A question of integrity

The software industry needs to regain customers' faith by ensuring their products work

The software industry needs to regain customers' faith by ensuring their products work

The word "integrity" has been getting a good airing recently - especially in the US, but increasingly over here. It is about time too - and not just because of the recent corporate scandals that have rocked the business world.

You only have to look at the long list of high-profile, failed public sector IT projects to realise that the software industry is not immune to damage. According to analyst Gartner, 90% of all enterprise resource planning (ERP) projects in the 1990s failed - as will up to 70% of all customer relationship management (CRM) projects initiated into 2005.

Only last month the chief executive of the British Computer Society, David Clarke, underlined the fact that the failure rate of ERP projects "would not be tolerated in other professional fields such as health, air travel and civil engineering".

But still, software industry executives claim that the economy is to blame for their companies' weak financial performance. In reality, the industry is suffering because of its own lack of integrity.

The essence of selling software over the past nine months was captured recently when I visited one of the world's largest manufacturers to discuss the possible sale of my company's customer service and support software, armed with the usual arsenal of technical documents and Powerpoint presentations.

As it turned out, the main topic of discussion was not the functionality of my organisation's software. Instead, I was asked repeatedly whether my company could deliver the promised benefits within the agreed budget.

I was relieved that I could answer all their questions positively, but the questions they asked had little to do with technology. In other words, their overriding concern was my personal integrity and that of my company. They needed to be as certain as possible that we were going to keep our promises.

We recently interviewed a professional services manager from a leading CRM provider and learned that only 15% of its implementations were successful. With odds of only one-in-seven, its customers would have been better off taking their IT budget to Las Vegas.

Another customer collared me earlier this month to bemoan the five lost months of productivity created by a set of dysfunctional software tools that a supplier had repeatedly pledged would work. The customer had spurned several other companies' offerings in favour of the larger firm. While the one-time economic loss was certainly sad, the loss of reputation that supplier suffered would continue for a long while.

So can software companies really be so evil that they purposefully do not keep their promises?

Of course not. The software business is no more or less ethical than any other industry. However, there are two fundamental reasons why, under their current business models enterprise software firms simply cannot keep the promises they make to customers.

First, enterprise software is now so complex and inflexible that installation and modification have become intrinsically risky endeavours.

Second, the industry has allowed itself to fall into a "hit-and-run" mentality. If a software company can get tens of millions of pounds upfront for a project where success or failure may not manifest for years, where is the immediate incentive to succeed?

Unfortunately, both extreme complexity and large upfront licensing fees are ingrained into existing enterprise software business models. The result is a growing dissatisfaction with enterprise software. In fact, in the past 18 months, the number of seven-figure deals for ERP and supply chain management software has fallen by 62%.

I do not believe this is a result of a weak economy. Corporations are simply barricading themselves against software suppliers.

Is there a solution? I believe so. Mirroring current reforms in corporate governance as a whole, the software industry needs to make a concerted effort to assure its own integrity. The industry needs to put practices in place that make promise-keeping the rule, rather than the exception.

Software companies need to work on regaining trust by making sure software actually works - after all, this should not be too much to ask.

There are other ways too that we can convince customers we mean what we say - such as allowing them to implement our software before commitment. What it all boils down to is a matter of honesty.

If the industry does not help itself soon I foresee even more glaring headlines about IT failures.

Greg Gianforte is chairman and chief executive of RightNow Technologies

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