Last week, I wrote about how customers have become more savvy about buying enterprise software and more open to experimentation about enterprise architecture and user experience.
Nevertheless, many perennial truths about software selection endure. I listed six software-buying truths last week that enterprises need to heed if they want to find the right fit in the digital world. Here are six more truths -- some of them inconvenient -- that can make you a smarter buyer. At the end of each one, I suggest a short lesson for your team to take away.
1. Open-source isn't much different Open-source technology in the enterprise used to cause theological debates. Fortunately, that seems to be winding down from the realm of religious schisms to the world of business utility. Still, we sometimes see people with knee-jerk pro and con reactions to open-source technology. You want to avoid that.
Open-source technology is generally neither simpler nor cheaper -- just different. And, of course, you'll find many different business models across open-source projects. You'll want to examine those closely, since different business models lead to different incentives and obligations.
As a practical matter, during any vetting process that includes open-source technology, you may need to work with an integrator, rather than a software vendor. (There's a whole separate conversation we could have about selecting the right consultancies and integrators -- these relationships typically prove more perishable than software commitments, even though services may represent a larger spend on your part.)
Lesson: Evaluate open-source options using the same criteria as you would for commercial solutions (and vice versa).
2. Assessing a vendor's true financial health remains tricky You've seen the vendor press releases. "We're growing like gangbusters! We have new investors! Another year of profitability!" All this may or may not be true, and even if it were true, the firm could still be failing behind the scenes. In particular for privately held vendors, you can't really believe their claims without reviewing audited financial statements.
Please note that outside investors -- particularly the venture capitalist kind -- can prove extraordinarily destabilizing for young vendors. They tend to press for exceptionally rapid growth, and if that growth doesn't materialize, they can force an ugly exit from their investment. That's fine for them but very disruptive for the customer.
I'm not a financial analyst, but I'll suggest that, for customers evaluating the health of both private and public vendors, cashflow becomes the single most important metric. Vendors will earn profits and losses. Their market caps will rise and fall. And, of course, both have long-term implications. But a vendor that runs short of cash will have to take drastic measures.
Lesson: Review audited financials and quarterly reports, but with a grain of salt, and look to other indicators of pending trouble, like cash and staff hemorrhages.
3. Big software vendors are no safer than small ones Big software vendors and their products are not inherently more stable than small vendors. This runs counter to that old saw about nobody ever getting fired for going with XYZ.
First of all, software from the likes of IBM, Microsoft, and Oracle tends to be more platform- or toolkit-like, which can create serious upgrade risks. Perhaps more importantly, large vendors will readily undertake major shifts in strategy by acquiring and merging competing products, or by simply sunsetting a platform outright because the vendor's livelihood doesn't depend on a single solution.
Ultimately, you want to balance risk with reward. A small vendor trying to get really big, really quickly, definitely represents a higher-risk supplier, but if it is on to something really good, you might welcome the ride.
Lesson: Look beyond vendor size to more meaningful signs of technical or institutional turbulence.
4. The long-term viability of any product is best measured by the community around it By "community," I mean third-party module developers, integrators/consultants, and, of course, customers like you. Long-suffering platforms like Lotus have continued to endure because of the strong community around them. For the same reason, SharePoint will probably endure long past the time people think fondly of it.
In other words, your technology can become undead but remain viable due to external support and enhancements. Surely, that's better than having a vendor or technology kick the bucket on you before you're ready to migrate.
Lesson: Evaluate the size, vibrancy, and independence of the broader community around any technology.
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