Will it become easier to buy enterprise software in 2023?
By Andy Venables, Chief Technology Officer at POPX
Andy Venables, CTO at POPX, discusses whether managed services make IT procurement more attainable
Extracting maximum value from digital platforms is the basis for achieving successful business transformation. However, a new IT system is not the answer in and of itself but should act as the facilitator to transform the old operating model into a new one. This is why taking a holistic approach to transformation, with an end-to-end view that aligns business and IT on common goals, will get the best results. If done well, it’s also one of the fastest ways to enhance and strengthen the company culture, although doing it badly could set it back.
Experiencing buyer’s regret?
Just stitching together fragmented or inefficient processes with a new digital experience is a trap that many well-intentioned projects have fallen into – either due to a lack of vision, executive sponsorship, funding, or all of the above. Gartner said that 73% of tech buyers who had bought but have not yet implemented their products or solutions already indicated high regret. They didn’t say why, but I would suggest it wasn’t anything to do with vendor selection. In fact, most medium-to-large enterprises these days have a robust tender process and would refer to analyst papers or Gartner quadrants and augment this with their own relevant experiences to help make sure they shortlist the best software vendors in the industry. If we can assume, therefore, that most buyers have done their due diligence, what Gartner is actually saying is that ‘post vendor selection’ there is a high degree of buyer’s regret based on unsuccessful or delayed implementation of a solution.
This tendency towards buyer’s regret has long been associated with purchases of enterprise software, which by its very nature is big, expensive, complex and takes a long time to get to value, and you can only get there with significant resources on a long-term commitment basis. As companies increasingly digitise and transform their operations, the need for technology to solve difficult challenges and deliver the desired business outcomes is only increasing. As a business community, we cannot escape the need for software platforms that exist to help make things better.
The problem is that the vast breadth and depth of these systems can mean that only the richest financial institutions can afford to buy, implement and run them, supported by a small army of dedicated in-house software developers. This can make such a prospect hard to digest for medium-sized businesses, whose transformation needs are equally pertinent to their success. How do they begin to reconcile all these factors, so they too can confidently take the leap into purchasing the solutions they need that could make the difference between stagnation and profitable growth?
The template for failure
Suppliers put a lot of time and thought into helping organisations select the right vendors and solutions, but their help tends to stop at the point of selection and doesn’t address the different ownership models and their suitability for different company types.
The point after vendor selection is arguably when the real work begins, and organisations need all the help they can get. Most tech companies assume those businesses purchasing the solution will take on all the responsibility and risk, regardless of whether they do the work themselves or use professional services to help them.
For smaller enterprises, even accessing the help of expensive professional services may not result in success, usually it is only done until budgets run out. When this happens, many businesses decide to take everything back in-house, away from the consultants. This can be particularly stressful for everyone involved as the business could suddenly realise it now has to face the reality of full ownership of a software development team that costs over seven figures to maintain per annum.
It’s a rich price to pay just to maintain new technology, especially if the project fails to meet the expectations of the business. After multiple attempts to get it right with only small progress, the illusive promise of ROI may seem unreachable unless something changes. So, what approach should more modest medium-sized organisations take to avoid the many transformation trapdoors?
The blueprint for success
The answer lies within managed services. Adopting this approach enables customers to onboard solutions faster, with greater transparency on cost, timescales and added value.
A managed service model helps customers avoid the expensive and often ineffective professional services trap – which relies on the customer taking on all the cost and risk while allowing the consultants to walk away with minimum accountability or continuity.
In a traditional professional services engagement, the consultants tend to move on from a project after implementation and onboarding has been completed. In contrast, a managed service provider believes this is just the start of the process and is dedicated to extracting maximum value from any enterprise software purchased.
Managed services are often agreed on a fixed price and basis that covers everything in an all-inclusive style arrangement. For example, if a new integration or functionality is needed, it’s included in the agreed package, so developers will build and implement a request at no extra charge to the customer. There is no professional services-style delay and protracted conversation about price and waiting for extra budget.
A managed service provider works as an extension of a client’s in-house team, with shared goals and a commitment to achieving the business outcomes the customer desires. Communication is key, especially when planning each phase of the implementation process, and having a long-term view ensures a continual roadmap of work for developers to focus on.
2023 –A year of change
New enterprise-wide technology platforms present the ideal opportunity for change and to improve on poor-performing processes and manual ways of working. The chance for everyone involved to benefit from new skills development and contribute to the success of the initiative, should not be undervalued. Targeting processes that offer the most potential value for redesign, simplification, standardisation, and automation, will help create success by leveraging an enterprise solutions’ extensive capabilities.