IT managers are still complaining about the quality of packaged appsbut now they're doing something about it
Next month, Murry Mercier hopes to close the book on one of the most frustrating experiences of his CIO career. That's when his employer, Integrated Health Services Inc., plans to go live with new versions of its personnel and financial applications--nearly two years after trying to get its vendor to deliver software that works as promised.
Programmers at the operator of long-term-care facilities in Maryland have spent hundreds of hours developing fixes for what Mercier says was buggy and immature software, and his project-upgrade costs are double what he'd budgeted. He's determined that won't happen again. "We were the quiet and disgruntled customer, but we've become much more vocal," Mercier says. "We're going up the ranks at the company to make it clear we're not happy."
Mercier has taken a squeaky-wheel approach to get Integrated Health's ERP vendor to fix buggy software.
Mercier's frustration is shared by other business-technology managers who've put their faith and millions of dollars into a vendor's hands, yet have limited recourse--and usually no chance of a full refund--when software doesn't perform as promised. Now some say they've had enough, and they're setting higher requirements for quality. The business relationship between software vendor and buyer remains complex, but the downturn in tech spending has given IT managers more leverage. "We don't have any hope our vendor will all of a sudden get religion and deliver clean code," says Mercier, who wouldn't name the vendor because he doesn't want to damage an already strained relationship. "But we won't be a victim anymore."
American Power Conversion Corp. kept the pressure on its vendor of supply-chain software until the vendor paid to fly two top code developers cross-country to spend a few weeks at the power-protection manufacturer's Kingston, R.I., headquarters, writing fixes for buggy patches that at one point brought APC's product shipping to a halt. "It was a calamity of unpredictable breaks in the system," says Richard Morrissey, APC's director of worldwide E-business development, of last year's implementation. The help came only after APC began throwing around its weight as a $1.4 billion-a-year company and a major customer, even suggesting it may no longer serve as a reference for the vendor, which APC declined to name. A discussion between the two companies' CEOs soon followed.
Vendors may not make quality as high a priority as customers do, says American Power Conversion's Morrissey. The manufacturer vows to have a different kind of relationship with vendors in the future.
"We learned as a company that the next time we step through this process, we'll have a much different relationship with the vendor," Morrissey says. "As a customer, quality is a high priority. It may not be as high for a software vendor."
The software industry has a lot of work to do to meet the rising quality expectations of customers. Even as companies grow increasingly dependent on sophisticated software, conducting business with software vendors can sometimes feel like buying an "as-is" jalopy through the classified ads. A study released this summer by the National Institute of Standards and Technology, a federal agency that supports research of technology-infrastructure issues, concluded software bugs cost the U.S. economy $60 billion a year. "Few products of any type other than software are shipped with such high levels of errors," the report says.
Take enterprise resource planning software, which is often cited as the most problematic because of its complexity and because it interacts with so many data sources within a company that any bug--or an implementation error by the buyer or integrator--can rapidly derail a project, with disastrous results. Companies have come to depend on the tremendous value they get from ERP software, yet all the leading vendors--including J.D. Edwards, Oracle, PeopleSoft, and SAP--have been accused at some point of releasing subpar products. "A lot of times, the attitude of the big players is 'Take it or leave it,'" says Jane Aboyoun, who until June served as CIO at TMP Worldwide, parent company of online job board Monster.com. TMP recently reached a confidential settlement with an ERP vendor for an implementation that Aboyoun says was delayed a year because of buggy software.
QUICK TIPS: Help Yourself
Sometimes, customers create their own software-quality problems. Here are tips from vendors on how IT managers can ensure success:
Use only product experts. That includes the vendor's professional-services group and certified partners; make sure internal employees involved in the project know what they're doing.
Be choosy about customization. Every level of customization creates a potential for conflict when the base system is packaged software.
Let go of the past. Customers sometimes face functionality problems when they try to customize a new system to look like an old one. Also, old mainframe data can sometimes clash with a new system, so get rid of the data, or archive it on tape, if it's not necessary for running the business.
Use best-practices information provided by the vendor and have a solid project-management process in place.
Conduct business-process modeling. For example, be sure to document what the business process should be for a new global application. Otherwise, each geographic region will develop its own process and the result will be lost functionality, a complex implementation, and software that is unable to serve its intended purpose.
Take advantage of maintenance programs and tools. Customers sometimes ignore the early monitoring and reporting tools provided by vendors that can spot a potential bottleneck before it turns into a big problem. --Mary Hayes
If a company runs into problems with a vendor after it has already spent time and money on the implementation, it often makes the most business sense to try to work through the problems, rather than ripping everything out and starting again. And while software buyers try to create deals that reduce their risk, such as paying in increments based on project milestones, the reality is that the software buyer-vendor relationship is unusually intertwined. "It's a unique industry in that way. Once you bet on a software direction or supplier, you're making a bet on that vendor as a partner," says Forrester Research analyst Ted Schadler. "To break away from that relationship takes an act of will on the CIO's part to suck it up and bear the cost. That cost isn't recoverable, so it just doesn't happen."
Buyers may be getting tougher on quality, but they've also helped create this problem. The market has rewarded vendors for new features, not for quality and reliability. In the fiercely competitive software business, that creates a race in which vendors feel pressured to deliver new functions and work out the bugs later. Mercier is convinced that his vendor released immature software because it was trying to stay in step with a competitor's release schedule. "They're so torn up with what the competition is doing that they're neglecting customers who've gotten over the bells and whistles that might sell their product and are just trying to get the system to work," he says.
Meanwhile, Mercier says he's seen only spotty results from his squeaky-wheel approach. Sales and support managers he's contacted are providing more assistance with implementation and product modification, but he says that when he complains about the lack of a customer-feedback loop, the engineers say it's a corporate issue that they can't change.
The Business of Going DigitalDigital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.