Success or failure in software applications

Our businesses run on application software. Yet the failure of new software applications continues to plague us.

A survey of 158 organizations by Aberdeen group in February and March of this year, has shown another set of issues. The writer describing this in a BLOG, outlines the symptoms, but his perspective also describes the problem. The results of the survey show:

• Nearly 65 percent of respondents reported declines in employee productivity, up from 58 percent in the 2008 survey.
• Just over 60 percent stated that problems with application performance have caused decreases in customer satisfaction, a jump up from 47 percent in 2008.
• nearly 40 percent said that application problems damaged the company's brand, compared with 32 percent in 2008.

Is this kind of performance acceptable?

Part of the problem starts with the writer's opening sentence "Sometimes I forget that selecting, implementing and paying for core enterprise applications are just the first steps in the long and arduous journey of managing the lifecycle of enterprise applications. "

Implementing new application software is not about software, it is about business outcomes. Talking about software projects in terms of selecting and evaluating software as the first steps is the problem. Too many projects get started with the software and end with the software being installed. The software is only a small part of the need.

After implementation, business units are left trying to make sense of the software, become productive with the software, respond to customer needs and continue to sell their products. Unless this is an integral part of "the project", why would you expect anything but dissatisfaction with the results.

Successful software projects need to follow the following cycle:

1. Identify the business goal in concrete measurable terms. This may mean dollars and cents (the most common measure), but also means other business outcomes. For example, improvement in quality of service, faster response time, improvements in productivity may be more easily measurable and will eventually lead to improved profitability.
2. Identify how the software will help you reach these goals. If you just assume that improved results will come, you will be disappointed. New jobs, new software, revised business processes will initially cause reduced productivity. Unless there is some early return on investment from these new tools, you will cause frustration, reduced performance, etc.
3. Evaluate software based on its ability to best deliver the improvements identified above. Then implement and measure the results based on the imporvements. Leave the financial measures until later.
4. Do not end the project when the software is installed, or even when the technical cleanup is completed. End the project when the business goals have been achieved.

The original blog entry describing the survey can be found here.

CRM - 3 roads to disaster

CRM (Customer Relationship Management) seems to get an increasing number of articles about failure. It offers so much opportunity for a business, yet has a high failure rate.

The attached article by Rick Cook in Inside CRM is another in the list. In it Rick identifies 3 areas where businesses have made mistakes with a CRM project:

• Concentrating on technology rather than people.
• Not having everyone on board.
• Not putting the customer first.

I've mentioned these before, but it keeps happenning. The last is the most interesting. When we use the words "Customer Relationship Management", how can we think of anything but putting the customer first. If we want to improve the relationship, the customer must be first.

The second must be important if we are to accept the third. If our people are not on board, the customer will never be first.

If we accept those two, then we should not be concentrating on technology. It is the least important and only becomes important because the job is left to the technology people. Technology is only a small part of the solution. It may be a big one from a non-technician's point of view, but forget that. The people, the change in process, the relationship is what's important.

In order to achieve success, it is the only thing that is important.

Are you in a Perceived Staisfactory Relationship with your IT suppliers

In a recnt discussion with an IT supplier, he described one of the challenges that he faces when speaking to potential clients. They are in a perceived satisfactory relationship. They are not ready or interested in a new supplier.

Having worked for large companies with many suppliers, I can understand the situation. There are a lot of articles out there about customer relationship management that describe how it is easier and less expensive to keep and grow an existing customer relationship than it is to build one. The same is true of suppliers. I have had many poor supplier relationships that were turned around. It is much easier and I fully support it. Changing suppliers is a major distraction and keeps you away from your priority, building your own business. You focus on your major suppliers, who are very important to your business.

Unfortunately, computer support is not a priority for most businesses. They must use computers, but it is a distraction. We see this not only in small businesses, but also in large ones. Many CIOs (Chief Information Officers) have complained for years that they should be at the executive table. In those situations, since the experts are in the company, we can say that it is their own fault. They haven't shown how important Information Technology can be to the business, so why should be business care?

In a small business, there is typically no one with a good combination of business and technical skills to guide the company in exploiting technology, so perhaps that is understandable. But what is the impact?

Before discussing the impact, let's look at the source of the problem. Most computer support companies and staff that support small business are technically skilled and experienced. They speak technical language to their customers and expect them to do the same. They look down on anyone who can't speak their language and make their customers feel inferior.

Albert Einstein said "if you can't explain it simply, you don't understand it well enough". That is the problem. The suppliers and technicians don't understand the issues well enough and they need to show their superiority by using technical language. As a result, business people suffer from a low expectation of what they can get from an IT supplier and changing suppliers is painful and doesn't produce value.

There are a few suppliers out there that can speak the language of business. Business owners and managers need to start looking for them and expecting to be able to get the kind of service and language that they need.

Some of the expectations that you should have and should get:

• Your computers should provide a stable service. Failures and problems cost you time and money.
• New software should increase productivity, reduce costs or increase quality. There should be a rapid return on investment.
• You IT suppliers should be able to speak to you in your language, expalin the business issues without technobabble.
• Your suppliers should be coming to you with business solutions, not another sales pitch.
• Your suppliers should make it easier to make use of computers, not harder.
• Your suppliers should help you learn to adapt to the new technology, not drop it in your lap and have you learn through a fire hose.

There are probably more things that should be expected. Start not only expecting this, but demanding these from your suppliers. This is the only way things will change.

Don't waste company knowledge

When a business looks at productivity improvements and improved profitability, they often look outside their company for the skills to help them get there. This is particularly the case when new software is installed. They look to the software company as the "experts".

The software company are experts in their own software, but not necessarily in getting value from their software. In order to get value from software, it has to help you to achieve your goals. That starts with your existing business processes.

Your business already does some things right. There may be opportunities for improvement, and many of the opportunities are already known by your staff. They just don't know how to make the improvements.

When you turn over a software project to your supplier, you are giving them the keys to your business. They don't know your business! They know their software.

The challenge is to get the knowledge from your staff of what works and does not work. Help them to develop solutions to improve productivity, increase sales or reduce costs, whatever your current priority may be. Focus on the issue that is most important to you. Once they understand the priority, and have a way of making their knowledge known, they can help to redesign the process to achieve the improvements. Once they understand that they will be able to see where the software can help them.

Most small businesses don't have the kind of skills and experience to bring people together
to achieve this goal. So they have to go outside for help. The mistake that is made here is that they turn the whole process over to outsiders to design the new solution. What is needed is someone who can help bring that knowledge to the surface, educate your staff about process improvement and help them to redesign the process. Notice the emphasis on help, not do it for them.

Doing this will ensure that they are focused on your goals, they will buy into the solution and own it in the end.

Not only will the job be easier, the solution will be better, and the cost will be lower (you are paying for a facilitator or coach, not a designer).

Business Software - Buy first, pay later

Does anybody remember the old Fram oil filter commercial "pay me now, or pay me later"? It describes a situation where, if you don't change your oil and filter in your car on a regular basis, you will pay maore for it later, by having to buy a new engine.

The same thing applies to buying software. It has gotten very easy to buy business software. Just download it. It is easy to use. There is no effort to install. Most business managers will buy first, then investigate later. This can be a waste of money, time and effort. You may get some value from it, but you can get a lot more, if you plan for it. In addition, the cost of implementing new business software goes far beyond the price of the software. There are many other hidden costs. Check out my articles at www.thevirtualcio.ca for more information.

The problem comes with the changes to your business: the process, job definition and training. If you aren't prepared for that, you will lose in the end. Your productivity will go down. Your costs will go up. You may not get any value from the software.

By doing a little planning up front, you will understand the total costs, understand exactly what benefit you will get and how you will get it and minimize the lost productivity.


We have all heard the old The problem with not preparing for what you will do with software that you buy.

New Business software: Are you in the show or a spectator?

I recently read an article that talked about the differences between a spectator, the star and the people creating the scenery, the lighting etc., relating this to other activities.

I think it can also relate to installing software for your business.

In many cases, business owners look at their job as funding the activity, making the decision and getting out of the way. Their perception is that they are not technicians, and all anybody wants to talk about is technology. Since they don't understand what's being discussed, they back away from the project. Many of the business staff also back away leaving it to the technicians (either the supplier or the more technically oriented staff).

As owner or manager, you don't want to become a technician. If you do, you won't do the important jobs.

There is a much bigger role for the owner/manager, much bigger than any technican provide. Would you let the lighting specialist define the return on investment? Would you let the set builder decide on who the actors would be. Would you let them define how much to spend? No. You are the Producer and Director. You decide why you are doing it, how much to spend and what kind of a return that you want. You also do everything in your power to ensure that you get that return.

So what does that mean?

• You define your business goal. You visualize how the goal will be met.
• You ensure that your best people are involved, and they look at how the business activities need to be changed (doesn't an actor provide an interpretation?).
• You keep the goal up front so that everybody understands what success means.

These are the most important activities in your project. They can't be left to an electrician, a stage hand or even an actor. None of those responsibilities are technical. yet they are the keys to success of your software installation.

Little things mean a lot

I had a discussion with a small business owner recently. She was typical of many people who start a small business. The was in it for her skills, and she was really good at what she did. What was lacking was the business skills. She hated accounting, tracking expenses, doing calculations, etc. So she did it when she absolutely had to, no sooner. She did what we all do with something that we don't like, we procrastinate. Then we come to the time when we must do it and it is very painful. We dread it.

Many activities required for a successful business are not things we like to do. They are things that we must to to succeed in business. What we need to do, is ensure that we build a system to manage our business. Don't do a bunch of "one of" things just to get through it. Find someone to help you put together a system that will get the job done with minimal effort. For example, if you have to do quotes, is the data captured so that you can automatically create the invoice? When you order materials for a job, is it tracked as part of the job, or is it a separate activity? Are your invoices and costs automatically allocated to the right accounts? Setting things up this way can greatly simplify your business and make it easier for you to manage those things that you hate to do.

You may not have the knowledge to do this for yourself, so get someone to help you. Set it up once, then use it. That will minimize the complexity, eliminate the need for you to think about it. It will happen automatically, so you don't have to procrastinate. And when the big time comes (tax time), everything will be ready for your accountant.

Setting up once, saves you time, saves you frustration. Even if it costs you money fora bookkeeper or accountant to set it up for you, it will be worth it.

Software training like gaming software

There is a change coming in business software. It's happenning in web based solutions, but has been around for a long time in games. How effective it is for business is another question.

Games are designed with training in mind. When you start playing a game, they give you a simple problem. As you succeed at the first level, you get a bigger challenge. Each level gets more difficult. There are two benefits to this:

• First, you are not exposed to the complexity of the full game. In effect you learn by doing.
• You get a feeling of achievement as you pass each level. This creates an interest in going to the next level

Business software traditionally has not done this. Because the software comes with the software supplier, he provides training. There is an assumption that people will remember this blast of training and that common training is adequate for everybody. It not only assumes that everybody learns at the same pace, but it assumes that every business is the same. Learning through a fire hose does not work! Every business is different, every person has a different learning process, and every person has a different job. The learning process should be like what is delivered by gaming software. Learn a little at a time, learn only what you need, see some success and go on to the next step.

Self learning is available in web based applications as well. Many of the products that are delivered over the web are easier to use. We can see that in individual products such as Amazon and eBay.

Is that good enough for business? Do we just wait until the software suppliers deliver a more innovative way of training business people?

There is one more compliation in business. In games and in many of the services like Amazon, there is one process and it is defined by the software developer. The software developer defnes the goal and the methods of achieving success. They program this into the game. They are in total control. Services such as Amazon may be more adaptive, but the supplier is still in control of the game.

Business is different. The software developer develops an automated process, but the business is in control of the game. The business has their own set of goals, their own business process and will try to adapt the software to support the business process. The software supplier is not in control. He doesn't know how the software will be used, so he can't build a self training approach.

Many businesses buy the software and assume that installing the software will address their problem. After the fact (time and money), they find themselves dissatisfied with the results. They didn't know that they had to provide the goal, the vision of how to reach that goal and the process that the software has to be applied to.

I'm sure that we will solve this problem some day. But for now, we need to focus on the process and a better method of training staff to learn the software.

CRM, Salesforce.com and other software

I just read an excellent article about the misconceptions of justifying software and getting value.
The article talked about justifying salesforce.com to your CEO.
The author talked about 5 misconceptions about Salesforce.com. These misconceptions are valid for many software products, not just salesforce.com
The five miconceptions (generic to any software)

1. Buy the software and the results will come in a few weeks. While the software can be up and running in a few weeks and in use, whether you get value is another question. How is your business process going to change if you are going to get value? How will the software help? This is often the biggest failing of any software implementation.
2. Use of the software can be mandated. CRM products are a major problem here, but others are as well. You can tell people that they must use it, but two things will happen: Your productivity will go down; Your data will not be very good. The biggest benefit of your new software is the data that you capture about your business. If the quality is bad, your value goes down. The net effect can be that you get less value than before you bought. People must buy into the need and get some benefit from it, or you will not succeed.
3. CRM products suffer from this problem more than others. The misconception is that Salesforce is a glorified contact manager. No software product is that simple. All software automates a business process. It does not just sit there and contain data. The process that it automates may not match your existing business processes. You need to understand what it does for you and how you can use it.
4. Low intial setup costs should sell you. Different software products have different setup requirements. Some have an initial outlay for hardware and software. Others do not. In either case, the cost of the software is only a small part of the cost of installing and using the software to get value. If there is no value delivered, the cost is too high. No matter how high the cost, if the value exceeds the cost, you are ahead. See my article on the cost of buying business software.
5. The best way to install software is the big bang approach. While there are some minimum things that must be done to ensure that you have it right, the big bang approach creates the big opportunity for failure. This applies to large companies (and some have had a BIG bang failure), but it is even more important for small ones. You don't have a bunch of people sitting around to work on this. You have a business to run, and change is a challenge. It affect productivity. See my BLOG entry on Chaos.

To see the article on Salesforce.com click this link.

Salesforce.com seminar

I attended the Salesforce.com seminar ysterday. Salesforce bills itself as usable by large and small businesses alike. Because of its business model and lack of large up front costs, this is true.

What I found interesting though is that the seminar that I attended was defined as an introduction for potential users of the product. They did have an introduction to the functionality, however, most of the focus was for large multi-nationals and how they can integrate Salesforce.com into their business. They focused on Cloud computing. The partners were there promoting the add ons that they provided. The signs identified the companies and their products by name, not by value or functionality.

While it is nice to see that they are trying to make their product easy to set up and use by introductory users and small businesses, their marketing of the product in this forum leaves a lot to be desired. Most small business users will not care about cloud computing or components. They are looking to get value from the software. They don't have time to analyze the productss. They just want to make it happen.

Software companies that want to sell products to small businesses need to change their approach, if they want to provide solutions to small business. They need to get out of the technology and into value.

Installing software means creating chaos

Many business owners decide to buy software in order to improve their business. They often assume that this is all that can happen. However, no matter how small the software product is, they are making a major change to their business that has implications on their business operations.

A software program is an automated process. The developers have defined a business process and chosen to automate it in a specific way. This means that when you implement the software, you are making the following changes to your business:

• You are changing the way you run your business. It is unlikely that the way the software developers have chosen to automate the process is exactly the way you currently run your business. Do you understand how things will change?
• You are changing people's roles and responsibilities. Since the business process is changing, the job people do will change. Roles and responsibilities will change. Do you understand how people's jobs will change?
• You are changing the tools (the software) that people will use to do the job. They will be uncomfortable with the new software and won't know how to use it properly. The training that is provided will not help a lot. Most training for business software is like drinking through a fire hose. What impact will this have on productivity? How long will it take to recover?

These three changes will create chaos in your business. Your choice is whether you create CHAOS 101 (the basic version) or CHAOS 701 (the PHD version). Through proper planning, design of the process impact and appropriate training, you can ensure that you minimize the impact.

refer to chaos 101 vs 701

Software is just Automated processes

I couldn't have said it better myself. This is a quote from Jed Symms, a consultant from Australia, who also looks at getting value from software.

He describes software as automated processes and outlines how to evaluate software.

• First describe your business processes.
• Simplify your business processes taking 40-50% 0f the processing steps out. (this is possible because most of the steps are carry overs from past actvities and no longer are required. Sometimes standardizing activities can achieve the same thing).
• Then, and only then, look at the software and how it supports your new business process. Some processes will match exactly. Some software processes will be better than your current process. Some will not be as good, but you can live with them. For some processes, the software will not help at all.

Most businesses that install new software, don't recognize that the software automates a business process. The way they automate it may be in total conflict with their existing processes. The end result is a conflict and a result that doesn't improve business operations. It makes it worse. That's why so many software projects fail.

You buy software to upgrade your business. Make sure that you get value from the experience. Start by looking at your business processes.

Chere here to see Jed's article.

Return on Software Investments

A recent study by the Aberdeen Group indicates that small and medium sized businesses that are investing in ERP (Enterprise Resource Planning) software are not estimating the Return On Investment (ROI). Considering that these "investments" are being made to increase performance of the business, you would think that more businesses would want to see the return. Can you imagine investing in stocks and not knowing what a good return was?

For those that do estimate ROI, less than 25% look at the return after the project is completed.

Calculating ROI for an ERP project may be the challenge. ERP affects so many parts of the business that it is difficult to see the impact after the fact and difficult to project just what will be impacted by the change.

The software change is easy to see, but that is not "the big change". The big changes, are cultural, improved productivity, reduced costs and improved information for decision making.

Most software projects focus on the implementation of the software and on training people to understand what the software does. The original goal is often lost in the activities of implementation. Most businesses acquire software because they feel they have to. While they may have to, to survive, they still need to understand how it will affect their business and because their business is constantly changing, financial measurements can't be the only ones. Questions like: "how will it speed up delivery to my customers?; "how will it improve the quality of service?"; "how will it reduce costs, improve productivity, improve access to information?". If you can visualize the answers to these important questions, you will develop a plan that goes far beyond implementation of the software, and even if you don't estimate ROI, you will get a much better result.

Look here, if you want to see more detail on the study.

Save to Invest in new technology

Most businesses that look to take advantage of new technology, look at this as an expenditure. They know that they need to spend money to buy the hardware and software, and they have to wait until they can find the money.

At a conference, recently, I heard the term save to invest. What I realized was this was the approach that I take with software projects. Often companies buy first, hoping that they can save money later. It doesn't have to be this way.

A company looks to software to improve their business, and they should. But this doesn't have to be guesswork.

Whatever your goal is, you need to spend more time visualizing what a difference this will make to your business. This is where you will define in detail where your savings will be.
As you design your business process, you will identify many areas where your can save money or improve performance. Many of these can be done without buying new technology. You may be able to buy a small amount to gain further benefits.

This is in total conflict with the traditional approach to implementing software, which I would call the BIG BANG approach. Pay all your money up front and hope to get a return. This not only increases risks, but takes longer to produce a return.

every project should have some benefit up front, then produce incremental returns until it is finished. This will cost you less, reduce risks and keep everyone feeling involved in the process and seeing that not only the technical people are making a contribution.

Increase productivity with new software

I have often mentioned the productivity that is lost in a business when new software is installed. This is caused by two things: People are uncomfortable with the software; they have been forced to consciously think about what they are doing. This slows them down.

At a conference yesterday, I was reminded that games don't work that way. When you start a new game, you enter at a simple level. As you gain experience at that level, you begin to get more comfortable. Once you pass the first level (you are now comfortable), the complexity increases. The complexity and knowledge that you need increases at each level.

Unfortunately, business software doesn't work that way. When you first get to look at new business software, you get to see all of its complexity. You have to figure out what you don't need, so that you can ignore it, and focus on what you do need. Most people never get to use more than 10% of the functionality, even when they are very experienced. This makes people uncomfortable and slows them down.

Training doesn't help. You get one to five days of feature blast. Most people remember very little of this firehose training.

Let's assume that the business software industry is eventually going to get it, and provide a learning approach to their software. What does a business do in the meantime?

The solution comes in planning.

1. If you have defined your business processes before you went to to buy the software, you know what you want the software to do for you.
2. Use that to identify the training that you need. Ensure that people understand the way the new process will work. train them on the functions that will make the first phase work.
3. Once they become comfortable and productive, you can go on to phase two. Do the same thing again. Define the new steps in the process. Train people on these new features.

Not only don't companies go through a phased approach, they often never get to phase two. The first implementation is so traumatic, they never get to exploit the real functionality of the software. The next time that the business needs to improve, they assume that their current software doesn't do it and they go through another forklift upgrade.

Small Business pays for Technology supplier's mistakes

I have run across two instances lately of a small business that paid for mistakes made by their technology supplier.

Most suppliers to small business are small businesses themselves. When they make a recommendation of a solution to their customer, they tend to charge in two parts. The first part is for the hardware and software. Since they must purchase this themsleves, they tend to charge for it up front. They charge for their time later. This is something they can control, and it is where they make their profit.

All of this is understandable, and if the solution was guaranteed, it would not be a problem. But since the supplier had to pay for it up front, if the hardware doesn't do the job, new hardware must be bought. The client ends up paying for this. The first purchase is a loss.

This may be understandable except for one thing. In both cases that I mentioned, the supplier had made an assumption. They assumed that because this was a small business, they did not want to pay for a top of the line solution. They bought a cheaper solution, because they assumed the client would not pay for it. The client wasn't given the opportunity to choose. The quality of the hardware may have been ok for most situations, but not all.

Technology suppliers need to change their approach with small business. They need to assume that their clients are intelligent, even though they don't know the details about the technology that they are buying. They need to make clients aware of the options and the risks that exist. If they do that, then their client will have more respect for them and trust the solutions that are recommended. Until that happens, small business will continue to feel that they do not have any control and will not trust the solution providers. That is one of the reasons why many small businesses are reluctant to take advantage of new technology. They knwo that they are likely to get the shaft. They only go there when they have no choice, or have totally satisfied themselves that the solution is right. Both delay the implementation of solutions that could bring productivity advantages to their business.

Software sales tactics

I recently experienced a sales tactic used by software sales people and I thougth I would provide a caution to business owners who attempt to get support for their investigation into acquiring software.

I was preparing to help a business that was interested in CRM software. I had not looked at this package before, so when the supplier (out of the blue) sent me an invitation to an event, I thought I would attend.

The first thing that I got was a phone call from the supplier asking what I was interested in. After I explained, he asked me what I used for myself and whether I would be interested in a free trial. He then put me onto my sales contact who followed up by phone and email within two days.

While this was excellent follow up by the software company (most don't do that well), it was a major problem for me. I hadn't defined my own needs yet. I hadn't helped my customer define their needs either.

So here I was, being sold a free trial without any definition of what I was trying to accomplish!

This is a common experience for most business owners. We start with the software and see if it sort of fits with the generic concept of what I wanted to do. Then we make a decision. Now it's too late.

If you have read my blogs before you know what I believe:

• Define your goal. Visualize the end result.
• Get a detailed definition of your business process.
• Identify how the software supports your business process.

Do all of this before you consider buying. I understand how easy it is to fall into the software sales trap. If you want to be successful, don't let the supplier dictate your schedule!

Conficker Virus and legitimate software

Many companies think they are saving money by getting bogus copies of software. There is no question that software companies charge too much for their software and constant upgrades. For the small businessman and large for a different reason, buying software is a pain.

But all the hype about the conflicker virus provides us with another good reason to have licensed software and up-to-date virus definitions.

According to the people that respond to these issues, anyone who had a valid operating system and up to date anti-virus, was not vulnerable to this virus. There were 2 million systems that did not have valid operating systems and could not get updates. These are the people who were the most vulnerable.

One IT supplier identified a new customer that had bought what they thought was legitimate systems, but the supplier had simply copied their own version of the operating system. The customer didn't know, and as a result were vulnerable. This begs the question. If you got it cheap, is it valid?

All small business owners are concerned about running their business and the costs of running their business. The cost of the software is small compared to what the Conflicker virus could have done. There is so much free software out there, that you can run your business with free software (including LINUX), why would you put your business at risk with copying software?

Focus on running your business. Get qualified suppliers that can take away the problems of having to develop technical skills. There is far more value in that than in trying to get cheap services.