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The Real Cost Burden for Enterprise Software


April 17, 2015

Many of us in information technology believe that innovation is all about product. Building bleeding edge technology.  Sometimes bleeding edge doesn’t solve your problem. For example,  Vinnie Mirchandani recently described how the use of engineered systems with a proprietary database does not solve the fundamental customer problem of high Total Cost of Ownership (TCO) in enterprise software.

The number one cost variable? Professional services (internal and external) to customize software to meet unique requirements. And, to change the software to meet new requirements. And, to manage upgrades when there is custom code. And, to build up product development and quality assurance capacity.

I’ve written a lot about the TCO problem and how FreeBalance keeps these costs down.  Yet, major enterprise software vendors are touting the notion of reducing TCO – generally by buying more proprietary software, or by changing your business rules to meet the so-called “best practices” that are come out the box. This is a complete myth. Governments operate processes based on legislation.

Code customization is the factor that generates high TCO.

Four Approaches to Meeting Government Requirements

There are different Commercial-Off-The-Shelf (COTS) approaches with different TCO implications. For example, reuse of a custom-developed application from one government to the next does not take advantage of true COTS: multiple customers running the software and full quality assurance.

  1.  Custom developed – significant code customization burden
  2. Project reuse – significant code customization burden
  3. COTS ERP – although there is significant existing code, the code customization burden can be significant depending on the amount of true government functionality
  4. COTS GRP – customization is virtually eliminated

What Do We Mean by Customization?

Some vendors can be disingenuous in the definition of “configuration.” This can mean scripting and macros that requires programming but may not be programming within the Integrated Development Environment (IDE) used by the vendor. We’re purists at FreeBalance:

COTS Are Not Always the Same

There are many problems with legacy COTS and ERP systems, some described below. Some of this is reflected in technology choices. The most important FreeBalance advantage is in process.

COTS vendors are rarely involved in government implementations. Therefore, it is up to the customer and system integrator to customize the system. Customers can request new features that may or may not show up in the future. It’s a feature lottery.

FreeBalance is involved in every implementation. We partner with many system integrators. We commit to new features as part of the contract. So, any missing feature is developed by FreeBalance and placed into the next release. This means that this “customization” is no longer orphaned. It is fully supported.

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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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