software – In Search Of

If you are a project manager that does software projects, you deal with the “top side” of product investment all the time. Whether your teams are running agile like scrum or kanban, or whether they are running a phase-gated cycle (waterfall), you are focused on the decisions about organizing the investment into packages for release or deployment. You are running the factory which takes requirements in one end and (hopefully) spits working features out the other. You are working with the analysts or product people to ensure that there are enough requirements, stories, or ideas “ready to start” to keep the team occupied.

But what about the other side of product investment? We often talk about return on investment or ROI, but most organizations only use an ROI project to justify the investment. Some will go as far as to attempt to measure “hard” ROI numbers, but frankly even that is missing half the boat because it is hard to measure the impact of software capability on your organizations top line or bottom line. Without a body count, the best we can do is to infer the correlation of software capabilities to a movement in profitability and assume that the relationship is causal. When it comes to softer benefits like risk reduction, customer satisfaction, or employee retention, there is no reasonable way to measure “hard” ROI dollars.Continue Reading

When purchasing software for your business function, one must consider the following:

The software vendor has two value propositions:

1) The capabilities already built in the software product.
2) The vendor's capacity to add more capabilities over time.

These values must be compared to:

1) the prioritized requirements of your business function.
2a) your assessment of the vendor's capacity to add capabilities to their software product.
2b) the alignment of your business function with the vendor's target market.

These correlate to:

1) how little benefit you will likely realize during initial implementation.
2) how little benefit you will likely get from future releases of software product.

These are compared to:

1) how much it will cost you to purchase and implement the software.
2) how much it will cost you to maintain and upgrade the software over the lifetime of the application.

If you need to customize the product, or you need to pay the vendor extra to customize or develop capabilities so that you can accept the product, these change the cost/benefit ratio as well. A bird in the hand is worth 2 years worth of customization – by either you or the vendor.

If the product must be integrated with other systems in use at your company, those costs must be considered, as well as integration testing whenever either end of the integration changes.

In either case, whether you realize it or not, you are entering a partnership with the vendor, if the vendor doesn't act like a good partner, they probably won't be. Their corporate issues can become detrimental to your product implementation. Their staff choices can have tremendous impact on your ability to get your project done. Their vision for their product can easily move away from your companies goals. The cost of replacing the customized or integrated software will be higher than otherwise, and in all likelihood, the value delivery will be lower than expected.

Choose wisely, it pays to be careful, when making such decisions.

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The Other Side of Product Investment

Vendor Candidates