Where PayPal leads in solving failure others must follow

Where PayPal leads in solving failure others must follow

Summary: PayPal's president is getting personally and publicly involved with account management. Enterprise software vendors should follow his example but will they?

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Over the weekend. Steven Musil at CNet reported the case of a PayPal account that had been frozen and how David Marcus, president PayPal got personally involved. The details in a nutshell:

The fresh feeling of good will came from David Marcus, PayPal's newly appointed president, and delivered to a frustrated customer who had tried for months to free $64,000 locked up in a PayPal account. It all started in May, when Andy McMillan, organizer of the Build conference, attempted to have minimum balance requirements removed from his account. The specifics of that effort can be read on McMillan's blog.

If that was all there was to it then I'd shrug. One email doth not a changed company make. But the key point comes here:

"Please know that I'm now going to use your story to radically change how we deal with holds, and communicate with our customers," Marcus said in his note. "I'm driving a lot of changes at PayPal (I took over 5 months ago), and I hope that over time we will earn your trust again."

As I read through this story I could not help but think about the number of failed or failing enterprise software implementations. Heck, our own Michael Krigsman has carved out a career documenting them! 

Unlike PayPal which can be thoroughly frustrating and may on occasion lead to loss, enterprise failures have much more wide reaching consequences. Most recently I noticed that the QLD payroll project failure is being blamed for job losses. It is hardly surprising to find that the failure has become political. This is an extreme example but with reported failure rates as high as 70% for ERP project implementations, it is surprising that we don't get to hear more about what's going on.   

Part of the problem is that failure is a multi-faceted issue. In The Real Reasons Why ERP Implementations Fail to Deliver to Expectations, Eric Kimberling, CEO Panorama points the finger squarely at end user organisations. While I agree that customers have a part to play, I also agree with Vinnie Mirchandani that after 30 years of implementing software, the big SIs should now be in a position to cookie cutter the bulk of what customers need, drastically reducing time and cost to completion. 

hierarchy of unpredictability
Credit: Panorama Consulting Solutions

There is another, less reported side to this. Anyone remember the debacle over SAP hiking maintenance costs? It was a long run, painful series of events that only resulted in compromises by SAP once it became obvious that the user groups were no longer prepared to negotiate behind closed doors. Instead, they took the battle to the broader media in an effort  to expose the problems they faced. It worked.

It may come as a surprise to some that the big vendors still try to muzzle discontented customers but it goes further. Having captive cadres of analysts and bloggers on board can make a significant difference to perceived mindshare. A good scorecard arising from a glowing analyst report or nice words from a series of bloggers is one of the influencing decision point in deals. 

It should equally come as no surprise that subtle pressure is brought to bear on these folk, either directly through the implied threat of economic sanctions or simply by refusing to help individuals get to the stories they need to write. It happens all the time. How do I know?

It's happened to me on many occasions over the years. In recent weeks I have fielded a steady tricle of 'help?' emails from colleagues, concerned about aspects of their relationships with vendors. On the one hand they feel the need to be frank in the public domain, on the other hand they fear retribution. My advice is always the same. If right is on your side, then you have nothing to fear. 

In those circumstances, is it always fair to blame customers? After all, suppliers and SIs are always in a better position to know what is and is not feasible in a particular set of circumstances. And yet still we see each deal being treated as though it was the first deal ever done. The word 'unique' is never far from people's lips when in reality, that's mostly nonsense.

Yes, there are some business processes that are unique to organisations and yes, those can and should be preserved. At the very least they should be taken as the jump off point for building something that is truly transformational. But getting those processes shoehorned into new systems that insist on 'best practice' is often tough. Kimberling argues:

There is no easy answer to how to best achieve business results that meet or exceed executive expectations and lead to true business transformations. However, there are a number of proven success factors that can help ensure your ERP implementation leads to material business improvements...

I partly disagree. If what I have seen coming out of the cloud world is a proxy for the future then those are the vendors we should be watching more closely as leading a new(er) way. In an enthusiastic post about Workday's upcoming IPO, Vinnie Mirchandani said:

Workday has saved them [customers] over a billion so far, and yes, that gift will keep on giving, till on-premise vendors knock some sense into their hosting and application management partners to move to shared service models.

It's a narrow view but still, something with which to compare. He was a lot more encouraging in a later post about analytics where he said:

I would love to hear an IBM or SAP salesman say “Don’t just use our tools. Supplement them with FICO’s, SaS’s and Oracle’s to create multiple models ”

I would love all of them to say “Audit your results from our tools and allow us to share them with other customers so industry averages can improve”

I can't argue with that even though there are plenty of ways that cloud can fail.

Yet in the world created by ERP players, such words would be considered sacrilege. Not necessarily by some of the vendors but certainly by many of the SI organisations that say they are 'this' or 'that' vendor houses. Think I am wrong? The other week an SI sought advice on solution selection. As part of the conversation I suggested that an alternative couple of vendors might make a better fit based upon what I was being told. That went down like a lead balloon: "You might be right but it's not in my interests to accept that." Where does the customer fit in all of this? They're the ones who end up on the hook for the next failure.

Taking all these wee dots and joining them up I have to ask. Is this environment acceptable in a post on-premise world? I don't think so. We should be taking lessons from PayPal. That will only happen when brave souls speak out. The upcoming conference season provides that opportunity. 

Image credit: 5 Top Reasons Why Cloud Computing Projects Fail

Topic: Enterprise Software

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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4 comments
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  • thoughts . . .

    Article starts good, but the rest seems to be just talking about whatever you want.

    "best practices" should not always hinder innovation. I don't think they are mutually exclusive. Depends on what practices we're talking about.

    "Yet in the world created by ERP players, such words would be considered sacrilege. "

    Part of the problem seems to be that things do seem to have become more religious than practical. You have to be in the cloud or using SaaS or BYOD, otherwise you're sacrilege etc.
    CobraA1
  • that's why...

    ...it's called joining the dots - making the connections.

    Don't disagree on the 'religious' aspect.
    dahowlett
  • What does PayPal do with all of the funds they reap from us?

    I suppose I'm one of the lucky ones out of the many unflattering stories I've read about PayPal.
    I had not received any payment from my customers for several days, so I logged into my Paypal account and found it was suspended and my funds where unavailable. This came without warning and without so much as an email from PayPal.
    After proving my identity, providing my SSN, drivers license, bank statement, utility statement, invoices and receipts (of my products I sell, to prove I originally paid for them),
    and phone numbers of the vendors I purchase from ( believe it or not, PayPal needed phone numbers to contact my suppliers), I was told It would be 180 days before I could get my money.
    Spending 5K on a lawyer was out of my budget so. I refunded the nearly $12,000 I had in my account back to my customers. Once the 6 months had gone by, I thought I would transfer my remaining PayPal balance to my Bank account. (A small amount of money was left in my account just $16.62) but oddly enough, I was told I could not send it to the bank account I had on file with PayPal, that I needed to open a new bank account to obtain my funds. Second option is to provide them with a Tax ID number (which will cost me a $100.00, in the state I live in, we are allowed to use our SSN instead) and they will mail me a check.
    So there it sits. All of $16.62. I can take the afternoon off from work to go down there and spend $100 on a tax number or get another bank account (which of course I will need to maintain as it will come with fees that add up quickly).
    Logic dictates forgetting about it. It also stands to reason many other countless people are forgetting about a left over dollar or two. Then you have to factor in people who die and have balances left over. PayPal is not a bank so they don't have to follow the rules that a bank does.
    So my question is, what does PayPal do with the funds they are acquire in this manner?
    gary_k
    • Paypal funds

      Paypal follows the state escheatment process.
      esmorly