Sipping rather than gulping down IT
Over the past few months with Alfresco, I’ve met with dozens of enterprises to talk about open source content management. Yesterday, one of these companies said something very interesting:
“For us, open source lowers the bar to ROI.”
“ROI,” of course, means return on investment. The higher the investment, the bigger the return must be. Open source turns the traditional software ROI equation on its head: instead of imposing a huge upfront cost on an enterprise, open source allows the enterprise to ingest smaller increments of software. Sips, rather than gulps. As in the real world of food, “don’t wolf down your IT” is an appropriate, accurate metaphor for healthy IT buying.
Not only is it better because open source won’t break the bank, but open source is better because enterprises tend not to have enterprise-wide IT requirements that they can easily gulp down all at once. I’m not saying enterprises don’t have enterprise-wide problems that IT can fix. They do. I’m arguing, rather, that trying to fix them all at once tends not to work well. Besides, IT needs tend to grow organically, one department/person at a time. Much better, than, to invest in IT that more easily scales in this way.
In my world, you can’t get into one of the big proprietary vendors for less than six-figures. Yet most IT problems can be fixed with a much smaller dose of CRM, ECM, etc.
In talking with a large financial institution today, they remarked on their general experience with big IT investments: most never get implemented, or get incompletely implemented. Two years into the failed project, the champion of that project leaves the company to take a job elsewhere, and the project dies. Or, in the ECM space, you pay Documentum/FileNet/etc. $1M for your system, another $3-4M for consultants to make it work and set up workflow, and 6 months after your business processes change and no one can afford to re-invest in the consultants to make the system work again. So the system falls into disuse, and that ROI is -$4-5M. What a waste. Serious indigestion.
Don’t believe this happens in the real world? It happens all the time. One company I’ve worked with has spent nearly $1M on a system that they haven’t been able to get working, despite two years and countless dollars on consultants. They’re not alone.
That is sheer insanity - how could a vendor feel good about foisting that sort of “investment” on a customer? And why would a customer buy from a vendor that forces such a mammoth, upfront “investment?”
I couldn’t, and I wouldn’t. Instead, look to open source as the technology and business answer to proprietary indigestion. Open source is based on service and support - vendors get paid when they do a good job, and you drop-kick them when they don’t. You’re only out the support costs you’ve been paying (which tend to be much lower than the support/maintenance costs you pay on your proprietary systems, and that’s after you’ve already wasted truckloads of money on the upfront license costs. Open source gives you choice. It returns control of IT to the CIO. (Tastes better, too. 