Today, competitive companies and their Executives cannot be satisfied with simply keeping up with the pack or maintaining status-quo when it comes to effectively utilizing technology to build competitive advantage. Executives understand that the expense invested, time spent, and internal resources required to purchase, implement and rollout the same systems as their competitors merely affords an at-par capability. Then, add the additional time and development expense to customize the new system to fit the organization’s needs can be daunting at best.
In today’s technology environment, the “openness” of applications to create a new or replace company-wide systems is allowing corporate and Information Technology Executives increasing ability to custom develop systems, including ERP-level and Mobile apps, which are built from the ground-up to improve processes, optimize workflow and create competitive advantage for their business.
Organizations opting to develop custom systems are appreciating many benefits of ownership versus “leasing” a system from a brand-name vendor:
A quote that has inspired me through the past many years of my career: “We don’t hire smart people and tell them what to do. We hire smart people so they can tell us what to do” – Steve Jobs is a concept I’ve held close to me with every person I’ve ever hired. In developing a new custom system, empower your smart people to be stakeholders of the project. Let them tell you what would improve their efficiency and effectiveness in a new system’s functionality and where they believe their ideas can lead to adding competitive advantage. Solicit their ideas and ask them to be a part of a team to develop the requirements of the new system from the ground-up. Let your smart people advise what works well with the legacy system and what would they improve in the new system. Asking your team to contribute to such an important project creates a tremendous sense of ownership. A resulting benefit of developing innovation in your new system may also be likely a great innovation effect you’ll see in your own people.
When my wife and I bought our first starter home, I was a Home Improvement enthusiast. I watched all the Home Improvement shows on HGTV. I knocked down walls, added skylights, added a deck, replaced our landscaping, and even vaulted our living room ceiling. The feeling of being able to make our home “ours” was absolutely amazing… until we received the credit card bill. All brand name vendors will talk with you about the scalability and ability to customize their systems, but artfully deflect from direct questions about hourly rates and custom development requests. This is where the concept of “vendor hostage” comes to play. The brand name vendor gets you in with a great discount off the system’s list price, but then recoups their profit with higher than industry standard development rates and inflated project hours required to complete development tasks and maintenance. Also, one little secret many brand name vendors don’t want you to know: where do you think they get their ideas for version upgrades each year? You got it, from their clients. When clients request customizations to their systems, and the vendor sees a really impactful request that will improve their system, they include that update in the next version… and yes, provide your enhancement to their user group – and your competitors.
Custom software development allows you to complete further enhancements or system changes as the business’s requirements change at little cost, and not share your intellectual property with a vendor’s entire user group!
3. Improved Financial, Operational and KPI Reporting
Rather than accept the “canned” reports provided with a vendor’s off the shelf system, organizations developing their own solutions can highly customize reports as well as how their reports are disseminated, for example using Dashboards for real-time data access. We’ve literally experienced a renaissance in financial, operational and KPI reporting improvements over the past years. Another great concept: “What gets Measured gets Managed” is time-honored, but I add “…and Effects a Change in Behavior.” Improved reporting is the impetus of improved behavior which has a flow effect to improved performance. Today’s systems are allowing much richer, relevant and real-time key data to be shared. The days are past when business unit management received reports on a weekly recurring schedules (I hope this doesn’t sound familiar with your own reporting structure.) Unfortunately, when these reports are received, the data may have already been two weeks dated. The difference is simply proactive versus reactive.
4. Total Cost of Ownership
In addition to the earlier mentioned vendor development rates for customization requests, purchasing a brand name vendor’s system without doubt comes with many additional long term financial commitments, including annual maintenance and licensing fees. Most brand name vendors charge 25 percent or more annually just to maintain their system. They advise that these fees are required to pay for [their] development teams to continually improve and add functionality to the system for their next “.X” version releases… we’ve already covered how they receive many if not most of their “new ideas.” The math is pretty simple – at a 25 percent annual maintenance fee (AMF,) you effectively repurchase your system every four years. Now let’s add-in if the vendor also charges you based on a per-seat license fee. If you have strategic plans to grow organically or through acquisition, ta-da – so does your license fee in direct correlation to your growth. You’re actually penalized financially for growing your business! In a next article, I’ll address in more detail why brand name vendors also love for you customize their systems… not just for the initial developer fees to customize the system… but also when you try to upgrade to the vendor’s next “.X” version, you can’t without their help [due to the customizations] and need their developer support “again!”
5. Vendor Support
One of the worst catchphrases I’ve ever heard was while participating in a meeting with one of our vendors who was trying to upsell our organization to a new networking platform. The sales representative advised our Executive team that we should be assured of the need and decision to upgrade due to the simple fact that “no one has ever been fired for purchasing “insert: sales rep’s company name here.” I can’t believe I’m going to use a phrase I hear all too often from my teenage daughter – but “OMG!” Did this individual really just say that to us?? I’m sure the sales representative was trying to professionally deliver a message to our team that their products were so widely used by the corporate world, individuals making the selection of their “new and improved” solution would be immune to criticism due to the high cost of purchase, exponentially higher operating expense, and on-going financial commitment for the total cost of ownership, including support and maintenance. The comment just didn’t sit well with me I guess. When I addressed issues we had experienced with their company’s support over the past year, and that we were actually considering moving to a competitor of theirs, the sales representative then told me that we could purchase a “premium” maintenance package and would then receive improved support. Wow! It’s hard to knock me off balance, but twice in one meeting! We would be required to purchase better support? Another great all-time quote from Bill Gates: “Your most unhappy customers are your greatest source of learning.” Customer Service shouldn’t be a Department, it should be an attitude. Developing your own systems allows you to provide world-class support – to your own team members.
Just put one foot in front of the other – Many of our clients have advised us that their new system projects started with a simple comment about “I wish we could do that.” It really can be that simple. We see all too often that company’s partner with numerous vendors for an unlimited number of systems which creates quite a patchwork quilt of competing systems within the organization. Starting with just one new developed system to replace a legacy application that may not be performing to your needs can be the start of something very great within your business and within your project stakeholder team – and it can be kind’ of fun, too.
We believe in bringing he visions of others to life – businesses can benefit from innovative ideas that their many team members from all levels can share. As these organizations look to increasingly add competitive advantage and build efficiencies into their processes, we want to remove the barriers that slow their progress. One of the biggest barriers that businesses face – technology – also has the capability to be their most significant asset if that technology is applied in a creative way.
The largest obstacle many companies face is the simple question “where do we begin?” – Our dedicated team can begin work in the requirements phase of the project to help identify the initial structure of the system, workflow and ensure that the new system will integrate seamlessly and securely with your organization’s other critical systems, optimizing the benefits of the new software. You are partnering with our team for a result, not a service.