What This Article Covers
- What is Software Decisions?
- How is Enterprise Software Estimation Presently Performed?
- The Problem with Getting Pricing Information.
- The Results of Hidden Prices on Efficiency of the Enterprise Software Market.
- How to Work with Software Decisions
- What are the Benefits of Sharing the Software Decisions Analytical Products?
- What are the Future Plans for Software Decisions?
- How to Read the Analytical Products.
- How to Follow Up
This web page is designed specifically for software vendors that may be interested in participating with Software Decisions. It explains how the our analytical products and calculators work and how your company can benefit from sharing them with your current clients and prospects.
What is Software Decisions?
Software Decisions is a new site that is focused on providing self-service analytical support to executive decision makers. This means while we offer some associated services, that the calculators are designed to be used by our customers as decision support tools independent of other support.
Some of what the site plans to offer is analysis in the form of articles. The Software Selection Package, which includes Honest Vendor Evaluations and MUFI Rating & Risk are examples of qualitative analytical products – these help provide context, but much of the focus of the site is to provide quantitative tools. We have three types of calculators currently, but plan to add more when we have the time.
Software Decisions the end result of a number of analytical threads that have been partially documented in books from SCM Focus Press.
These books include the following:
- The Real Story Behind ERP: Separating Fact from Fiction
- Enterprise Software TCO: Calculating and Using Total Cost of Ownership for Decision Making
- Rethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects
- Replacing ERP: Breaking the Big ERP Habit with Flexible Applications at a Fraction of the Cost
The first two of these books are published, and the second two are in process. The books reference the Software Decisions site, and Software Decisions showcases the books as they offer a more thorough explanation of the calculations and logic behind Software Decisions. However, the quantitative research and support is actually located at the Software Decisions website.
The generalized conclusion is that enterprise software decision-making is far too frequently based upon simplistic platitudes which do not hold up under research. Some of the most common of these are listed below:
- One should always buy integrated systems
- It is good to concentrate your purchases from a single vendor
- Big vendors provide lower risk implementations than smaller vendors
- ERP, particularly “big ERP” from a major vendor is a necessary component to a solution architecture
Most of the people making these statements are seeking to be influential, without performing or even checking the research to know if they are true. There is nothing wrong with proposing a hypothesis, however hypotheses are eventually supposed to be tested; yet in enterprise software they never are. In fact there is no interest in testing these hypotheses, as most of these logics are designed to support a previous existing compensation structure.
For the book The Real Story Behind ERP: Separating Fiction from Fact, all of the logics used to justify Big ERP were evaluated – and none of them turned out to be true. That is a 0% success rate. However, Big ERP proponents adjusted for this, by simply changing the storyline over the decades.
Even though much enterprise software is quite sophisticated, decision-making enterprise software is essentially stuck in the Middle Ages, does not incorporate scientific principles of testing. In this environment mythology and hyperbole controlling decision-making, and it leads to the poor quality of outcomes where the wrong application from a vendor with connections to consulting companies or IT analysts are selected over far superior and more appropriate offerings. As an example of this, I recently had a conversation with an SAP consultant who recommended using SAP functionality, that we both agreed did not work – but would ask if SAP corporate would commit to getting it to work. It is an interesting economic system where software vendors that lack operational functionality still receive the business over vendors that have had the functionality working for years – and which can be readily purchased. But this is symptomatic of the enterprise software market. Furthermore, this individual is a person whose opinion is well-respected in the field.
How is Quantitative Analysis for Enterprise Software Performed Presently?
Normally by the project managers with input from consulting companies and software vendors. In performing research on this topic it’s rare to find entities that focus on performing estimation for hire that are not connected to other lines of business — for instance consulting. Certainly consulting companies will perform this service – but considering they are all connected to the major software vendors could anyone actually trust their “estimation?” Large consulting companies look at any estimation opportunities like this as simply sales opportunities for their enterprise software divisions – as implementation is where the real money is.
If one looks at IT analysts, they do not quantify costs, durations, manpower, etc.. Neither Gartner nor Forrester would have an ability to publish quantitative estimation, even if they were interested in performing them, because they both sell “technology advisement services” which bring the most money form the largest software vendors. Gartner has a sales team in Florida that sells to or (“shakes down”– depending upon your perspective) software vendors with implied promises of better ratings in exchange for buying highly marked up “technology advisement services.” They want to keep selling these services, and when you actually perform the TCO analysis honestly, the results work in the opposite of their adherence to promoting large software vendors.
The entire enterprise software market is heavily tilted in favor of mega-vendors and larger vendors and against the smaller and more innovative vendors. This is because the major consulting companies and IT analysts are remotely controlled by the major vendors. This is accomplished, in part, because quantification of the true costs and benefits are hidden from view. Consulting companies do not know, and would not share objective comparative numerical information to clients that would educate them, for fear of losing control over their decisions. Consulting companies want their clients buying software they have trained consultants for, they do not want their clients thinking for themselves. IT analysts will not quantify factors for fear of alienating their “customers” the major software vendors.
An important story from the research at Software Decisions is that most of the biggest name applications – that have the support of all the major consulting companies are some of the worst values. Some of the mid-sized vendors are sometimes decent values, but there is in general a negative relationship between vendor size and value, vendor size and innovation and vendor size and the quality of information provided to customers. However, this cannot be known unless one attempts to quantify the costs and benefits of the applications in a comparative way — which is exactly what Software Decisions has done.
The Problem Getting Pricing Information in the Enterprise Software Market
Even basic pricing information is difficult to find. A lot of people enjoy using the term “free market” or “efficient market,” but many people do not know that one of the requirements of an efficient market is published prices – and beyond that published prices in totality or TCO. If one looks at Consumer Reports, they publish a yearly TCO study of cars, which is quite illuminating.
This helps consumers make better decisions because they can see the full picture. Amazingly, while gathering this information, one software vendor sent us a non-disclosure agreement in order to receive pricing information. We can think of no other industry where pricing information deserves protection as “intellectual property.” This would be like a car company that required that you engaged in sworn secrecy before they told you the price of the new Buick LeSabre. You could not tell your friends the quoted price of the Buick LeSabre without legal liability. One might want to ask the question as to how efficiently an economic system would operate if the pricing of all items were considered intellectual property – only to be divulged in certain special circumstances. This would make sandwich buying a tricky endeavor.
The Results of Hidden Prices
The lack of published prices in addition to the inability to obtain TCO studies, leads client to underestimate the actual costs and makes the larger vendors seem more appealing than they should. It makes clients more susceptible to simplistic platitudes provide by the major consulting companies, and allows major consulting companies to make recommendations that are bad for their clients but profit maximizing for them. This is because it’s not clear to buyers how much more inappropriate solutions actually cost.
Software selections that center around how to leverage resources trained in specific applications within the consulting company is not an actual selection at all, but is a rigged system. One could say it is a corruption of an advisory function, but the major consulting companies never had a record of providing non-self serving advise in the first place. The consulting company is not providing advice to their clients, but recommendations for courses of action which maximize the consulting company’s billing on the account. The fact that so few buyers can figure out this rather obvious fact is perplexing, but this is the case.
How to Work with Software Decisions
The site is controlled with a membership application, so you would receive a customized coupon code that would provide you with free access to the analytical products that apply to you. You may share your coupon code with those that you think would be interested in this information. This helps market your application, and helps promote the Software Decisions site. Obviously, we hope exposure to the site may lead to purchases of analytical products for other software categories outside of yours.
What are the Benefits of Sharing the Software Decisions Analytical Products?
The benefits are that your software is shown as the best or one of the best applications in its software category. There are several themes that can be utilized in your marketing. For instance, we estimate risk, and it is no surprise the that best quality applications are also the lowest risk, something which is most often only viewed by buyers exclusively through the lens of the size of the software vendor.
What is the Cost of Inclusion into Software Decisions?
There is no cost. Software Decisions is 100% buy side. Software vendors also do not have influence over the analytical products.
Quotations from Software Decisions would be limited. Our intent is to get individuals to actually read the research. We also need to guard Software Decisions from being seen as promotional.
For those that agree to the program, we would request that you somewhere display the Software Decisions logo on your website. But its not mandatory, although we guess that most vendors would want to.
We can’t provide free access or the coupon from the logo link however. The coupon code is to be distributed on a one to one basis with qualified leads, and is not to be provided to casual visitors to your website.
Because of the depth of the analysis, and the fact that the type of the analysis is not available from other sources, it seems that the best use of the access is with qualified leads that are some ways into the process (or with current customers of course). Experienced salespeople know that you don’t offer up a big share like this early in the process.
What are the Future Plans for Software Decisions?
This is the first step for Software Decisions. The site was operational as of Feb 15th 2014. It was first necessary to develop estimations for a variety of software categories. However, future analytical calculators will include things like planned maintenance, and other calculators that seem to be of interest. At this point we have a large database of quantitative information about enterprise applications, and could develop a number of interesting calculators. We can also aggregate this data in interesting ways in the future.
As the database of software vendors grows, more analysis can be performed. However, from the 57 applications that have been evaluated the breakdown of enterprise software costs is the following:
Just this graphic can be useful in getting buyers to stop focusing on the software costs. The costs above are truly “total.” We include the internal as well as the external costs for both implementation and support. For details on our TCO method, see the book Enterprise Software TCO: Calculating and Using Total Cost of Ownership for Decision Making.
We would like to schedule a screen-sharing meeting so that we can walk you through how the analytical products work and answer any question you have. We think there is a substantial value for participating in the program for every vendor we contact. The hurdle is understanding what Software Decisions has to offer, and then putting together a plan for how to leverage this information. We would like to be able to make this site a success and to be able to keep it updated — and therefore a viable entity for the long haul. We think it is a worthwhile addition to your long-term marketing strategy.