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Software upgrades: No free lunch
Mark Aldred, sales director of the UK's iliad Solutions, says that upgrades of industry leading software are not free, not cheap and probably not even good value for the money. While many users recognize this at some level, he says, they seldom take any decisive action to make sure it doesn't happen again.
October 3, 2002
With the much anticipated, and long-overdue arrival of Release 6 of a popular transaction processing platform, users face their biennial conundrum, and the EFT industry is reminded of the benefits of using one of the very few, market leading product solutions.
This new version of this particular industry leading, high-end system provides some -- though limited -- enhancement on its predecessors, and best of all, comes free of charge to those who have been paying maintenance fees for the life of their systems.
New releases from established providers promise to offer improved performance and enhanced functionality (including continued compliance with industry standards) and to back commonly requested, customer-specific modifications into the core product.
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Mark Aldred |
The result should be a faster, more resilient, better-featured solution, enabling clients to throw away hard-to-maintain mods and return to a "lower cost of ownership," product-based solution.
It should also be the platform on which industry developments are or will be made available when the client needs them.
However, in the software business, like anywhere else, there's no such thing as a free lunch.
Typically a number of issues present themselves at the time of a new release that send waves through the user organization and have users reaching for the Yellow Pages.
First, the bad news. If you're not already up-to-date you either will not be able to leap straight to the new release, or worse still, your "old" version of the system is unlikely to continue to be supported. Put simply, this freebie is a matter of necessity, not of choice.
Then, the reality. New releases seldom offer users a real opportunity to "throw away" those mods. In practice, the features that clients add to their own systems tend to be either unique to their local market, or their competitive edge. There will rarely be sufficient demand for them for the supplier to be able to justify the cost of adding them to the product.
Then, geography. For a system enhancement to command enough support to get into the product (or even into the product plan for future development), there has to be a critical mass of existing or potential demand. If your supplier is not based in your geography, then they are unlikely to have your needs at the top of their list. Just look at the reluctance of software vendors to embrace the chip card, except at the same pace as the U.S. market. In other geographies, this is a telling absence from most of the "leading" products.
Then, cost. In practice, every "product-based" solution is likely to have been heavily modified. The only way to maintain levels of functionality is to reapply those mods to the new release (saving the few that are in the release as standard, and those the user doesn't use anymore!). This exercise is seldom less than a many man/year effort.
If you have a large IT infrastructure and therefore the internal resources to undertake this task, then you might count this as "free." In practice, how many man years do you actually get for $1 million? Think what your business could acquire in the new commodity technology world for $1 million. And ask yourself what the opportunity cost of tying up a small department for the period of upgrade is.
Finally, the future. The very thing you are seeking to protect by choosing product and choosing to keep it up-to-date. The truth about the future is that most of the proprietary platforms that underpin the leading solutions are not a part of it. Even if you take the new software release and ease the threat of a discontinuation of vendor support, there's a good chance your hardware and operating system supplier has an unpleasant surprise around the corner for you. The aforementioned release 6 comes "warm" on the heels of Compaq's encouragement of all of its clients to move to the S Series platform. Many will have been motivated by the risks involved in not keeping up-to-date.
So the fact is, these software upgrades are not free, not cheap and probably not even value for money, and while the good news is that most organizations recognize this at some level (and hence reach for the Yellow Pages), they very seldom take any decisive action to make sure it doesn't happen again.
So there's the challenge. When you do call on the "alternative" suppliers, touting their open, commodity-based technologies and encouraging you to achieve vendor independence, take the exercise seriously.
If you can create an environment where your transaction switch and authorization engine complies with your IT strategy, rather than sticking out like a sore thumb...
where the architecture is modular and distributed and is maintainable using skills that are commonplace...
where either you, your software supplier or a trusted third party can enhance your system to your local market's or your own specific needs, without dependence on a far-off software factory serving markets which barely resemble your own...
Then perhaps we can all have lunch.
Mark Aldred is sales director of the UK'siliad Solutions. He has been in the IT industry for 22 years and in the payments field for the last 15 years. His previous positions include country manager, UK and Ireland, for Applied Communications. He also worked with S2 Systems, as a distributor and as director of its European Distribution Channels Operation. Most recently, he served as sales director of eFunds International Ltd, the EMEA leg of eFunds Corp.
Mark believes that "intelligent partnering" and a collaborative approach to relationship management are what a sophisticated market demands. "I believe that the time has finally come, after a number of false starts, when clients of all sizes can have their requirements met by well-architected open-system solutions," he said.
