Boring is Beautiful: Software That's Selling in a Down Economy

You’re a software start-up with a Web-based solution that promises to dramatically increase revenue for manufacturers. But the product is proprietary and will take a team of trained integrators to deploy it in a heterogeneous computing environment; return on investment (ROI) could be two years away… Good luck getting the attention of an information technology (IT) manager.

In today’s fragile economy ROI analysis is being factored into every corporate expense, from employee salaries to year-end holiday parties. For most IT managers software expenditures are justifiable only if they produce tangible results now. Rather than acquiring new technologies promising unpredictable results and difficult-to-measure benefits, the business mandate for IT is to figure out how to reap greater value from their existing systems. According to market research outfit Gartner Group, “Instead of larger, do-it-all software projects, an enhancement of existing systems and optimization vs. total replacement is the common criterion [for new software purchases]. Enterprise customers have shifted…to buying software tools that optimize their current business processes.”

In fact, contend analysts, IT buyer behavior has so dramatically affected software revenues in the last few years that many vendors are being measured by the size of the correction and whether they’ve remained in business.

Indicative of the ailing economy is the “do more with less” maxim and the need to integrate existing proprietary systems, which has fueled renewed interest in some older software technologies as well as a push to newer standards-based solutions on the part of IT. For example, many new data warehousing implementations are utilizing job scheduling, a well-proven data center automation tool, to ensure timely and accurate information updates. Trendy Web services are gaining favor as an inexpensive way to share data between different applications—and to pull out more functionality from them.

Companies are either standardizing on common business systems or building bridges between proprietary ones. Similarly, they are requiring software vendors to sell software built upon industry standards versus proprietary solutions.

IT managers in today’s weaker economy are in search of optimization tools and best practices. If an IT department already has a working solution, it is actively looking for ways to get more use out of it. An ERP (enterprise resource planning) installation needs streamlining and companies are hiring experts to “tune up” the application, i.e., get rid of outdated processes and reports that are no longer used, and reduce overall processing time. Likewise, IT can reduce the cost of maintaining its ERP system by using software tools to integrate it with other applications.

Almost all IT projects are under tighter scrutiny and IT managers are being held accountable for their success. A critical success factor is to assign a project leader; someone who owns the software, and can change business processes to adapt to the new software, provide support and get issues resolved. In fact vendors should also be firm about requiring a technical contact who owns the implementation on the customer side.

New Software Development “Survival” Strategies

Software companies must convince customers that their products will contribute to the bottom line with reductions in time, mistakes, IT staff effort, as well as reduction in computer hardware utilization. Likewise instead of budgeting for large-scale research and development projects, software engineering strategies for most vendors are focused less on innovation, and more on providing immediate return to customers and fulfilling the need to reduce time, effort and expense. Instead of building new products, cost-saving features are being folded into existing products as a way to hasten time to market with new functionality.

Today’s software customer is investing far less in “nice to have” software products; they are buying “predictable outcomes and ROIs.”

Gary Leight is Founder & former President of TIDAL Software.