Success in Enterprise Software Starts with Good Vendor Relationships

June 5, 2015 Harry West

vendor_partnership

One of the cool things about working at Appirio is that I routinely get to see organizations make the transition from legacy practices and technology to a better, cloud-based model of operating. Our clients can deliver higher-quality experiences and insights to workers, contractors, managers, and executives — everybody benefits. As a veteran of the enterprise software space myself, I have a natural bias toward the technologies we deploy from companies like Workday, Salesforce, and Google. I appreciate them for how audacious they are. The idea that large enterprises would manage their total workforce 100% in the cloud — and put their General Ledger there too — seemed unrealistic 5-10 years ago (or before Workday existed). Salesforce.com runs a multi-tenant architecture that now processes about 2 billion transactions every day. Cloud application and platform technology have made great strides in the past few years, and it’s fun to see how so many organizations have taken to the cloud and become far more productive as a result.

Problematic relationships with legacy vendors

Our role as strategic advisors also reminds us just how much technical debt is still out there in the enterprise applications space. One of the more depressing things to see when working with a client is a lack of a fundamental relationship with primary solution vendors. More than once I’ve evaluated a company’s system landscape and simply asked, “Why aren’t you working with your vendor on this roadmap — what do they recommend?” only to learn that the relationship with the legacy vendor has basically ceased to exist. Typical reasons for this include:

  • “We negotiated a really good deal for licensing — maybe too good — and the vendor basically won’t return our calls until we’re ready to buy something new.”
  • “We went to third-party maintenance a couple of years ago and the people who owned the original vendor relationship don’t work here anymore.”
  • “We can’t get anything new to work until we upgrade, and that costs $X million.”
  • “Our vendor reassigned our sales rep so many times we don’t really have anyone to call who still understands us. Oh, and our new Account Executive sucks. Should we pay more for Premium Support?”
  • “We bought all those licenses years ago as part of a larger contract but never went live. Now we don’t know if we want to use it at all, and need to reevaluate. We’re not sure where to start.”

It’s surprising how often we still see these issues. Some of these problems are simply the result of bad customer service, but many arise due to the continued existence of shelfware.

The benefits of eliminating shelfware

One of my favorite things about real cloud solutions is that they eliminate shelfware. I personally despise shelfware for a whole variety of reasons. First, it delivers negative value to the client; every dollar spent on shelfware is a dollar that organizations could put to better use elsewhere. Second, it serves as a false-positive feedback loop to the vendor. Nothing good happens when you pay money to a vendor for software you have no ability to deploy or use, yet they continue to profit from it. Lastly, the vendor still gets to chalk every buyer up as a “customer,” when in reality, many people at those firms might not even realize they own the product. When I hear vendors claiming hundreds of customers use a solution but I’ve never met a single one of them in real life, it’s pretty clear that vendor is counting owners of pure shelfware as “customers.” There are some vendors in the enterprise software space today whose claimed customer counts are so high that they actually have me worried. If I don’t start seeing a lot of new, happy, live customer stories at HR Tech this year, I’m going to be tempted to file about 500 Missing Person reports.

Building a healthy vendor-client relationship with the cloud

So choosing the right vendor is a huge step in avoiding shelfware problems and a lack of vendor attention. Another one of my favorite things about the cloud is that it requires a more collaborative and active relationship between vendors and customers than ever before. A true cloud vendor gets to work right away when you license their service. They provision you a tenant and allocate storage, memory, QA resources, support staff, and more to help you get live and productive — and always on their latest release. There’s nothing passive on either side of that relationship. As a user, you are also “bought in” to getting your company live on the service, and making sure that adoption occurs as widely as possible to maximize your ROI. This is what a healthy vendor-client relationship looks like — with an investment and a payoff on both sides.

In my experience, it’s sometimes harder for legacy on-premise vendors to adopt these behaviors. This is because at best they only have one foot in the cloud, and their old ways of thinking about customers are still in place. On the customer side, old procurement habits can also be hard to break. When you think of software as an asset you can capitalize, or as an item you want to negotiate the lowest possible price for, you may make purchasing decisions that don’t properly align your success with the vendor’s solutions. That old adage still applies: if a price looks too good to be true, it is. We still sometimes see behavior in the field that looks like “the bad old days” with desperate vendors discounting software and services to levels that make no sense if they ever intend to service the customer properly. This should be a big warning sign for the future of the vendor-client relationship.

To get the most out of cloud investments, Appirio has always favored true multi-tenant applications from vendors that live only in the cloud. This operating model produces winning relationships for both users and vendors, and delivers more compelling insights and experiences along the way. Practicing what we preach has been working well for us so far – we run our entire company on Salesforce, Google, Workday, and a number of other cloud solutions. We don’t own a single server. This makes us even more confident that great cloud vendor relationships will work well for our clients too.

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