February 12, 2004

Enterprise Software Buyers Are Fighting Back

While reading CIO Today's "Software Buyers: 'We're Not Taking It Anymore'", and all through writing this, I can't help but hear the refrain from Twisted Sister's "We're Not Going To Take It" rock anthem resounding in my head.

From working in a large firm and dealing with numerous software vendors' tactics, this article likewise struck a chord with me. To sum it up, a recent survey found that enterprise software buyers are unhappy with the way vendors charge for licensing their products. But that's not the real sore spot, per the article: "They are downright furious about the cost of maintaining them -- not to mention the sometimes sneaky policies that vendors have established for compelling enhancements and upgrades."

"AMR Research queried several hundred executives and found that many feel mistreated and betrayed by their vendors. More notable, companies are not accepting the status quo -- that is, whatever the vendor dictates -- anymore. "In fact, customers are beginning to react in ways that have important implications for the entire application market," the report says."

When asked which actions they were going to take in the next 12 months, executives replied:

"38 percent were training internal personnel to provide technical support;

35 percent planned to renegotiate their maintenance contracts;

22 percent were considering switching to a more accommodating software vendor;

21 percent intended to stop taking upgrades;

12 percent decided to discontinue paying maintenance; and

11 percent were interested in a new software delivery model, like on demand."

I've personally used many of these approaches with software companies who issued minor changes disguised as full version upgrades, issued no upgrades whatsoever during the annual maintenance period, or just plain didn't fix their chronic problems. Naturally, the larger your organization is, the more clout you generally have with vendors. In the legal market, the top 200 firms have plenty of muscle when dealing with software companies, and smaller firms sometimes find they have more influence than they first thought.

On occasion, I've patiently tried to help the vendors understand the customer's point of view. Generally, we don't want 20 new bells and whistles that "look cool". Business users want good, stable, and reliable software that meets their everyday needs. Most users don't use more than 10% of its features anyway, so why add more things they're just not going to use, which bloat it up and cause more DLL conflicts, resource and memory issues, training and support challenges, and integration problems? The problem is, vendors can't charge much, if any, for these desired stability enhancements because they should have been there in the first place -- at least from the customer's perspective.

On the flip side, what's not being said is that customers have contributed to their own problems as well. Poorly planned implementations, lack of training, and a host of other shortcomings will generate mediocre results from even the best software. So this isn't a rant against the vendors. Rather, it's an indicator that in the current economic climate, organizations are being tasked with getting more out of what they already have, and therefore don't have as much elbow room for less accommodating software or its vendors. Thus those vendors who make the extra effort to truly understand their customers' needs (hint: ask them!), develop creative pricing structures accordingly, and stand robustly behind their 'wares just might succeed where others fail. I find it interesting, no, telling, that I could very well say the same thing about attorneys who want to keep their competitive edge with their own clients.

While there is tremendous pressure to keep IT costs under control, I'll let the software industry in on a little secret: Savvy business users aren't afraid to choose the more expensive option if it will best meet their needs, has a cost-justified ROI, and perhaps most importantly, comes with superior customer service. Cheap isn't always better, even though it may look good on a budget spreadsheet. However, with that said, customers are always looking for bargains, and don't like hidden surprises. I've learned long ago that a satisfied customer may only tell a few friends about you, but a dissatisfied one will tell many more, and much more loudly as we've seen in the CIO Today article. Thus a little sweat equity with your customers goes a long way.

Topic(s):   Law Practice Management
Posted by Jeff Beard
Comments