCommerce, last-mile delivery, and loyalty programs?
  • Reporting and Analytics: take an inventory of the standard reports offered, does it offer ad hoc reporting, and will the metrics offered help you run your business effectively?
  • Finance: Do they provide a supporting module and if not which financial applications do they integrate with? 

Finally, be sure to ask the finalists for references, operators similar to yours in size and scope. 

Pros and Cons
During the course of due diligence, you should be deciding if your business is better served by a focused, a group of focused applications or an end to end, ‘seed to sale’ offering. Both have their pros and cons. Let’s consider each.

Seed to Sale Solutions

Pros
An integrated seed to sale offering minimizes the need to exchange information between disparate software applications. The user interface and process is consistent for each area of your business. You have one vendor to work with and solve your business challenges. Reporting and Analytics are seamless and gather information from all aspects of your business, providing that important holistic view of your business.

Cons
Seed to Sale solutions do tend to be more expensive and often require employees with more advanced skill sets to operate them. It can take additional time to train an employee on how best to use it, partly because they tend to be built on more traditional ERP applications.  ERPs may require additional information and enforce steps not required by the cannabis industry. They are also more complex to configure and implement, which can take weeks to complete and test. Lastly, Seed to Sale solutions tend to be robust in one area of operations, but lack the required functionality in other areas. 

Focused Solutions

Pros
The vast majority of these solutions have been developed independently of a traditional ERP. By doing so they are typically full-featured, do a great job of solving for your specific needs, and have a modern, intuitive user interface. Processes and workflows focus on the needs of a cannabis operator and do not require irrelevant information or processes. Lastly, they offer more appealing pricing, possibly due to the absence of financial obligations required to support an underlying ERP.

Cons
On the flip side, if your business requires more than one focused solution, you are introducing many vendor solutions that require multiple contracts, pricing structures, procedures, support groups, and user interfaces. Realize, if not managed by the vendor, the burden of exchanging information between platforms rests with you. This information exchange can be challenging, especially if each application does not provide open access to their data.

Conclusion
In conclusion, and as a general statement, I’ve found the more successful software products are those developed by entrepreneurs who have worked or developed similar products in other industries. They understand the underlying principles at work and have learned from their mistakes building similar applications. Also, you’ll unlikely find the perfect match for your business, so reasonable compromise should be considered. And always keep in mind, similar to your business operations, selecting a software solution is not a trivial process, especially for vertically integrated MSOs. Putting your efforts in the software selection process will minimize business disruption while bringing value and operational efficiencies to your business sooner than later.

About the author
Robert Bacchi is a managing partner at G’Stato LLC and has an extensive background serving the cannabis industry, with expertise working with vertically integrated, MSOs, single license operators, mentoring software vendors, and providing strategic guidance to startups. Additionally, he serves a number of cannabis consultancy groups bringing his technology services to broaden their offerings.

Robert has performed numerous software evaluations for companies in and outside the cannabis industry, both for regional and global clients.