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SandHill.com | Sales & Marketing | Software that Makes CIOs Happy: "Software that Makes CIOs Happy
Software that Makes CIOs Happy
Top IT executives from Unilever, BP, Lockheed Martin and Kaiser Permanente provide insights on what software vendors can do to improve their product offerings.
Maryann Jones Thompson, Sand Hill Group
Jul 05, 05
Most I.T. buyers would say that software vendor behavior has improved over the past 5 years. Since the recession when businesses dramatically slashed I.T. budgets, software companies have had no choice but to improve customer relations and product quality in order to remain competitive.

But CIOs speaking at Software 2005 say there is still much room for improvement in software buyer-vendor relations. The panel consisted of the key I.T. executives from major corporations:

* Neil Cameron, CIO, Unilever
* John Leggate, Group VP for Digital Business, BP
* Ed Meehan, COO Information Services, Lockheed Martin
* David Watson, CTO, Kaiser Permanente

Moderator Ernest von Simson, senior partner at Ostriker von Simson, prompted the panelists to speak on "hot button" issues such as consolidation and pricing. The discussion identified a list of "to-dos" for vendors which would make CIOs worldwide "happier" with software products.

Improve Quality
The panel was unanimously unimpressed with product quality. "The quality of software I receive from you is abysmal," says Kaiser's Watson. "I'm in a business where if I put in a bad piece of software, I can actually kill people. We take patient safety and software quality extremely seriously. I need partners that take it just as seriously as we do."

Hospitals are not the only clients with life or death accountability. "At Lockheed Martin, we have more lines of code than Microsoft in the products we deliver," says Meehan, complaining that the enterprise software vendors he purchases from do not have the same standards of quality. "The difference is that our products have to work because we have lives at stake, missions at stake."

Add Value, Not Complexity
"Most software adds complexity," says BP's Leggate, speaking for many critics of the enterprise software business. "We're looking for software that adds unique value to our corporation."

"The complexity forces companies to invest in maintenance and integration work which seems to have no return for the business. This places the CIO in a bad position," says Unilever's Cameron. "All other parts of the business can negotiate away expenses with no ROI... It makes me not want to buy software."

Build Dialogue
Software vendors have long been criticized for a lack of strategic, consultative selling. The CIO comments seem to indicate that vendors are trying to be true business partners - but not quite there yet. "Please don't tell me you're going to solve all my problems. Vendors are continually using that pitch," says Cameron. "Ask me what my problems are."

Adds Leggate, "If you're going to set out to build good stuff, come and talk to me first," We want to work with companies at a level of strategy, not at a level of selling boxes and disks."

Be Flexible
All panelists expressed an interest in new vendor business and pricing models. "The ASP model was static," says Watson. Buying software as a service allows enterprises to purchase more than just an application; it can also come with an additional piece of intellectual property. "Software as a service is more flexible."

As vendors increasingly focus on service or subscription models, it is important to remember that all customers may not want the same model - or the same model every time. Adaptability is key. "We like to go to our vendors and say, 'Can you do it this way?'" says Meehan. "Most of the time, it works out."

Embrace Reality
Even at companies with large IT budgets, funds available for new initiatives are still scarce. Meehan explains Lockheed Martin has grown 13 percent over the past 10 years but the IT budget has only grown 1 to 1.5 percent.

BP has a similar situation. "The headroom for new software is only $10, $20, $30 million a year," says Leggate of BP's budget. "We care deeply about innovation. But we need things that fit our business and take our company forward but not cause integration problems."

Smooth Merger Impact
Too often, customers are bearing the brunt of industry consolidation. "I don't know how many times I've been negotiating for a product, purchase one and then end up with the other because of an acquisition. You think you know what you're buying but then you have to factor in what's going to change as a result of the acquisition," says Meehan. "We look for value, ease of use, ease of dealing with company and flexibility in our deals. The consolidation going on in the industry adds another layer of complexity."

Enhance Security
IT security remains a tremendous challenge for enterprises. Software vendors need to do more to help fight the battle. "Today I am spending tremendous amounts of money to protect the business environment," says Meehan. Lockheed Martin tracked 56,000 viruses two years ago. Last year that figure hit 10 million. The ramifications of the situation are huge. "How can we get 130,000 people patched against a vulnerability before the hacker community figures out how to exploit it?"

Share Responsibility
"I'm looking for [vendors] to have some skin in the game," says Watson. "When it works, I'm happy to pay you because I like 'win-wins.'" But too often when it doesn't work, vendors wrap themselves in warranty provisions and eliminate their downside. "I don't believe that is a fair exchange in value."

Speed Industry Evolution
Buyers appreciate that the software industry is maturing and evolving. But the dynamics and timing of the evolution are frustrating. "We're all looking to see the future and bring the future forward," says Cameron. "When we see the future, our biggest frustration is 'How do we get there faster?' What we've got is SOA and I won't live to see it - and I'm young... So we have to get after these things faster so that we can bring them to the business and see the benefit."

"If you can [provide a solution] in 4 months for less than a million dollars, I'm ecstatic," says Meehan. "I think the technology is moving in that direction. We don't have time for the two-to-three year, multimillion dollar engagement anymore. We're expecting quick solutions to real business problems."

Maryann Jones Thompson is editor of SandHill.com. To view the entire Software 2005 CIO panel, visit the post-conference video page click here.