It’s a new day in enterprise technology buying!
Today, Dion Hinchcliffe, Chief Strategy Officer at Adjuvi, tweeted a brilliant WSJ post authored by Bain partners Chris Brahm and Michael Heric [WSJ subscription required - find the link on my twitter account to read for free]. In my mind, it should be required reading for anyone with influence over a technology buying decision. Their point basically boils down to this: The average enterprise software user experience is lousy, big software vendors don’t really care because they have strong relationships with analysts and IT buyers, and they lock customers into long-term contracts on solutions that have crazy high switching costs. But this is changing rapidly. Now, it isn’t just IT making software decisions. Business executives and non-IT users are gaining more influence over buying decisions – one Bain survey that suggested that an entire third of this purchasing power has moved out of IT.
Here are my favorite quotes from the post:
Traditional enterprise software packages have a number of knocks against them: long implementations, middling fit to a number of business processes, massive infrastructure requirements, complexity that is very hard to change once it’s in place, and most of all bad end-user experience.
So what does this mean for those running selection processes - particularly when the sponsor is outside of IT? This has particular relevance for companies too small to have a fully mature internal IT capability and who have been making buying decisions without a strategic IT executive for years.
It means there are substantially more good options in the marketplace to choose from and you should look at them carefully. You probably want to bring in someone to help you navigate the complexities and nuances of all the products that are available and come up with a good short list. The cost of doing this up-front will be easily offset by the money you save on licensing and implementation and downstream integration costs.
It means that you really need to understand the length and complexity of implementations. If an implementation seems too long (after you add 20-30% to the initial estimates) or too resource intensive, be sure to use it as a point of comparison with your software options. Newer, more agile packages and some of the most recent offerings from the big guys have addressed this. It really is possible to put together good solutions out of many small projects now, and integration is much less problematic and much less costly than it used to be. Don’t be afraid to go more best of breed either.
It means the buzzword “cloud” should really just be a given at this point. There are small, specific niches of the market that still need on-premise solutions, but the vast majority of companies have no reason to host their own software or to deal with upgrades. For more on this topic, take a look at John Hoebler’s excellent posts here on major cloud benefits and here on why you want to avoid upgrades.
It means you need to get real users in the room to help choose new software and do not allow them to de-emphasize the importance of the user experience. If the software is hard to use; if it makes people’s lives harder and complicates how you do business, the savings on IT maintenance and licensing will not amount to much. Research like the article references shows you’re not alone and the software vendors are being forced to catch-up. Choose partners who are showing a real effort to improve in this area.
Finally, it shows that the difference between business and IT continues to diminish. Your technology folks need to talk in terms of business strategy and operations and your business folks need to be fluent in technology. If you don’t yet have people who can tie these together, you will need to find someone who can help in the short-term and who can help you build these capabilities internally within you existing organization. While it may be an area you can hire consultants for on a project-by-project basis now, your long-term effectiveness will depend on your own people being able to sort through the complexities and priorities of these decisions on their own.
Thanks to Chris Brahm and Michael Heric for the great article and thanks to Dion Hinchcliffe for bringing it to my attention. As I said at the beginning, this should be required reading for any executive with influence over technology buying decisions.