Software…the bane of our existence! No wait, that’s healthcare or Google Buzz? In any case, to quote myself, “There are three primary struggles when it comes to the business value of your applications: usability (learning how to use the product combined with what it can and cannot do for you), cost (upfront and ongoing), and support.” Lets talk about cost and support.

There’s not much point in belaboring upfront cost. This is usually obvious and painful. There are myriad factors to determining which application is best for your business needs, but I can’t speak to that with authority unless you hire me as your contract CIO for a very reasonable fee. However, I would like to suggest that ongoing support costs, the longevity of the product, the support lifecycle and your support relationship with the vendor are oft overlooked and may even be more critical than the upfront expenditure.

You should expect to spend in the range (this is a generalization but generally accurate) of 10-20% of the total cost of the application for support per year. This varies somewhat depending on whether you are paying strictly for support or for support with software assurance. These numbers are negotiable and the best time to negotiate them is when you are considering writing the vendor a very large check for the initial purchase! Although, in this current economy, vendors are more flexible and willing to re-negotiate to retain your business.

Attempt to get a service-level agreement (guaranteed response times, guaranteed uptimes, penalties for failure to meet the SLA). Negotiate support payments for the duration you anticipate using the product (two years, five years, etc). Often vendors will agree to a fixed price for year one with a cap on percentage increase for the remaining year or two or three. Make certain you understand the product roadmap. How long do they anticipate supporting this product? How does the vendor manage planned obsolescence, because even if they won’t admit it, they do!

Once you are confident you have negotiated the best possible deal and are secure in the details for the support and maintenance agreement: buy it. Buy it the first year, the second year, the third year…you get the idea. Relate to is as a business requirement. If you are going to use the application as a business tool, you must keep it in good working condition. You must keep current on the fixes and updates. You must have someone to call who is an expert with the product, can answer your questions, give you instruction and fix it when it breaks. Don’t call me! Don’t call your aforementioned uncle Larry, unless he happens to be an ex-employee for the vendor in question!  Call the experts and get to work.

Lets talk about software as a business enabler, as a tool. Whether you use Excel, PhotoShop, AutoCAD, Quickbooks or SolidWorks, it is likely that you depend heavily on any number of business applications (software). There are three primary struggles when it comes to the business value of your applications: usability (learning how to use the product combined with what it can and cannot do for you), cost (upfront and ongoing), and support.
Lets tackle them in order.

Usability:

Not all applications are created equal. It is likely that no one taught you to use Internet Explorer or even Microsoft Outlook. It is, however, unlikely that you sat down to unlock the mysteries of PhotoShop or SolidWorks all by yourself, as these are complex, extremely powerful, not terribly intuitive tools. In either case (IE or PhotoShop), most users utilize a tiny percentage of the power of their business applications and, even at that, do so inefficiently.

Consider the value of training. Would you put a staff member in front of the assembly line,  ultra-sound or even pizza oven and say, “Good luck figuring out how to run it! We’ll expect you to be productive by the end of the day!”

For some applications, like Microsoft Office, there are a plethora of training resources: books, online, on-site, etc. For others, particularly specialized applications, you’ll likely have to send someone out of town or fly someone in.

Finding the right resource, the resource that works for you and your staff is critical.

Some scattered thoughts in this regard:

• Lecture is the worst possible method for knowledge transfer. It just doesn’t stick.
• Hands-on is a requirement for software training: people learn and retain what they do.
• Consider a train-the-trainer approach, particularly with specialized applications. Find an in-house resource, send them to class and let them train the rest of your staff upon their return.
• IMPORTANT: Your most savvy technical user is likely the WORST candidate for being your trainer! Trust me: it comes easy to them, they expect it to come easy to others and their presentation/people skills are likely minimal.

The ROI for business application training is consistently validated. As much as I dislike the phrase and as oxymoronic as it may sound…training is a no-brainer!

What tools does your business require: a hammer, a cell phone, a utility van? How long do you expect these tools to last: two years, five years, ten years? What drives your purchase decisions for these items: quality, reliability, functionality, performance?

I have a finish hammer that was my grandfather’s, I’ve never had a cell phone for more than two years , and I expect my utility van, in which I haul around my 327 children, to last at least long enough for most of them to move out!

What’s my point? Good question. My point is that for some odd reason most small businesses relate to their skid loader, 10-key or office chair entirely differently than their technology tools. They fail to consider the useful life of their IT equipment, fail to consider quality and value when making purchasing decisions, and fail to evaluate the impact of functionality and performance on the tools usefulness.

I’ve read that Oracle replaces their computers every six months, as their internal studies reveal that the increased performance of new computers leads to increased productivity for staff, which in conjunction with lower maintenance and support costs leads to immediate positive ROI. A bit extreme? Perhaps. I mean, what does Larry Ellison know?

Maybe your staff’s productivity isn’t so directly tied to the use of your technology tools. Maybe you can remain competitive while doing business on that Windows 98 eMachine you got free in 2001 with a three-year AOL contract. Maybe you can justify spending $3,000 over the next year in maintenance costs on the server you could replace for $2,500 (complete with 3-year warranty), increasing the performance of your business critical systems for all seven of your staff. Maybe not.

Practical Steps:

1. Make IT purchasing decisions based on value, reliability and performance, not just upfront cost.
2. Estimate useful life of equipment for the purposes of depreciation and budgeting for replacement, and account for these when determining the costs of goods/services that you sell.
3. Consider purchasing hardware warranty covering the entire useful life of the equipment.

Next, we’ll discuss software!