Bad relationship...

Bad relationship...

Summary: The backlash against the software industry continues. But the feeling seems to have drifted from anger to disappointment to bewilderment.

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TOPICS: Tech Industry
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The backlash against the software industry continues. But the feeling seems to have drifted from anger to disappointment to bewilderment. At SandHill Group's Software 2005 conference last week, representatives of the corporate IT world expressed their view that software companies are totally failing to address the challenges and priorities of their customers.

"The quality of software I'm getting from you people is abysmal," said David Watson, Kaiser's chief technology officer. "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." V Woolf

One McKinsey study showed that the percentage of spending devoted to packaged applications and services had actually fallen in recent years relative to internal software development. Validating such findings, Watson said he manages an IT department that is growing by 12% to 15% a year as it invests in the IT enablement of health-care services. Most software companies, however, are not even breaking double digits.  

Offering a potential solution, John Leggate, CIO and group VP of digital and communications technology for British Petroleum, argued that software fees should be tied solely to business results. He noted that vendors should collaboratively engage their clients as opposed arguing over 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 explained that a mere 12% of BP's $2 billion annual IT budget is earmarked for software. Of that $120 million, $90 million is tied to the renewal of existing licenses while only $30 million goes to new software investments.

That is the environment that today's service-oriented product and solution providers are stepping into. One hopes they will ultimately perform better than the previous generation of software companies.  

Topic: Tech Industry

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  • Useful Info.

    I am doing my best to be fair, so please bear with me.

    For this story to be useful, it seems to me, ICT providers - whether they be software package vendors, solutions suppliers, consultants, software developers, or service providors - need to understand what the people quoted want from their ICT that they are not getting.

    I followed your links and I often hear, in person, the kind of frustration that I read there. It is clear that software package writers often develop applications software with too few customers - and stories about bad patches are (sadly) so common it is an industry-wide embarassment.

    Nevertheless, I am surprised to find customers who buy these packages are not specifying what they want - and verifying supplier claims, before installing. There also appears to be a lack of baselining before upgrading - an error at which we can only wonder...

    Talk such as: "I'm looking for you all to have skin in the game with us", "That's no way to have a relationship. We want to get past the discussion about the money." and, "Everything is conspiring against me to spend less with you guys" is big talk with all-too-obvious little thought. I am sure it will cause many suppliers to consider this event money well spent, because major customers got to let off steam. But those CIOs should expect no other return other than some nice quotes to put in front of their boards and investors...

    However, I am not worried by your main question: "That is the environment that today?s service-oriented product and solution providers are stepping into. One hopes they will ultimately perform better than the previous generation of software companies."

    Service provision means that absorption cost accounting, and similar practices, can be applied. While it still falls short of 'skin in the game' we can, at least, allow those CIOs to be able to demonstrate life-cycle return on investment, reduced investment risk, cost controls, and quality measured by results delivered.

    It seems to me that a large part of the SandHill Software event's remit is to give some major CIOs the opportunity to try and push their software vendors into supporting them for just a few more years, until big monolithic ICT depatrtments go the way of the dinosaurs. Evidence, if it were needed, that SOA is starting to make its presence felt in the marketplace.

    I expected a little more from you guys - as advocates of software as a service. Find the events where CIOs are talking turkey - where they are talking about how they want their software to knit together, how they want the road ahead to be mapped (and built), and how they want to see staff motivation managed in the transition - and beyond.

    Fingers crossed - aye?
    Stephen Wheeler
  • Very true...

    As a corporate developer, I say "amen!" to the complaint of the CIO. I am, of course, in his shoes. I have also been in the shoes of the software vendor and really feel his pain.

    For these reasons, and the basic economic problems of spending major resources to produce something for sale that costs nothing to deliver, it is blindingly clear to me that an open development model is an idea whose time has come. Basically, good software is far too costly to develop and too cheap to copy, and nothing will ever change that.

    The disruption that this causes to software vendors is not a moral problem; it's a natural consequence of the spread of knowledge that once was the exclusive preserve of wizards, and any business model that depends on the creation and maintenance of an artificial scarcity will ultimately fail.

    I am therefore pretty optimistic about the prospects of service-oriented architectures, as long as they offer the opportunity to provide something to users at a better value than they can provide for themselves. That's what it's always been about in the business world, because it's what has always driven our individual as well as our corporate choices.
    bthomasmo@...
  • It's in the development.

    Proper planning and metrics (and good management) are the basic requirements for success with any custom software development process. It is failure in these regards which torpedoes most inter-firm development projects, and it's on the part of the client and the consultant.

    Open source software can be a solution if the client is willing to shift their business model and bias just slightly - from a proprietary stance, to wanting a tool that works effectively and will have good support for a fair price. The whole "you build it and then we own it" concept just won't work anymore. However, "you build it, and we pay you by the hour to do that, it;s open source, and then we pay you to maintain it" concept is the way it's going.

    Either this, or go out of the box.
    Kamikaze_Ohka