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12/16/2013
09:06 AM
Tony Byrne
Tony Byrne
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6 More Enduring Truths About Selecting Enterprise Software

Buying business software can be a tricky business. Pay attention to these truths and warnings.



Editor's note: This is the second of two parts. Read part 1: Six Enduring Truths About Selecting Enterprise Software

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.

Real Story Group

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.

[What can agencies learn from IT investments that fail? Read: Lessons For HealthCare.gov: Recovering When Your IT Project Crashes.]

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.



5. Technology selections must be test-based
The three keys to selecting software are test, test, and test. All else is guesswork. Don't waste your time building massive spreadsheets asking for checkbox answers to vague statements about integration, ease of use, and robust support. (On that last one, I'll offer a tip: All enterprise vendor tech support sucks; it's just a question of how bad.) Instead, rely on testable, narrative use cases as the core of your selection process.

Enterprises sometimes resist this because testing takes time and effort. Selection team leaders rightfully ask how much they should invest here. The answer depends on how important the technology is to your business success. What's the cost of picking technology that plays out as a poor fit -- or outright failure?

Incidentally, we find that iterative, empirical testing usually saves you time in the end. It improves your negotiating position and reduces the infamous gap between product selection and implementation.

Lesson: Empiricism is your best friend here.

6. Technology is not intrinsically a good thing
You already know that most technology implementations fail to bring expected business returns. So beware of analysts who cheerlead for the technology industry or a particular software segment, and avoid pundits who assume that technology adoption is a sign of enlightenment.

First, ask yourself: "Do we really have a technology problem here?" If you can't answer that definitively, you should pause and reflect further on the next steps to take.

Above all, don't look at a technology acquisition as an end in itself. You may achieve some program milestones by selecting and implementing new software, but did you really improve your business? Did you make your customers more satisfied? Did you make your employees more effective?

Lesson: Shape your technology selection efforts as the first step in a journey that has clear business objectives along the way, and don't hesitate to terminate a purchase entirely if you discover that new technology won't take you where you need to go.

What do you think?
You may sense a bit of cynicism in this list, but hopefully you'll see some passion, too. As an integrator myself in the 1990s, I got so frustrated witnessing poor technology choices in the initial stages of big enterprise initiatives that I decided to shift careers to see if I could do something about it.

Enterprise technology buyers deserve the right software fit. The right technology and vendor aren't sufficient for business success, but they're usually a necessary precondition.

But what about you, the enterprise customer, and the lessons you've learned? Did I miss any big ones? Chime in using the comment section below.

Tony Byrne is a 20-year technology industry veteran and president of Real Story Group, which focuses primarily on research on enterprise collaboration software, SharePoint, and web content management.

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