Changing How We Buy Enterprise Software !

I recently looked up the definition of Enterprise Software in Wikipedia and saw the following description: “Enterprise software, also known as enterprise application software (EAS), is software used in organizations, such as a business or government, as opposed to software chosen by individuals.”

The first part of the definition seemed good enough. It was the second part that struck me.  Enterprise software is something other than “software chosen by individuals”.

So here is the problem.  Enterprise software is usually purchased by the IT department and the Office of the CIO but is used by the average business or general user.  Now there are good reasons why the IT department needs to be involved, compatibility, integration, security, scalability etc. etc. etc.  However the voice of the end user seems to play a much smaller role than the case should be – it is not always “software chosen by individuals”.

So this is what creates the principal – agency problem in the purchase of enterprise software. The “Principal” (the IT Department) is supposed to fully represent the interests of the “Agent” (the end user or individual) and purchase software that always fully meets the needs of the end user – this often does not happen as evidenced by frequent complaints from end users.

So how can we solve this problem – how can those who are the primary users of business software gain more power to control what software is purchased by the IT department on their behalf.  Here are some logical suggestions.

1- The budget for enterprise software purchases should be controlled by the business units. This may seem like a radical suggestion (though it is tried sometimes) and has potential issues.  However, I am a strong believer in the theory that those who are most impacted by a decision should own the resources that dictate that decision.

2- A software decision team of 5 should make the decision – 3 users, 1 IT & 1 Finance Representative. The number can be different but my point is that the decision should be weighted towards the voice of the end user.  Now before some of you quickly point out that the end users don’t have all the knowledge or skills to make a decision – you can simply manage this by IT selecting from a list of solutions pre-approved by the end user representatives

3- Conduct a minimum 3 month pilot with at least 5% of the users. Yes I know this can be expensive, but vendors may want to consider having demo systems that can actually be used by potential users.  Nothing like actually using the software to determine if it will do the job. If it is possible to have two parallel demo systems in place by competitors that is even better.

4- Have minimum user experience ratings as part of the acceptance and payment criteria. One of the challenges of non-SAAS software is that once you have purchased it you are stuck with it whether you like it or not. Having a payment schedule over a year that partially rests upon user “happiness ratings” may be a good idea.  For SAAS software you could argue this is built in as you can stop paying after a couple of months if you don’t like the software.

Now before my vendor friends get upset that any or all of these suggestions will make the sales process longer and more complex I would say the following – the enterprise software industry has to finally realize that the “customer” is not a faceless corporate entity or even the IT department – it is the end/business user that will use the software on a day to day basis.

If you make the end user happy – you will sell more software – it is as simple as that.

So the “Right Question” is what can we do to ensure that the needs of end users are not only met but their wildest expectations are exceeded.  This is what drives consumer software and this is what should drive enterprise software because we are selling to the same people !

As always I appreciate your comments and input on this post.

Thanks,

Zia.

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4 Responses

  1. Great post, and I can not agree more, Zia!!

    And the answer might be simple: Start asking that question at all! 😉

    And while I feel uneasy to “lecture” global enterprise software vendors here on answering your right question, in respect to the training aspect of enterprise software, planet enterprise (for full disclosure, I am a Co-founder, and we will start addressing the end users in full scale only in 2011), is exactly about that:
    ensuring to exceed the expectations of end users – by treating them, and their experiences using our product, with as much respect as possible. Ok, and applying experiences from the games industry who applied an end user perspective for decades;)

    Again, great question!

    Bernd

  2. Bernd, thanks for your comment.

    I am aware of your work around using gaming as a way to help on enterprise software training and education – I think this is certainly on of the way to move the needle on this.

    For me the lessons of game mechanics (eg. incentives etc.) are very valuable in an enterprise context and should be looked at more deeply.

    thanks

    Zia.

  3. Consumer oriented EAS 🙂 Liked the ideas here to make it happen though I can visualise challenges in execution of some.
    Using gaming for training ES is novel 🙂

  4. Hi Zia:

    Great post. Here is yet another alternative: Buy a Saas offering: there are few reasons for IT to be involved in the process and Business users will be driving the decision! 😉

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