Representing billions of dollars in annual technology spending, IT leaders from British Petroleum, Lockheed Martin, Unilever, and Kaiser Permanente made it clear that the software industry needs a new business model, better quality control, and closer product development ties with customers.
"The quality of software I'm getting from you people is abysmal," David Watson, Kaiser's chief technology officer, told an audience of several hundred software industry executives. "I'm looking for you all to have skin in the game with us. When it doesn't work, you all tend to wall yourselves off with warranty provisions." Watson is overseeing an IT department with a budget that's rising by 12% to 15% a year as it places big bets on IT enablement of health-care services.
Perhaps the most disturbing were the panelist's descriptions of software vendors compounding one problem with another. Neil Cameron, CIO of Unilever, which makes consumer goods ranging from Skippy peanut butter to Ben & Jerry's ice cream, said the software the company uses to run its various business units is making what should be a simple business painfully complex--thanks to issues such as buggy applications and the constant efforts to keep up with patch management.
And because many of those buggy applications also happen to be expensive, Cameron said he ends up fielding tough questions from other Unilever execs as to why the company is paying so much for software that doesn't deliver equal value in terms of business benefits. "Everything is conspiring against me to spend less with you guys."
The panelists agreed that software security issues are taking up too much of their time and money, and that a portion of the blame for that lies with the vendors. They also said software vendors still haven't figured out to come to them before designing products to ensure that they're building applications that companies actually need.
Along those lines, John Leggate, CIO and group VP of digital and communications technology for British Petroleum, suggested a possible fix: software fees based solely on business outcomes. Leggate suggested vendors should spend more time collaboratively developing products with their customers and less time debating licensing contracts. "We're spending an amazing amount of man hours negotiating and squabbling," he said. "That's no way to have a relationship. We want to get past the discussion about the money."
Leggate also provided a reminder to the software community of who has the power: Of BP's $2 billion in annual IT spending, he said just $120 million is earmarked for software, and that $90 million of that goes toward renewing existing licenses. That means intense competition for just $30 million in new software investments.