May 2, 2013Doug Hadden
Enterprise Software Success Myth #5
Doug Hadden, VP Products
FreeBalance is a medium-sized Independent Software Vendor (ISV) with considerable success competing against very large Enterprise Resource Planning (ERP) vendors. We are sharing 16 lessons learned by bucking conventional wisdom to encourage industry innovation and creativity.
Enterprise software companies scale by creating a services channel. This channel promotes ERP and other types of software while supplying labour for implementations. It is thought that labour cannot be scaled within a software manufacturer. Professional services staff at enterprise manufacturers should be focused on a small minority of implementations that extends products. In fact, high professional services revenue devalues enterprise software companies.
Large numbers of expensive failures in enterprise software implementations may come from a disconnection between what companies build and how customers use products. This may come from a lack of on-site implementation knowledge for what Michael Krigsman calls the “devil’s Triangle” .
- Enterprise software companies are relying most heavily on after-sales maintenance revenue rather than meeting customer needs directly
- Maintenance model from ERP companies is increasingly under attack from 3rd party maintenance organizations and cloud computing providers.
- Failures in ERP implementations are regularly blamed on the victim – the customer .
- ERP vendors determine what new features will be presented in software, usually described at user conferences. These decisions are made with little or no on-site customer experience.
- ERP vendors rarely attend Public Financial Management conferences, and rarely participate to learn about new trends.
FreeBalance operates “in network” by seeking customer interaction. We realized that the “arms’ length” approach used by ERP vendors increases the likelihood of failure. As I described in 2011, software manufacturer involvement is critical to ensuring success for GRP in emerging nations and developing countries.
Other aspects of the FreeBalance approach include:
- Ensuring that FreeBalance is part of every implementation team. And, ensuring that implementation partners are focused on customer success .
- Using the venue of the FreeBalance International Steering Committee to change the product roadmap to meet customer needs.
- Deep commitment to PFM by participating in conferences and NGOs like FreeBalance ICGFM .
- Also, a commitment to share good practices and PFM futures with the broader PFM community.
- Local hiring to scale implementation commitments, build local capacity and improve insight into changing customer needs.