Learning From Others

Next week, Global 360 is hosting a few hundred customers at our annual Global 360 Customer Conference in Las Vegas, NV. I've always looked forward to events like this for my customers because it is a great learning opportunity. While there will be exciting announcements about the company, new solutions, and the industry, the greatest value is in the interactions between fellow customers. There are only a few times when it is so convenient to talk with people from a variety of organizations, trying to meet similar goals. Like old friends getting together for the first time in years, there is so much to talk about. It is gratifying seeing a Manager from a Claims Management group at a large insurance provider, exchanging ideas with a Director of Accounts Payable at a medical supplies distributor. Selfishly, it is an excellent learning opportunity for me as well. It is also the perfect time to get questions answered from the leaders within the organization and to help influence the direction of products and services.

I will be posting from the conference all next week... stay tuned.

Where's The Disconnect?

Why is disaster recovery still challenging to organizations? Perhaps a 2003 Harris Poll sheds some light. This poll, along with a more recent IDC study, revealed the false confidence of many executives compared to their more realistic IT Managers. When asked how long it would take to recover applications and data after a loss, CEO’s and other senior execs indicated 10 hours. IT Executives indicated 30-40 hours… over 3x longer! Clearly there is a disconnect. Unfortunately, by the time most business executives find this out, it is too late.

As a result of good planning however, my customer’s catastrophic event was relegated to a surmountable challenge. Heeding the advice of our 34th President, they were able to use this event as a learning experience to help further refine their plans. They were also thankful that, while the failure was with a separate system, the Global 360 support team rushed to assist with the recovery process to help bring them back online.

A President's Advice - Good For IT?

One of my favorite quotes is attributed to former President Dwight D. Eisenhower, when he said “Plans are nothing, planning is everything.” Recently, a large customer of mine had a major database failure, bringing operations to a crawl. More importantly, this database housed critical customer information and due to the size of the organization, full backups were completed only periodically with differentials more frequent.

Many years ago, while working with an internal corporate IT department, I recall regularly performing tape back-ups of filestores and databases. While it was a relatively straightforward process, restoration was a different story. On one slow day, I decided to go back into the archives to see what would happen if we needed files from old backups. I was surprised to find that 30% of the tapes could not be read, or were missing a bulk of the data. While the technology has improved significantly since then, and best practices have been refined, I suspect that the real-world implementation of the two lag far behind. In other words, organizations know what to do, they just don’t do it. Unfortunately this can be costly…

• In a 1996 study conducted by the Contingency Planning Research organization, they found that the hourly cost of downtime associated with lost data can range from $18,000 for a small business, to $6.5m for a Retail Brokerage.



• According to an article published in the Disaster Recovery Journal, Fall 2001, “Only 6 percent of companies suffering from a catastrophic data loss survive… 43 percent never reopen, and the remaining 51% reopen only to close within two years.”



• In a USC study conducted by Ian Mitroff, professor of Business Policy, interviews and surveys about crisis planning conducted with Fortune 500 companies found the following: During a three-year period, proactive companies [those who did not need a crisis to occur before preparations and planning] averaged fewer crises than reactive organizations, 22 compared to 33. The average return on assets for proactive firms was higher than that of reactive ones, 6 percent versus 2 percent.

Succesful Implementations Should Not Be Elusive

Have you ever wondered why some IT projects turn out successful and others with less than desirable results? I have participated in countless RFIs, RFPs, presentations, demonstrations, proof-of-concepts, “bake-offs,” and negotiations. I have been involved in year-long investigations and sales-cycles. And through all of this due diligence, I have seen these same implementations fail to meet expectations. For those that believe they already know what is required to make a project a success, consider this a refresher. For those who haven’t given it much thought, I hope you find this helpful.

For a detailed review about project success, consider this detailed analysis from the University of Missouri – St. Louis. Here are a couple of interesting statistics from the study:

• On average, about 70% of all IT-related projects fail to meet their objectives
  
• Only 16% of IT Projects are Successful (on budget, on time, met requirements), 53% are Challenged (over cost, over time, or lacking intended features), while 31% are Impaired/Failed (abandoned or cancelled at some point)

Here is a list of the top 10 attributes for a successful project outcome (Jiang, Klein, and Balloun, “Ranking of System Implementation Success Factors”, Project Management Journal, December 1996):

1. Clearly defined goals. (including the general project philosophy or general mission of the project, as well as commitment to those goals on the part of the team members).

2. Competent project manager. The importance of initial selection of skilled (interpersonally, technically, and administratively) project leader.

3. Top Management Support. Top or divisional management support for the project that has been conveyed to all concerned parties.

4. Competent project team members. The importance of selecting and, if necessary, triaging project team members.

5. Sufficient resource allocation. These are Resources in the form of money, personnel, logistics, etc.

6. Adequate communication channels. Sufficient information is available on the project objectives, status, changes, organizational coordination, clients’ needs, etc.

7. Control Mechanisms. (Including planning, schedules, etc.). Programs are in place to deal with initial plans and schedules.

8. Feedback capabilities. All parties concerned with the project area able to review project status, make suggestions, and corrections through formal feedback channels or review meetings.

9. Responsiveness to client. All potential users of the project are consulted with and kept up to date on project status. Further, clients receive assistance after the project has been successfully implemented.

10. Client consultation. The project team members share solicited input from all potential clients of the project. The project team members understand the needs of those who will use the systems.

For additional factors, read through the report.

The Challenges Are The Benefits For SaaS

The ability to sustain and grow a Software-as-a-Service (SaaS)-based company may not be much different than the ability of a Chef to sustain a restaurant. Consistency, reliability, and innovation are the keys. Those that can execute in these three areas will thrive. As a significant benefit, these components may also drive the success of SaaS on the whole over client/server-based enterprise software. Why?

As with any company, customer loyalty drives success. While managing and selling for a SaaS-based company, we would often think of our customers as if they were on a perpetual trial, constantly having to prove why we're worth it. When a typical enterprise software company sells perpetually-licensed software, once the deal is closed, the customer owns that software for all time. If you no longer need the software, or just don't like it, well... you're stuck. This means that due-diligence is critical before making a purchase both from your internal needs/requirements assessment standpoint, as well as in reviewing vendors. While the same applies for SaaS systems, it is to a much lesser extent.

If you don't like, or no longer need your Salesforce.com, Dovarri, Zarca, LoyaltyLab, Apptix, (or any other SaaS provider) system, well just cancel your contract. Try getting your money back from your Oracle, IBM, Siebel, etc. implementations. You may be able to cancel maintenance and support, but that's about it (and inadvisable). This places a tremendous amount of pressure on SaaS providers to constantly earn your loyalty - consistency and innovation are paramount. Furthermore, the impact of reliability is tremendous and remains a formidable challenge for SaaS providers. Salesforce.com's outages are just one example. And they are a public company with $100m in the bank! Most SaaS providers are start-ups with a only a bit of funding.

In the long-term, those SaaS companies that overcome these challenges will pose a formidable threat to traditional vendors. While my old biology professors would dislike the reference, it is a prime example of "survival of the fittest" in action.

If It's Good For Them, Why Not Me?

Ironically, many of the benefits of a Software-as-a-Service (SaaS) system, are negatives for a large enterprise. Large systems have lots of moving pieces, many of which are from different vendors and touch different users of varying skill level. Therefore flexibility and control are critical for these organizations, but are not strengths of SaaS solutions. Roll-outs of upgrades are major events, which can wreak havoc in a large organization if not well thought out. Customers of SaaS providers like Salesforce.com are typically at the mercy of the vendor. Even the common subscription model itself can be disconcerting. CIO's tend to like assurance and hate uncertainty, leaving a lot of "what if's."

What if:
-the vendor goes out of business like all those ASP's in the '90s?
-the vendor loses my data?
-the vendor's systems are down?
-I want/need to change the UI
-there is a security hole?
-I need access to my data and I lack an Internet connection?
-the vendor is acquired by some other company and their data ownership and privacy policies change and are unappealing?

While these are questions that every SaaS customer must ask and company must answer, the implications for large organizations are magnified. After all, if the home-cook burns the steak, only a few, [mostly] forgiving friends and family members are left unhappy. If the professional chef burns the steak, many, [mostly] unforgiving customers are left unhappy, angry, and quite vocal about it.

So that begs the question. Can a bad SaaS system, like a bad chef, remain in business for long? Some of us know all too well that a bad home-cook can keep on cooking for many, many, many years. But what about the chef?

SaaS For Everyone?

Software-as-a-Service (SaaS) systems are technically limited by many factors, not the least of which is the browser environment. While the expansion of broadband and new technologies such as AJAX give developers capabilities they did not have just a few years ago, major issues remain - from security to integrations with mainframes and other legacy applications. Further, SMBs are an underserved market for what have traditionally been enterprise applications, but that does not mean they don't want the benefits of Business Intelligence, CRM, ERP, etc. like the big guys. It is that typical enterprise implementations for an SMB are often like swatting a fly with a 2x4. While the problems are agnostic to company size, the scope and depth are quite different. It is easy for a home cook with some skill and decent equipment to prepare a great meal, but doing that everyday, multiple times/day, for a few thousand people, as on a cruise ship... that's an enormous challenge. That is what any good enterprise-level application is designed for. In addition, SMB's tend to lack critical components to successful in-house IT implementations:

• IT and business-related human resources to plan, execute, tweak, maintain, upgrade, etc.
• Financial means
• Technical Literacy

The beauty of a SaaS system is the need for all of those components is either reduced, or even eliminated. Cost is also often sited as a significant benefit of SaaS systems. However, according to Forrester, by the third year of deployment on average, the cost of a hosted application starts to exceed that of an in-house licensed application. By the fifth year of a deployment, the cumulative cost of a hosted application is estimated at more then $1.6 million, while the licensed software costs about $1.4 million annually.

So why wouldn't a large enterprise want SaaS?

On with it...

Now that we've got the preliminaries out of the way, let's get on with it. I will be posting a short series about my thoughts on the future of enterprise software. Having recently left a leadership position at a Software-as-a-Service (SaaS)/On-demand/ASP/Web 2.0 (whatever the term de rigueur) software company, for a more traditional organization with a "perpetual license" model, I have been thinking about the "thin client/server" approach exploited by most of today's enterprise applications. Clearly the force of Salesforce.com since coming onto the scene back in March 1999, after Siebel's 6-year run, spawned numerous on-demand applications, including many copy-cats. In fact, their marketing mantra was "No-Software" (it is still in their phone number). Now IDC estimates that SaaS spending will double in the next five years to $10.7 billion in 2009 (IDC No. 33120: Worldwide and U.S. Software as a Service 2005-2009 Forecast and Analysis: Adoption for the Alternative Delivery Model Continues, May 2005).

So what does this mean for SAP, Microsoft, Oracle, let alone the thousands of other vendors and their customers? While SaaS and the open source movement must be addressed, and many companies like Microsoft already have, or are developing their strategies, it remains unclear how large customers will adopt these systems. In my experience, SMBs are today's primary target market for these solutions and for the foreseeable future. Check out tomorrow's post for why.

...And Finally

Most recently, the siren song of Business Process Management (BPM) lured me to Global 360, the world-wide leader in BPM and analysis solutions with over 20 years of customer success. After having seen the tremendous value generated over the years by imaging, workflow, document management, business intelligence, CRM, ERP and most recently BPM systems, I had to explore the next step - Business Optimization. This fulfills the promise of these systems by incorporating comprehensive analysis and even simulation, allowing an organization to maximize the value of its people, processes, and content - imagine that! With potential savings in the $millions, this is revolutionary across an organization, whether it is loan origination, claims processing, accounts payable, supply-chain, etc.

Why Global 360? Allow me a "plug" for a moment. With an unmatched history, veteran team (at all levels), tremendous customer successes, and cutting-edge technology, Global 360 helps complex organizations optimize their business processes better than any company. This, combined with our "secret sauce" - a sales and support methodology that uniquely focuses on proactively working with and helping our customers, has me excited about the future.

Over the years as an Information Technologist, Management Consultant, Sales Executive, and Senior Manager, I have gained a unique perspective and seen the intricate inner workings - the good, the bad, and the ugly - of extremely complex organizations, systems, and implementations. My "Good Karma" goal is to share this accumulated experience and my viewpoint with you.

Credibility, continued...

The saga continues... A few years following eGrail/Filenet, I was presented with a Director, then VP Sales opportunity at Zarca Interactive. Zarca is a comprehensive "Software as a Service" (SaaS), Web 2.0 company. They enhance traditional Business Intelligence (BI) and Customer Relationship Management (CRM) solutions by associating attitudinal data (e.g., customer perceptions) with traditional operational information (e.g., transaction data) to drive customer loyalty. For example, if I am a retailer like Target, I not only know what you bought, but I know what influenced you to buy it. With this information business leaders at companies within retail, healthcare, hospitality, energy, financial, and numerous other industries including education and state/local/federal government agencies, are able to make faster, yet more informed and confident decisions.

Zarca's unique solutions and strong sales team led to over 105% growth in 2004 alone. Yet, this pales in comparison to the increases in customer satisfaction and ultimately loyalty achieved by clients. After all, a small increase in loyalty = exponential increase in profitability (more on that later).

Credibility Is Key

The most trusted advisors whether friends, mentors, co-workers, bloggers, etc. are those who prove themselves credible. While a resume may only address the tip of the iceberg, what follows is a bit about me. Please use this information to evaluate my intentions and future postings.

I have a diverse background working for large and small companies, public and private, been on the front-lines working in an under-staffed IT department, and even started a few small technology-based businesses while in college (George Washington University alumnus). I was a Management Consultant for Arthur D. Little (ADL), the world's first management consulting firm (founded 1886), focusing on technology and operational-based business strategies for some of the world's largest organizations. I was an early leader on the eGrail Inc. sales team (a Web Content Management provider later purchased by FileNet Corp.), where my formal consulting background helped my customers ultimately extract the most value from our solutions. [CMSWatch, founded by Tony Byrne, is an excellent resource for WCM-related information]

I became a FileNet Account Executive following the acquisition. And during my tenure, I concentrated on helping healthcare, financial services, and insurance companies expand and manage their Web properties. This, while incorporating complimentary Enterprise Content Management (ECM) technologies to drive revenue, ensure a competitive advantage, and reduce servicing costs. WCM spearheaded FileNet's transition from a focus on Imaging and Document Management to a broader Enterprise Content Management, which also included Business Process Management (BPM).

What Does Karma Have To Do With It?

For over 13 years, I have been helping individuals and organizations across the country extract the most value from their technology investments. I am an Enterprise Software Account Executive (aka. Salesperson) and while we are all in the business of selling (i.e., persuading, convincing, evangelizing, etc.), I make my living at it.

Why Karma? Well, with a last name like Rudolph, you do not have to be the most creative kid on the playground to ascribe a seemingly witty verbal jab about our famously, socially-inhibited, glowing friend, onto yours truly. Like the story teaches, however, one must learn how to overcome adversity, transforming it into success, and use it to benefit others. The very definition of Karma.

That is what this blog is all about. My goal is to leverage the successes and failures I have seen over the years primarily in Enterprise Software projects and my natural curiosity for your benefit. I will seek to consolidate my accumulated knowledge, constant research, and general thoughts on Enterprise Software to help you meet your goals for your organization. If Karma is about giving and receiving, what do I hope to get out of this? Perhaps your business someday, or maybe a referral, but mostly the self-satisfaction that comes with helping others. That is what true sales and Karma is all about.