When It Comes To Enterprise Software, It's The Contract, Stupid - InformationWeek

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3/27/2011
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When It Comes To Enterprise Software, It's The Contract, Stupid

Customers crying foul over big deployments gone awry often ignore the very language that defines the scope of the software offering or implementation. Here's how to smarten up.

Mention the term "enterprise software" or "ERP" to any executive or business owner with any experience with such complex deployments, and you'll probably witness symptoms of post-traumatic stress disorder.

No question, SAP, Oracle, Epicor, Sage, and scores of other enterprise software vendors have produced innovative products to improve almost any business process: manufacturing, supply chains, sales force management, financial accounting, hospitality, human resources--you name it. However, having litigated hundreds of failed enterprise software engagements for many vendors and some customers over the past 15 years, I have witnessed a common theme that reveals itself faster than a pop-up ad on a gossip-news site:

Customers don't pay enough attention to the contracts they're signing, and in many cases they ignore the very language that defines the scope of the software offering or implementation.

All licensing agreements for enterprise software have similar language. In legal parlance, these disclaimers, warranty and remedies limitations, venue provisions, and integration clauses operate to the advantage of the vendor, not to the licensee. They limit the offering to that which is documented in the vendor's user manuals, use notes, release notes, and other pre-defined criteria. Off-the-shelf software works the way the software was designed to work (most of the time). But customers will try to superimpose their business onto the software during the sales process, rather than vet the software in such a way that will allow them to understand how the software actually works.

What ensues is a train wreck. Here's why:

  • Most customers don't define the functionality they want from the software.
  • Salespeople speak in general terms because they don't know (or care to know) the nuances of the customer's business. "Yes, the software can handle a size-grid for order entry..." But what does that really mean?
  • The complexity of the software and the potential business application stifles customer inquiries.
  • Customer execs and owners assume that software is some sort of magic potion that will let them slash their labor costs, without understanding the dynamics of how the software will operate to get them to that point.

With apologies to Paul Simon, "Still, a man hears what he wants to hear. And disregards the rest...nah, nah, nah."

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