There’s a virtual armada of icebergs out there today in the form of legacy enterprise resource planning (ERP) providers. These ERP icebergs show many of the same characteristics as their Antarctic counterparts. They’re old and have been frozen in place for decades. What you see is not what you get – the danger lurks beneath the surface.
Australian businesses need to be vigilant when evaluating ERP platforms. ERP icebergs have spent years buying up customer bases and products and look like an attractive option. Closer inspection, however, reveals they are just the same old legacy products, with a shiny veneer. Most of these products are based on old technologies that cannot be modernised. Their large customer bases now pay ever increasing maintenance and get little in return, often netting an empty promise that they will be able to “seamlessly” move to a new product – at some time in the future. Moreover, the existing products see little development and have fewer experts to support them.
If you find yourself “attracted” to, or already been struck by an iceberg company you should ask the following questions:
- How many developers, support people and consultants are working on just my product and how many of the developers are working on new features?
The vast majority of the products have been sold “on premise.” This means customers determine when they will upgrade to the latest version, service pack, patch or hot fix. Once on stable ground with these type of products, customers don’t want to risk issues by taking on new releases. So, these products tend to have customers on multiple versions, making it difficult to support, especially if they have customized the solution as well.
- What is average tenure of my products’ support people?
One of the telltale signs of an iceberg company is that, many times, the customer will know more about the product than the support team. Be sure to find out whether the company is offshoring your support contacts. If they are, that support staff is not likely to be of much service when things do go wrong.
- How much revenue does my product produce and how much of that is new customer revenue?
A customer may think they’ll be working with a billion-dollar company focused on their industry, when in fact they are buying a product that drives a fraction of revenue with a tiny development, consulting and support team. When an iceberg company offers a large number of different solutions, it dilutes the focus and resources and the value of the maintenance customers are paying. It also poses significant challenges when it comes to keeping up with the massive changes in technology and business models that are happening in the market today.
- How many customers are on the latest release of my product?
For many, the latest version of the product, where the limited investment in new features is, has very few actual live customers using it, so be sure to find out before you invest. The vast majority of maintenance-paying customers are on products that aren’t being developed or on old versions of the product that are not being maintained.
If you come across an iceberg on your business journey, follow some friendly nautical advice and simply, steer clear!
About the author
Lee Thompson is the Senior Vice President and General Manager, Asia Pacific and Japan, at Oracle NetSuite. He brings more than 20 years of sales leadership experience to Oracle NetSuite, working for high tech companies including TechnologyOne, Oracle and Salesforce.com. Prior to joining NetSuite two years ago, he was Senior Vice President of Corporate Sales at Salesforce Asia Pacific, and previously spent 12 years at Oracle, building its commercial sales business in the Asia Pacific region. Lee has also held senior managerial positions at Borland, Artsoft and Pilot Software and has worked in the UK, Sweden, Australia and Canada.