Thought Leadership
Customers First...and other lies.
Turn the beat around.
Reneé Bacherman
President and CEO
Fischer International
Let’s face it, software vendors, like most organizations, are in business to make money. Management has a responsibility to the board and to the shareholders to maximize value. But at what cost? All too often, this focus has overshadowed the commitment to customers, quality and excellence. I spent many years working for large technology companies as have many of my friends and former colleagues. Most software companies have a common motive: sell the customer, get them dependent upon technology, and then, as their dependence increases put the hammer down and extract maximum revenue throughout the lifecycle. Implementation costs have a way of ending up to be double or triple the original quote, maintenance renewal prices keep going up, and new versions of software with limited functionality are not part of the maintenance upgrades, etc. You get the picture. The sanitized term for this methodology is “screw you revenue.”
My preference, both personally and professionally, is to give and get “thank-you revenue,” i.e., earn money by providing a high level of value to customers for a reasonable cost. Over the long-run, the best way to build and sustain a growth business with a high level of customer loyalty is by doing the right thing. If vendors take their responsibilities to the customers seriously, then their responsibilities to the board and shareholders will take care of themselves.
And so it goes with technology. Vendors have a responsibility to develop and improve technology. They must constantly strive to make IT more affordable and less complex for customers to align IT with their business processes. With the advances in standards and open source technology, this is easier to do then ever before. It is now feasible for vendors to develop highly interoperable solutions that inherently reduce complexity and cost and make accelerated globalization a reality. I do not mean to oversimplify this. There is a significant investment, in cost, resources, effort and time but it is possible and the effort will pay dividends. Every vendor should have an aggressive and continuous improvement process with the interoperability objective in mind. Today, large software companies routinely buy their way into new markets by acquiring smaller companies with newer technology. That is a great time to make the extra investment to ensure interoperability (not integration) becomes part of the overall technology consolidation plan.
In addition to the technology, pricing and sourcing strategies need to be considered. The perpetual license/maintenance model is still the most widely used method of procuring software. It is a very outdated model and one that, understandably, does not sit well with many end users. Perpetual licensing is highly capital intensive model and it requires a significant investment in advance of value. Too often, the investment far outpaces the value over the lifecycle of the technology.
Vendors who commit to a true subscription based licensing models are committing to value. If a vendor is willing to charge for the ongoing use of the software, they are making a strong statement about their willingness to continue to earn your money by continuing to provide value. Getting what you pay for as you pay for it. What a concept. I think we can all live with that. |
