Business Technologies: You are Paying WAY Too Much!

Chad Walter recently asked a very good question that taps into the knowledge core of technology asset management. (It's here: Blogger)

"Does your business drive technology or does technology drive your business."

Great question, and it hides an enormous amount of detail that could easily translate into a unique value transformation of your enterprise technology environment. Here are my comments about how your company winds up spending the bucks on WAY more technology than you need.

The really serious key in this comment is that, with very low-tech, and highly cost-effective, technology asset management processes and procedures, you could reverse the costly trend of reactive buying and put business needs up front where they belong.

After nearly ten years of teaching technology asset management, tech portfolio management, negotiations, project management, and related programs to business professionals from around the globe, I would suggest that - for the average enterprise - technology is not merely driving the business but is also driving their "potential."

Want to reduce your company tech spending and build business value through tech?

Stop buying what you WANT and start buying what you NEED!

Altogether too frequently, an enterprise will contact me with operational problems brought about, not by IT as such, but by a slavish focus on "techno-best" at all costs. As a result, we see too many companies with very costly IT environments that have significantly outpaced user needs or abilities in their capacity.

It's called feature bloat and it means you are NOT in control--the supplier is.

When the users do not use - need - or want - a given level of functionality, then the enterprise has invested money in the wrong technology for its business model. Instead, you are conforming to the business needs of a supplier that convinced someone within your purchase/acquisition process that they MUST HAVE the new product or service.

As a direct result you will find yourself...

• Over-spending by a factor of as much as double,

• Under-utilization by factors of 10X and more,

• Constantly in reactive acquisition mode, rather than strategic acquisition mode,

• Paying enormous sums for unnecessary complexity that pushes the limits of your tech support, hardware, and systems compatibility,

• Modifying hardware as well as software simply because supplier "X" changed their product to "latest toy" stature,

Sometimes these problems are caused by C-suite personnel who "must have" the latest and greatest at all costs. Frequently, I meet with tech personnel who show me piles of new technology that far exceed the user abilities of the personnel. Sometimes these products were purchased for no more valid reason than "..an executive on the airline was using one and we should have it, too."

Or, the problem can be caused by techies who are under the same impression. Don't forget that techies, God love their strangely assembled brains, have invested a great deal of their time and personal efforts in learning a specific range of technologies. When the provider of that particular technology changes to a new product, sometimes the techs have no choice but to upgrade--or they could lose their certifications.

Now... There's a couple great justifications for business technology acquisitions.

The most common source of problems is a combination of many diverse factors and, in every client environment, we spend focused time sorting these out to find the root causes. But, there is another issue we should consider: As long as the enterprise is channeled into internal technology life cycle management decisions based on external pressures by suppliers, there will be - can be - no resolution to unnecessary IT spending.

In other words: Just because the supplier upgrades doesn't mean your business will benefit from the changes.

Pack all this together and couple it with the fact that the majority of companies simply does not have their own long-term & enterprise-loyal technical team. When all of these issues align the chances are pretty solid that you'll wind up with technology driving the enterprise potential for operational excellence instead of business strategies driving the tech environment.

Somehow, tech BECOMES the business because the business is too focused on keeping up with tech.

Here's How You Can Cut Costs on Software or on Hardware Support / Maintenance

Why are auto-renewal licenses and support / maintenance agreements an incredibly costly problem?

A majority of very typical enterprises:

• Have no trained individual responsible for closely monitoring auto-renewal agreements.
  
• Simply have no idea which auto-renewal licenses and agreements they have present in their technology environments.
  
• Do not know when the auto-renewal takes place.
• Do not know the process for canceling the auto-renewal.
• Have no process for determining if they should cancel the agreement.
• Try to purchase and implement costly and overly complex supplier-specific solutions or try to implement just-as-costly generic global standards.
  
• Have no executive support within the enterprise to extend the responsibility and authority to take action to reduce costs in a strategic manner.
• Honestly believe that they can purchase a silver-bullet solution that will resolve all their problems in one fell swoop.
  

Real World - Most auto-renewal agreements are crafted in such a manner that, if you do not cancel precisely in accordance with the terms and conditions, you will still have to pay for another year. (Yes, even if you tried to cancel.)

How do you prevent your company from being hammered by auto-renewal software or hardware support and maintenance agreement sharp practices?

• If this initiative isn't important to executive management, it isn't going to happen. If you are an owner / board member / executive manager, it is absolutely vital for you to get behind this individual asset management process. The savings can be enormous--with little or no negative impact on operations.
• Ensure that one of your people becomes trained in the methods and processes for closely monitoring the terms and conditions of licenses and agreements. No, you do not necessarily need a lawyer for this--an advanced clerical worker or paralegal could manage these on a day to day basis. (We do not teach law or profess to provide legal advice. We do, however, provide basic common sense methods for understanding the day to day requirements of technology agreements.)
• Ensure that your designated asset manager has the infrastructure present to gain access to the operational information required to effectively manage these materials.
• Ensure that all auto-renewal dates are clearly documented as well as the lead time for notification.
• Ensure that a VERY clear documentation process is in place to identify the precise dates and processes required to cancel an auto-renewal.
• Ensure that the asset manager has a credible and measurable process for evaluating the need to continue or cancel a given agreement.
• Ensure that you complete the simple, cost effective, and common sense ground work prior to considering new software, standards, or teams of consultant experts.
• Oh... And there IS no silver bullet solution. You're just gonna have to apply brain power.
  

There's more but you should get the idea. Remember, you have a choice in implementing technology asset management initiatives.

• You can choose to use the expensive-to-purchase and expensive-to-implement supplier-hype solutions involving costly international standards.

OR

• You can use a plain old normal, common sense, and a cost effective phased approach that makes sense for your unique environment. Once this ground work is in place, you can move on to more complex options.
  

I suggest you use option #2.

European Union Considering Software Value Legislation

This is a great follow-up to my last post. It seems that the European Union is considering legislation to require software publishers to be responsible for their code. OMG!! What a unique concept!

Anyone care to guess which international software houses are becoming very upset? It'll be interesting to see the way these folks spin their righteous indignation to this--obviously unfair--proposed legislation.

Let me think. How much do you suppose your company has spent over the years in cleaning up sloppy code on the part of software publishers? What was your ROI on all that effort? How much of the real work of your enterprise was set aside during those reactive emergency fix-fests? At what point in the history of product value did we all decide that software and operating systems do not have to deliver quality workmanship (or work-womanship)?

I'm sure we all agree that our well-funded legislators in D.C. will never produce such a consumer-friendly act--the technology product lobbyists who apparently make national policy would never permit it. So, how do we go about putting a stop to this very expensive sharp practice? It's actually quite easy (But few companies have the courage to follow up.)

Vote with you wallet. Start, today, keeping track of your costs--real or imagined--relating to repairing products containing defective or insecure code. Next time you make a volume purchase--or negotiate a support/maintenance agreement--explain (very gently) to the re-seller how you expect compensation for these hidden costs. Would you actually have the commitment to do this? Would you be courageous enough to drop this provider in favor of a competitor who actually produces a quality product and is willing to work with you on price? Probably not. If that's the case, don't complain when you pay out enormous sums of scarce resources on defective products.

How would you handle a new automobile full of defects? (Can you spell Lemon Law?) How about a poorly built home? A passenger aircraft with defective parts? A poorly designed and maintained highway bridge? Get my point? Are you the customer--or the clueless cash cow? You decide--it's your money after all.