The old Perry Como* chestnut refers to the Italian word “tomorrow” and is the Italian way of repeating–in a more romantic manner–Keyne’s dictum that in the “long run we’ll all be dead.” Whenever I hear polemicists talk about the long run or invoke the interests of their grandchildren trumping immediate concerns and decisions I always brace myself for the Paleolithic nonsense that is to follow. While giving such opinions a gloss of plausibility, at worst, they are simply fabrications to hide self-interest, a form of tribalism, or ideology, at best, they are based on fallacious reasoning, fear, or the effects of cognitive dissonance.
While not as important as the larger issues affecting society, we see this same type of thinking when people and industries are faced with rapid change in software. I was reminded of this when I sat down to lunch with a colleague who was being forced to drop an established software system being used in project management. “We spent so much time and money to get it to finally work the way we want it, and now we are going to scrap it,” he complained. Being a good friend–and knowing the individual as being thoughtful when expressing opinions–I pressed him a bit. “But was your established system doing what it needed to do to meet your needs?” He thought a moment. “Well, it served our needs up to now, but it was getting very expensive to maintain and took a lot of workarounds. Plus the regulatory requirements in our industry are changing and it can’t make the jump.” When I pointed out that it sounded as the decision to transition then was the right one he ended with: “Yes, but I’m within a couple of years of retirement and I don’t need another one of these.”
Thus, within the space of one conversation were the reasons that we all usually hear as excuses for not transitioning to a new software. In markets that are dominated by a few players with aging and soon to be obsolete software this is a common refrain. Any one of these rationales, put in the mouth of a senior decision-maker, will kill a deal. Other rationales are based in a Sharks vs. Jets mentality, in which the established software user community rallies around the soon to be obsolete application. This is particularly prevalent in enterprise software environments. This is usually combined with uninformed attacks, sometimes initiated by the established market holder directly or through proxies, about the reliability, scale, and functionality of the new entries. The typical defensive maneuver is to declare that at some undetermined date in the future–domani–that an update is on the way that will match or exceed what the present applications possess. Hidden from the non-tech savvy is the reality that the established software is written in old technology and language, oftentimes requiring an entire rewrite that will take years. Though possessing the same brand name the “upgrade” will, in effect, be new, untested software written in haste to defend market.
As a result of many years marketing and selling various software products, certain of which were and are game-changing in their respective markets, I have compiled a list of typical objections to software transitioning and the means of addressing these concerns. One should not take this as an easy “how-to” guide. There is no substitute for understanding your market, understanding the needs of the customer, having the requisite technical knowledge of the regulatory and systematic requirements of the market, and possessing a concern for the livelihood for your customers that is then translated into a trusting and mutually respectful relationship. If software is just a euphemism for making money–and there are some very successful companies that take this approach–this is not the blog post for you: you might as well be selling burgers and tacos.
1. Sunk vs. Opportunity Costs. This is an old one and I find it interesting that this thinking persists. The classic comparison in understanding the fallacy of sunk cost was first brought up in a class when I was attending Pepperdine University many years ago. A friend of the professor couldn’t decide if he should abandon the expensive TV antenna he had purchased just a year before in favor of the new-fangled cable television hookup that was just introduced into his neighborhood. The professor explained to his friend that the money he spent on the antenna was irrelevant to his decision. That money was gone–it was “sunk” into the old technology. The relevant question was: what was the cost of not taking the best alternative now, that is, what is the cost of not putting a resource to its best use. When we persist in using old technologies to address new challenges there comes a point where the costs associated with that old technology no longer are the most effective use of resources in that regard. That is the point at which the change must occur. In practical matters, if the overhead associated with the old technology is too high given the payoff, there are gaps and workarounds in using the old technology that sub-optimize and waste resources, then it is time to make a change. The economics dictates it, and this can be both articulated and demonstrated using a business case.
2. Need vs. Want. Being a techie, I often fall into the same trap of most techies in which some esoteric operation or functionality is achieved and I marvel at it. Then when I show it to a non-techie I am puzzled when the intended market responds with a big yawn. Within this same category are people on the customer side of the equation who are looking at the latest technologies, but do not have an immediate necessity that propels the need for a transition. This is often looked at as just “checking in” and, on the sales side, the equivalent of kicking the tires. These opposing examples outline one of the core elements that will support a transition: in most cases businesses will buy when they have a need, as opposed to a want. Understanding the customers needs–and what propels a change based on necessity–whether it be due to a shift in the regulatory or technological environment that changes the baseline condition, is the key to understanding how to support a transition. This assumes, of course, that the solution one is offering meets the baseline condition to support the shift. Value and pricing also enter into this equation. I remember dealing with a software company a few years ago where I noted that their pricing was much too high for the intended market. “But we offer so much more than our competition” came the refrain. The problem, however, was that the market did not view the additional functionality as essential. Any price multiplied by zero equals zero, regardless of how we view the value of an offering.
3. Acts of Omission and Acts of Commission. The need for technological transition is, once again, dictated by a need of the organization due to either internal or external factors. In my career as a U.S. Navy officer we are trained to make decisions and take vigorous action whenever presented with a challenge. The dictum in this case is that an act of commission, that is, having taken diligent and timely action due to a perceived threat, is defensible, even if someone second guesses those decisions and is critical of them down the line, but an act of omission, ignoring a threat or allowing events to unfold on their own, is always unforgiveable. Despite the plethora of books, courses, and formal education regarding leadership, there is still a large segment of business and government that prefer to avoid risk by avoiding making decisions. Businesses operating at optimum effectiveness perform under a sense of urgency. Software providers, however, must remember that their sense of urgency in making a sale does not mean that the prospective customer’s sense of urgency is in alignment. A variation of the need vs. want factor, in this case understanding the business and then effectively communicating to the customer those events that are likely to occur due to non-action, is the key component in overcoming this roadblock. Once again, this is assuming that the proposed solution actually addresses the risk associated with an act of omission.
4. Not Invented Here. I have dealt with this challenge in a previous blog post. Establishing a learning organization is essential under the new paradigm of project management, in which there is more emphasis on a broader sense of integration across what were previously identified as the divisions of labor in the community. Hand-in-hand with this challenge is the perception, often based on lack of information, that the requirements needed by the organization are so unique to it that only a ground-up, customized solution will do, usually militating against commercial-off-the-shelf (COTS) technologies. This often takes the form of internal IT shops building business cases to internally develop the system directly to code, or in supporting environments in which users have filled the gaps in their systems with Excel spreadsheets that various users had constructed. In one case the objection to the proposed COTS solution was based on the rationale that the users they “really liked” their pivot tables. (Repeat after me: Excel is not a project management system, Excel is not a project management system, Excel is not a project management system). As we drive toward integration of more data involving millions of records, such rationales are easily engaged. This assumes, however, that the software provider possesses a solution that is both powerful and flexible, that is, one that can both handle Big Data and integrate data, not just through data conversion, normalization, and rationalization, but also through the precise use of APIs. In this last case, we are not talking about glorified query engines against SQL tables but systems that have built-in smarts inherited from the expertise of the developers to properly identify and associate data so that it transformed into information that establishes an effective project management and control environment.
5. I Heard it Through the Grapevine. Nothing is harder to overcome than a whisper campaign generated by competitors or their proxies. I know of companies in which enterprise systems involving billions of dollars of project value being successfully implemented only to have the success questioned in a meeting by the spread of disinformation, or the success acknowledged in a backhand manner. The response to this kind of challenge is to put the decision makers in direct touch with your customers. In addition, live demos using releasable data or notional data that is equivalent to the customer’s work in demonstrating functionality is essential. Finally, the basics of software economics dictate that for an organization to understand whether a solution is appropriate for their needs, that there needs to be some effort in terms of time and resources expended in evaluating the product. For those offering solutions, the key in effectively communicating the value of your product and not falling into a trap of your competitors’ making, is to ensure that the pilot does not fall into a trained monkey test in which potentially unqualified individuals attempt to operate the software on their own with little or no supervision, training, and lacking effective communication to support the pilot in the same way that an implementation would normally be handled. Propose a pilot that is structured, has a time limit, a limit to scope, and in which direct labor and travel, if necessary, is reimbursed. If everyone is professional and serious this will be a reasonable approach that will ensure a transparent process for both parties.
6. The Familiar and the Unknown. Given the high failure rate associated with IT projects, one can understand the hesitancy of decision makers to take that step. A bad decision in selecting a system can, and have, brought organizations to their knees. Furthermore, studies in human behavior demonstrate that people tend to favor those things that are familiar, even in cases where a possible alternative is better, but unknown. This is known as the mere-exposure effect. Daniel Kahneman in the groundbreaking book Thinking Fast and Slow, outlines other cognitive fallacies built into our wiring. New media and technology only magnify these effects. The challenge, then, is for the new technological solution provider to address the issue of familiarity directly. Toward this end, software providers must establish trust and rapport with their market, prove their expertise not just in technical matters of software and computing, but also regarding the business processes and needs of the market, and establish their competency in issues affecting the market. A proven track record of honesty, open communication, and fair dealing are also essential to overcoming this last challenge.
*I can’t mention this song without also noting that the Chairman of the Board, Frank Sinatra, recorded a great version of it, as did Mario Lanza, and that Connie Francis also made it a hit in the 1960s. It was also the song that Katyna Ranieri made famous in the Shirley MacLaine movie The Yellow Rolls Royce.