Enterprise software continue to cost more

Vinnie Mirchandani wrote an article recently about how SAP and its vendors charge customers a bomb for product licenses and implementation.

In summary:

• Product license structure is confusing, and customers pay for products that they have already paid for earlier
• Implementation specialists charge an unacceptable premium for their experience and expertise
• Infrastructure costs are high

The world is exactly the same on the Oracle side of things. But, even with my “deep” understanding of how Siebel and related enterprise software work, I was horrified on how laid back the SAP projects are.

Of course SAP projects tend to become more complex than the typical CRM projects. But customers did not seem to bat an eyelid when they are told of a project for 14 months (and this was SAP CRM). I am speaking about a capability not requiring more than 6 months with Siebel, which in itself is not quite implementation friendly.

The question comes back to one word - “why?”. The answer is surprisingly straight forward.

• IT projects using the traditional enterprise software tend to become complex
• IT anticipates that users/requirements change over the long course of the project, and build-in buffer. IT projects cannot become more agile overnight since the underlying software has limitations with how stuff can be developed and tested

Traditional enterprise software needs to change, they are lagging behind for the times. Surprisingly, some of the vendors are not feeling enough of a pinch to nudge them towards that change.

I have been on the IT side of things for a good while now. But, I can easily imagine the decision of a CIO/IT leadership in the face of the above factors. SaaS brings in simplicity, predictability, agility and keep upfront costs under control. These matter more when you consider the relative simplicity of the product as compared to their traditional counterparts, and the higher costs over the long run.