Strategic CIO // Executive Insights & Innovation
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4/16/2009
04:53 PM
Bob Evans
Bob Evans
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Are Your Software Vendors Force-Feeding You Needless Stuff?

Are your enterprise software vendors trying to make their problem - revenue targets - your problem by force-feeding you add-ons and modules and services you don't want or need? CIOs say this "value-destruction" approach manifests itself in three specific ways, according to Forrester VP Ray Wang's latest installment in his five-part series, "It's The Relationship, Stupid!"

Are your enterprise software vendors trying to make their problem - revenue targets - your problem by force-feeding you add-ons and modules and services you don't want or need? CIOs say this "value-destruction" approach manifests itself in three specific ways, according to Forrester VP Ray Wang's latest installment in his five-part series, "It's The Relationship, Stupid!"In "Part 3: Pushing products that clients don't need in order to grow revenues," Wang says that while software companies can try to justify this approach by saying they have quarterly numbers to hit, they are nevertheless running the risk of "jeopardizing brand value, trust, and market credibility for short-term gain."

In these days of ruthless budget-cutting among the customer set, is that really a wise approach? I think not, and CIOs who in this environment might be vulnerable to strong-arm tactics due to their companies' desperate circumstances are sure to have long memories that will stay fresh well into the time of improving business climates.

And with more competition coming from new approaches and new companies via SaaS, cloud computing, hosted models, and more, Wang's message throughout his entire five-part series is a powerful one: will software companies be willing to exchange relatively modest short-term term revenue gains for ruined relationships in the long term?

Wang cites three approaches that CIOs say enterprise software vendors are employing that are focused solely on the revenue targets of the software companies rather than the business needs of the customers:

  • "Forcing clients to spend more to keep a low rate for maintenance." Wang cites an ERP director at a global oil and gas company who says that his company has "adopted a concerted focus to limit our exposure to this vendor" because of "how much they took our relationship for granted."
  • "Selling additional products that have no future road map because of post-acquisition roadmaps." The CIO at a North American manufacturing company said it has put a freeze on all future spending with this vendor for the next eight months" because it felt forced to purchase additional licenses before the vendor completed an acquisition, only to be told after the acquisition that the product was being discontinued and that no credits would be given.
  • "Suggesting additional consulting services that require additional product purchases." Wang says that an ERP program manager at a global consumer-products company experienced ongoing pressure of that sort. The pressure become so bad, the ERP manager said, that he finally "called members in our local user group and they gold us that other members have complained as well but the user group had been over-influenced by the vendor and was not able to assist."
  • These ham-fisted approaches seem so obviously counterproductive - why do some software companies insist on making the buyer-seller relationship even more complex than the underlying code? Be sure to check out the first two parts of Wang's five-part series, with the next two installments due on April 20 and April 27.

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