As usual, MR’s Software 2005 conference was star studded and a great place to network with a number of software executives. I presented with Brian Sommer on a topic called “Vendors are from Mars, Buyers are from Venus”. After listening to many of the sessions during the conference I am convinced I had decided on the correct theme. The disconnect between corporate buyers and software vendors may be even wider than I thought when I built my presentation slides. Here are 4 themes from the conference which when looked at from a buyer’s lens, shows the software industry may be listening to a different tune:
a) During the CIO panel at the conference, Dave Watson of Kaiser Permanante and Ed Meehan of Lockheed Martin both talked of the high-quality software (and other areas) their healthcare and aerospace industries demanded. John Leggate talked about BP’s Six Sigma quality initiatives. Other than in the interview with TCS, the Indian offshore firm and in the exhibition hall where offshore vendors like Aztec and Symphony had brochures and talked about their CMM initiatives, there was hardly any discussions about software quality. It is boring, but the industry has a bad ("abysmal" according to Dave) track record and needs to take quality a lot more seriously.
b) Charles Phillips, President of Oracle, in his keynote described a publishing customer as a result of Oracle’s acquisitions had in the last six months gone from just being an Oracle database customer to also a PeopleSoft HR, JD Edwards Financials and a Retek Retail customer. This customer told him Oracle was now a “strategic” vendor. What Charles did not discuss is that along with that moniker comes expectations of volume discounts, single account interfaces and more. Most of the CIOs bemoaned on their panel that so much of their budgets were already spoken for in existing maintenance and support commitments, and each is looking for ideas to cut that back to free up dollars for newer software. But in various sessions at the conference I saw more discussion on how to market better or how to preserve maintenance revenue margins. No real discussion around how to adjust to pricing pressure which exists and will likely accelerate in the market. Or those around how use of offshoring and open source components allows for lowered software development costs and therefore allows for lower pricing.
c) There were several sessions around Open Source, including an excellent panel hosted by my attorney friend, Hank (“Memphis”) Jones. However, during the CIO panel only John Leggate of BP talked positively about his Linux experiences, and he acknowledged they had not done much in the rest of the “stack”. Neil Cameron, CIO of Unilever talked about his small deployment of Open Source at his Iran operations (largely because US export laws would not allow proprietary US software to be deployed there). The other 2 CIOs acknowledged they had not done much around open source products (they did not touch on open source components in licensed software). Representing over $ 5 b in IT spend, this panel’s data point is not encouraging about corporate adoption of open source products. A lot more education/missionary selling is needed. And the industry needs some robust open source enterprise applications, not just tools and web browsers,
d) Scott Cook, in his fascinating presentation, talked about how Intuit listens to its customers and has introduced a string of very successful products. John Leggate of BP while acknowledging that much of his software budget was eaten up by maintenance costs, said he had $ 20 to $ 30 m a year for new software investments. His coaching to the audience “Come talk to me before you build it. Please don’t just build something, then try to sell me on it”. Neil Cameron of Unilever said “Our (CPG) industry has been dis-intermediated for so long…come help me get closer to customers” In different ways the other two CIOs articulated their own needs. Sounds like buyers with needs. But as Ed Meehan of Lockheed Martin said “ show me projects lasting less than 4 months, and costing less than a million dollars, and I am happy to fund them”. In spite all the talk of market consolidation at the conference, it is clear high payback, low risk, relevant enterprise software will always be in demand.