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8/9/2002
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Quality Counts

IT managers are still complaining about the quality of packaged apps—but now they're doing something about it

So what else are companies doing to guard against poor quality? They're getting creative. APC's experience prompted the company to build a mock production environment where it can safely test patches. Morrissey says his supply-chain vendor wasn't doing a good job of that, and functional problems cropped up when new patches were added.

Now APC wants to buy logistics-management software, and it's asking vendors to provide references not only for current customers, but for customers the vendor has lost as well. "It doesn't mean there's anything wrong with the software. Maybe the [former customer's] business model changed," Morrissey says. What he's looking for is consistency. If the vendor and the former customer both describe the same reasons for a breakup, that's a sign the vendor is capable of communication.

APC is considering asking vendors for a free trial, as well as working language into contracts that stipulates a financial reimbursement if poor software quality results in lost business. But that's tough to get. "I'm not always successful, but I try to get a risk-sharing contract, where a portion of the fee is held back until software is deemed operational," says Patricia Dwyer, a partner in IT executive contract firm Tatum CIO, who's on assignment as CIO at Glatfelter Paper Inc. in York, Penn. "It's very difficult to get, but it doesn't hurt to try."

Software companies are reluctant to offer such deals in part because of stricter accounting rules designed to keep them honest about how well they're doing. The rules say, in essence, that vendors can't record a sale until all contingencies have expired. It's important enough that vendors often will walk away from a sale if a customer insists on a contingency that delays payment too long. "If customers want to do things that will cause their vendors revenue-recognition challenges, that will create a real strain on the relationship," says Bill Henry, VP of marketing and strategy for PeopleSoft Global Services. "If a company can find a way to engage a software vendor to have accountability, and the software vendor is able to recognize revenue, there's a better opportunity for both sides to view the relationship as positive."

Reaching that goal is important. Business-technology managers agree that it's essential to have a good relationship with their most important vendors. And companies don't want to see their software vendors struggle, as that could hamper innovation or even drive them out of business.

Some vendors have responded in recent months to the growing chorus of quality complaints. They're lengthening product-development cycles and improving developer training, quality assurance, and testing. They're also devising ways to help customers avoid bad implementations, arguing that it's often how software is installed and integrated that causes problems.

Oracle recently started bundling testing software from Mercury Interactive Inc. with its software, making it easier for buyers to test their implementations and any customization to Oracle's systems. It has also developed automated tools for diagnosing problems at customer sites and reporting them to Oracle's support team, and it has restructured its implementation service around "business-flow" processes, so software installations are more closely aligned with the business functions they're expected to perform.

PeopleSoft has increased training for its support staff and now requires they take certification tests. It has also made a best-practices repository available to customers, and its three upgrade consulting labs achieved ISO 9001:2000 certification in January, meaning the International Organization for Standardization has verified that the company strives for high customer satisfaction and continual improvement.

J.D. Edwards has improved project-management processes in its software-development, expanded its beta-testing program, and improved tools for integrating software. It also gives users diagnostic software that automatically reports to the vendor's support staff and lets customers track the status of help requests online and read how other customers have addressed similar problems. And SAP has improved its customer-feedback process by meeting with representatives from a dozen of its largest customers several times within the past year to discuss their concerns and hear suggestions, and to establish more formal project-management processes. All the vendors say they've increased communication with their user groups.

The first step in getting better quality is to demand it, and some negotiators say software buyers aren't always tough enough. Tony Klein, who helps companies negotiate software purchases as a partner in the Silicon Valley law firm of Latham & Watkins, says IT executives are too often willing to sign whatever contract the vendor drafts. "I see some CIOs negotiate like heck, and some not at all," he says. "Now of all times--after two years of hardly anyone buying software--purchasers have much more leverage than they think."

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