Thursday, February 5, 2009

Enterprise Software in a Down Economy

So the big question everyone is asking themselves right now is "Where is this economy going, and what does that mean for my business?" I've worked in the Enterprise software industry for about 10 years now and the answer to the above question really depends heavily upon how my customers respond. That certainly doesn't make our industry unique in and of itself, as all businesses are in service to their customers, but it does lead down the path of trying to determine which customers are buying software and moreover which customers should buy software in this down economy. Really when you look at it that way the answer to the former is much more affected by the economy than the latter. My argument being that if an organization would have benefited from software in a good economy, in many cases that need is only amplified by the sagging economic climate we currently face.

This argument is supported by the same reasons organizations buy and implement software in a good economy. Typically companies acquire software to support fundamental business drivers; Cost reduction, cost avoidance, and increased revenue. Software supports this by providing Greater Visibility into how the business is executing, Greater Efficiency by automating and improving complex business processes, and Tighter Controls in consistently managing internal and external business interactions. Clearly leveraging technology to control costs, improve operational efficiency, and gain a better understanding of how to do so through greater visibility is just as much so, if not more of an imperative during difficult economic times than good. Nevertheless, there are far fewer companies seeking to buy software in a down economy.

Obviously in uncertain economic times organizations are going to be increasingly circumspect about taking on the costs and risks associated with a large software implementation. The decisions to postpone or eliminate capital expenditures for these types of projects is not driven by a perception that a need no longer exists, but more so in avoidance of the perceived costs and risks associated. It is here that time must be spent figuring out how to reduce the risks and associated costs of software while at the same time identifying and delivering the key benefits that will allow organizations to better navigate the challenging economic climate.

Many Companies are currently in the process of finding areas within their organizations where they can cut costs and drive greater efficiencies. Whether this is through renegotiating vendor contracts, eliminating high cost services or reducing headcount, these organizations are typically looking to internal mechanisms to drive these efficiencies. Software professionals and consultants in turn should be aligning themselves with these activities by focusing in on less comprehensive solutions that address discreet areas of the business, and emphasize shorter implementation cycles. Effectively the goal is to identify a way to allow these companies to leverage technology to drive efficiency while minimizing risk and cost.

Organizations themselves can reduce their own associated risks and costs by limiting scope and adopting best practices. By resolving high value opportunities into discreet areas of the business and limiting initiatives through well defined parameters, organizations can more accurately define a project and thereby limit scope. Furthermore an emphasis should be placed on implementing best practices wherever possible and moving away from more complex and customized approaches. This will minimize costly customizations of packaged software solutions, and greatly reduce the overall risk of implementation.

In essence the goal of this blog is to find ways to close the gap between the customers who are buying software and the customers who should buy software. I would like to use it as an open forum to identify and explore solutions that align themselves to enabling businesses to overcome today's economic challenges, while limiting exposure to cost and risk. Furthermore I am shamelessly soliciting feedback from you the reader to provide ideas and commentary to lead me in the right direction.