Why enterprise software should be expensive

Hundreds of thousands or possibly millions of dollars seems a steep price to pay for software. Especially as there are so many open source and cloud-SaaS options available to the buyer. But if you’re in the market, properly designed and supported Enterprise Software will save you money and possibly your company in the long run. Here’s why.

What makes an Enterprise?

Enterprises are essentially a large number of people, possibly distributed across numerous locations following repetitive business processes. Usually there is a large amount of capital tied up in assets and then there is working capital required to keep the business going.

The leadership responsible for running the enterprise… and all the way down to process owners — need to make sure that what is going on is effective, efficient and predictable.

When the Walmart ecommerce site is down they lose $40K per minute in sales. Likewise Amazon loses $220K per minute. I’ve worked in the mining and metals industry, the cost of downtime in a mine could be $180K per incident. That incident may be as simple as a conveyor belt going down because of a $100 part. Maybe the new part can’t be found because the inventory system is inaccurate because a batch update didn’t run last night because of some code that wasn’t properly tested.

Given the enterprise-sized cost of errors, decision-makers look to their software vendors to lower the risks of downtime. Vendors do this by providing software that is appropriately effective, efficient and predictable. The Total Cost of Ownership calculation should justify the high price-tags of a truly Enterprise application

Can I call you at 2am, will you pick up the phone?

I worked for a European Insurance company with annual revenues exceeding US $64B, which classifies it as ‘Enterprise’. Our primary vendor was IBM, a classic enterprise technology vendor. During our software selection process, the team’s 3-bullet mantra for evaluating vendors was:

1. Does the product do what it says on the can?

During the sales cycle, the vendor should not be neither overselling capabilities nor generalizing. The product had better work in our environment with our users on our schedules. We will consider Total Cost of Ownership (TCO), and not the ticket price. If we have to do a tonne of integration work, buy new hardware, or re-skilled the development team, then it may not be worth it.

2. Will it do it again tomorrow?

What ever the product does, we need guarantees of performance for the conditions that we will put it through. That means all the business as usual cases, spikes and dips in volume, with missing data, and when our users accidentally (or purposely) try to break it.

3. If it doesn’t and I need support at 2am, when I call you at home will you get out of bed?

When it goes down, we will need a commitment to have it working again fast. We can’t afford that downtime so the support organization would need to pull out all the stops. If an emergency fix is required we’ll expect developers to be working around the clock. And some smooth account management will have leverage and influence with the engineering organization to prioritize my problem.

Questions beyond the feature list

What are the characteristics beyond features and capacity, what makes software enterprise class? Here are the questions I’d be asking:

Can I rely on it to support my business?

  1. Will it function as specified?
  2. How robust is it?
  3. How well does it scale?

How closely will it fit my business operations?

  1. How configurable & customizable is it?
  2. How usable is it for the end-users, in all languages and territories?
  3. Is it accessible for my impaired users?

Is there sufficient rigor in your development process?

  1. How extensively tested is it, and each bug fully regression tested?
  2. How secure is the data, the algorithms and the authentication?
  3. Is it compliant with whatever legal regulations are in force ?

What will make the application successful in my organization?

  1. Tell me how you will support the application, my administrators and end-users?
  2. What analytics do you provide out of the box, via your partners or can we build our own via APIs?
  3. Do you provide documentation & training for my administrators and end-users?

How will you support me in the present and future?

  1. When tricky run-time or output problems occur, can we troubleshoot?
  2. How easy is it to take an software upgrade?
  3. What is your product roadmap?

This was first posted on https://www.firstretail.com/enterprise-software-product-management/ and contains more detail on the questions for vendors.