Download - Your Software Investment
Maximize YourMaximize YourSoftware Technology Software Technology
InvestmentInvestment March 24, 2004March 24, 2004
Presented byPresented by
Marcia McLeanMarcia McLean
CapeCoderCapeCoder, Mashpee, MA, Mashpee, MA
About CapeCoderAbout CapeCoder In business since 1998, incorporated in 2000In business since 1998, incorporated in 2000 Specialize in web-based, database-driven custom Specialize in web-based, database-driven custom
business applicationsbusiness applications Current projects use Microsoft .NETCurrent projects use Microsoft .NET Former manager with the MITRE Corporation, the Former manager with the MITRE Corporation, the
ASK Group, Freedom NewspapersASK Group, Freedom Newspapers Former Board member of the New England Former Board member of the New England
Employee Benefits CouncilEmployee Benefits Council President of the Cape Cod .NET User GroupPresident of the Cape Cod .NET User Group Member of the Cape Cod Internet CouncilMember of the Cape Cod Internet Council
A Major InvestmentA Major Investment
Total IT costs are around 2.3% of revenue, or Total IT costs are around 2.3% of revenue, or $5,000/employee*$5,000/employee*
Software and associated expenses account for 10-40% of total Software and associated expenses account for 10-40% of total IT costsIT costs
Failures in information technology cost the U.S. economy $100 Failures in information technology cost the U.S. economy $100 billion annually, with the price of software defect repair billion annually, with the price of software defect repair
alone estimated at $59.5 billion ** alone estimated at $59.5 billion **
*Computerworld 1996*Computerworld 1996**WorkSoft, automated software testing company**WorkSoft, automated software testing company
5 Steps to Maximize Your ROI 5 Steps to Maximize Your ROI
1.1. Analyze needs, define requirementsAnalyze needs, define requirements
2.2. Inventory what you haveInventory what you have• Options availableOptions available
3.3. Build or buy new softwareBuild or buy new software
4.4. Training, testing, maintenance, hiringTraining, testing, maintenance, hiring
5.5. EvaluationEvaluation
Case studyCase study
Case StudyCase Study BackgroundBackground
• Motorcycle dealership with four retail storesMotorcycle dealership with four retail stores• Safe riding school with 500 studentsSafe riding school with 500 students
RequirementsRequirements• Enroll students online and from the storesEnroll students online and from the stores• Enforce business rulesEnforce business rules• Accurate enrollment headcountsAccurate enrollment headcounts• Change and correct customer (student) infoChange and correct customer (student) info• Reconcile credit card chargesReconcile credit card charges• Make information available among Make information available among
departmentsdepartments• Send info to Commonwealth RMVSend info to Commonwealth RMV
Case Study (cont’d)Case Study (cont’d)
ChallengesChallenges• High administrative overheadHigh administrative overhead• Long time to train new administratorLong time to train new administrator• Hard to prevent overbookingHard to prevent overbooking• Information collected from various sourcesInformation collected from various sources• Could not make changes easilyCould not make changes easily• Burdensome to create reports to RMVBurdensome to create reports to RMV• Different people needed informationDifferent people needed information• CompetitionCompetition• Web hosting company was expensive and Web hosting company was expensive and
unresponsiveunresponsive
FIRST STEPFIRST STEP
““DEFINE REQUIREMENTS”DEFINE REQUIREMENTS”
Software RequirementsSoftware Requirements
Collection, organization, reporting, Collection, organization, reporting, distribution of informationdistribution of information
Start and end with your business Start and end with your business needsneeds
Examples:Examples:• Sales, cash flow and profitSales, cash flow and profit• SchedulingScheduling• Customer contact infoCustomer contact info• InventoryInventory
Questions to AskQuestions to Ask
What information do I need to collect, What information do I need to collect, organize, report and distribute?organize, report and distribute?
Who provides this information?Who provides this information? How is the information provided?How is the information provided? Who collects, maintains and distributes it?Who collects, maintains and distributes it? How is the information stored?How is the information stored? How is the information used:How is the information used:
• How is it reported?How is it reported?• Who needs this information?Who needs this information?
Case Study: Case Study: what information was needed?what information was needed?
““Inventory”: class sizes, codes, scheduleInventory”: class sizes, codes, schedule Method and amount of tuition paymentMethod and amount of tuition payment Customer contact and demographic Customer contact and demographic
informationinformation Attendance and gradesAttendance and grades Credit card payment authorization codesCredit card payment authorization codes
Case Study: who provided the Case Study: who provided the information and how was it stored?information and how was it stored?
Sales staff -> school administratorSales staff -> school administrator Customer call-ins to administratorCustomer call-ins to administrator InstructorsInstructors White boards, notebooksWhite boards, notebooks Legacy dealer management systemLegacy dealer management system
Case Study (cont’d): Case Study (cont’d): who needed the information?who needed the information?
CustomersCustomers InstructorsInstructors ControllerController StockroomStockroom General managerGeneral manager RMVRMV
Points of FailurePoints of Failure
Information was lostInformation was lost Hard to retrieveHard to retrieve Not organizedNot organized Not currentNot current Hard to make corrections, changesHard to make corrections, changes Not easily sharedNot easily shared
Define Requirements - RecapDefine Requirements - Recap
Determine what information you, Determine what information you, your employees, your customers and your employees, your customers and your vendors needyour vendors need
Who provides it?Who provides it? Who needs to see it?Who needs to see it? Will it need to be changed?Will it need to be changed? How and how often does it need to How and how often does it need to
be updated and reported?be updated and reported?
SECOND STEPSECOND STEP
““INVENTORY WHAT YOU HAVE”INVENTORY WHAT YOU HAVE”
Types of Business SoftwareTypes of Business Software
• BasicBasic Office Productivity Suites (Word Processing, Office Productivity Suites (Word Processing,
Spreadsheet, Email)Spreadsheet, Email) AccountingAccounting Virus Protection, FirewallVirus Protection, Firewall WebsiteWebsite
• One Level UpOne Level Up DatabaseDatabase Specialty – POS, inventory, HR, medical Specialty – POS, inventory, HR, medical Server-based, multi-userServer-based, multi-user
You’ve Made An InvestmentYou’ve Made An Investment
Software accounts for up to 40% of total IT Software accounts for up to 40% of total IT costs of $5,000/employeecosts of $5,000/employee
8% to 15% of software spending wasted8% to 15% of software spending wasted• Goes to purchasing, renewing, and supporting Goes to purchasing, renewing, and supporting
contracts for shelf-ware, software which is not contracts for shelf-ware, software which is not used becauseused because
Requirement no longer existsRequirement no longer exists ““Point” solution whose functionality has been Point” solution whose functionality has been
replaced by newer applications or suitesreplaced by newer applications or suites
Basic SoftwareBasic Software Business ApplicationsBusiness Applications Anti-virusAnti-virus Spam, Spyware FiltersSpam, Spyware Filters WebsiteWebsite SecuritySecurity
• FirewallFirewall• Encrypted dataEncrypted data• Restrict access to files and networkRestrict access to files and network
BackupBackup• CDsCDs• TapeTape• External hard driveExternal hard drive• RAID-configured internal hard driveRAID-configured internal hard drive• Online backup serviceOnline backup service
ServersServers ““8 reasons your business needs a server”8 reasons your business needs a server”
• File-sharing is easierFile-sharing is easier• Easier back-upsEasier back-ups• Specialized collaboration softwareSpecialized collaboration software• Mobile work forceMobile work force• Share high-speed Internet accessShare high-speed Internet access• Offload files and tasks to serverOffload files and tasks to server• Consolidate email accountsConsolidate email accounts• Easier to set up new computers and deploy Easier to set up new computers and deploy
new applicationsnew applications
http://www.microsoft.com/smallbusiness/reasonsforserver.mspxhttp://www.microsoft.com/smallbusiness/reasonsforserver.mspx
Inventory - RecapInventory - Recap
Bundled office productivity applicationsBundled office productivity applications Specialty packages, like accountingSpecialty packages, like accounting Custom software purchased with your Custom software purchased with your
businessbusiness Legacy databaseLegacy database Externally hosted web siteExternally hosted web site Utilities for network admin, anti-virus, Utilities for network admin, anti-virus,
firewall, spyware detectionfirewall, spyware detection
But Does It Work?But Does It Work?
Does my software collect ALL the information I Does my software collect ALL the information I need?need?
Does it provide helpful built-in or ad hoc reporting Does it provide helpful built-in or ad hoc reporting tools?tools?
How easily is the information shared?How easily is the information shared? Can multiple people use it at the same time?Can multiple people use it at the same time? How easy is it to learn and to use?How easy is it to learn and to use? How expensive is it to maintain and upgrade?How expensive is it to maintain and upgrade? Are my existing systems well integrated?Are my existing systems well integrated?
No?No?
Consider upgradesConsider upgrades Consider new software purchaseConsider new software purchase Consider consulting assistance to Consider consulting assistance to
integrate, enhanceintegrate, enhance Consider consulting assistance to Consider consulting assistance to
develop custom solutiondevelop custom solution
Case Study: Case Study: what was their investment?what was their investment?
Legacy accounting and POSLegacy accounting and POS Bundled office productivity suiteBundled office productivity suite Servers, hardware, networkServers, hardware, network Integration was minimalIntegration was minimal School information was kept on white School information was kept on white
boards and in notebooksboards and in notebooks
THIRD STEPTHIRD STEP
““BUILD OR BUY?”BUILD OR BUY?”
BuyBuy ““Shrink Wrap”Shrink Wrap”
• AdvantagesAdvantages Tested by vendor, support available and often part of Tested by vendor, support available and often part of
purchase pricepurchase price Forums, user groups and other resources readily Forums, user groups and other resources readily
availableavailable Maintenance, upgrades, patches readily availableMaintenance, upgrades, patches readily available Fixed price, no surprisesFixed price, no surprises
• DisadvantagesDisadvantages You get it “as is”, no customizationYou get it “as is”, no customization Vendor’s tech support may be inadequateVendor’s tech support may be inadequate You can’t legally copy it or redistribute it.You can’t legally copy it or redistribute it.
Buy (cont’d)Buy (cont’d)
Checklist before buying softwareChecklist before buying software• Pricing, “bundled” (Office)Pricing, “bundled” (Office)• Single or multi-userSingle or multi-user• Shop around for best price and special Shop around for best price and special
programsprograms• Release date of at least 12 months ago Release date of at least 12 months ago • Establish procedures for installation, updates Establish procedures for installation, updates
and patchesand patches• Test and run parallel, especially “mission Test and run parallel, especially “mission
critical” app and/or on production serverscritical” app and/or on production servers
LicensingLicensing Grants you the right to use the software Grants you the right to use the software
developer’s intellectual propertydeveloper’s intellectual property
Single-userSingle-user One computerOne computer
Multi-userMulti-user Multiple stand-aloneMultiple stand-alone
Multi-user site Multi-user site (limited)(limited)
NetworkNetwork
Multi-user site Multi-user site (unlimited)(unlimited)
Network, unlimitedNetwork, unlimited
OEMOEM Pre-installed with Pre-installed with computercomputer
Volume Licensing DiscountsVolume Licensing Discounts
Transactional – # of purchases (new, Transactional – # of purchases (new, renewed, maintenance)renewed, maintenance)
Forecast – spreads orders and costs over Forecast – spreads orders and costs over fixed period, e.g., 2 yearsfixed period, e.g., 2 years
Site – multi-user limited or unlimitedSite – multi-user limited or unlimited First order – price of future licenses First order – price of future licenses
receive same discount as your first orderreceive same discount as your first order Points - $ value of purchasesPoints - $ value of purchases
Freeware, SharewareFreeware, Shareware
FreewareFreeware• http://www.tucows.comhttp://www.tucows.com• http://www.download.com/http://www.download.com/• http://www.macoszone.com/http://www.macoszone.com/
Shareware: “try before you buy”Shareware: “try before you buy” Demo versions of commercial Demo versions of commercial
softwaresoftware Beware of spyware, adwareBeware of spyware, adware
BuildBuild ““Customize”Customize”
• AdvantagesAdvantages You have a resource your competition doesn’tYou have a resource your competition doesn’t Meets your business’s unique needsMeets your business’s unique needs You and your vendor have complete control if you want You and your vendor have complete control if you want
changes, enhancementschanges, enhancements You can negotiate licensing and ownership (buyer’s You can negotiate licensing and ownership (buyer’s
market)market)• DisadvantagesDisadvantages
It always takes longer than expected to buildIt always takes longer than expected to build It is often more expensive that expected – this is It is often more expensive that expected – this is
controllable through contract negotiations and managing controllable through contract negotiations and managing “scope creep”“scope creep”
It really is “Beta” – are you set up to deal with unexpected It really is “Beta” – are you set up to deal with unexpected bugs?bugs?
Do you have time to work with the vendor on testing?Do you have time to work with the vendor on testing? Do you understand your business processes well enough to Do you understand your business processes well enough to
help your vendor write a reasonably good statement of help your vendor write a reasonably good statement of work?work?
BuildBuild Checklist before “building” softwareChecklist before “building” software
• Shop AroundShop Around In 2000, In 2000, there were 127 technology consulting firms in there were 127 technology consulting firms in
Barnstable, Plymouth and Bristol counties providing custom Barnstable, Plymouth and Bristol counties providing custom software development servicessoftware development services
• There should be a contract and it should include:There should be a contract and it should include: Statement of workStatement of work Budget (fixed price, hourly)Budget (fixed price, hourly) Payment schedule (typically 1/3:1/3:1/3)Payment schedule (typically 1/3:1/3:1/3) ScheduleSchedule Protection of privacy, ownership of codeProtection of privacy, ownership of code WarrantyWarranty
• Expectations need to be clear up frontExpectations need to be clear up front• Work out communications (regular meetings, emails, phone Work out communications (regular meetings, emails, phone
calls)calls)• If you are putting the job out to bid, tell your vendorIf you are putting the job out to bid, tell your vendor
Build AND BuyBuild AND Buy Combination: Build & BuyCombination: Build & Buy
• AdvantagesAdvantages Can be best of both worlds – tested software that can be modified Can be best of both worlds – tested software that can be modified
to your specific needsto your specific needs Tech support MAY be available; user groups and other resources Tech support MAY be available; user groups and other resources
may be available as well.may be available as well.• DisadvantagesDisadvantages
Comes with a price – more expensive. Companies need to recoup Comes with a price – more expensive. Companies need to recoup their development costs, and this kind of software is harder to their development costs, and this kind of software is harder to write.write.
You HAVE to find a vendor who has deep knowledge of the software You HAVE to find a vendor who has deep knowledge of the software – and that may be hard to do.– and that may be hard to do.
Your vendor needs to provide excellent documentation and training Your vendor needs to provide excellent documentation and training – one more thing to worry about!– one more thing to worry about!
A good vendor is expensive: customization is a higher skill set.A good vendor is expensive: customization is a higher skill set. Vendor is probably a VAR, which means they may try to “upsell” Vendor is probably a VAR, which means they may try to “upsell”
you.you.
Business Software RecapBusiness Software Recap
Upgrades may be availableUpgrades may be available Buying newBuying new
• IntegrationIntegration• ““Hidden” costs of installation, running parallel, Hidden” costs of installation, running parallel,
training, purchasing more licensestraining, purchasing more licenses BuildingBuilding
• Requires good communication with vendor, in-Requires good communication with vendor, in-depth knowledge of your requirementsdepth knowledge of your requirements
Case Study: BUILDCase Study: BUILD Maximize current IT investmentMaximize current IT investment Unique business rulesUnique business rules Wanted exclusive ownership of the softwareWanted exclusive ownership of the software Enroll students at four stores and at trade Enroll students at four stores and at trade
showsshows New central database independent of legacy New central database independent of legacy
systemsystem Customer self-service componentCustomer self-service component Ability to administer servers and access data Ability to administer servers and access data
independent of their outside hosting serviceindependent of their outside hosting service Competitive advantageCompetitive advantage
FOURTH STEPFOURTH STEP
““TRAINING, MAINTENANCE & TRAINING, MAINTENANCE & HIRING”HIRING”
Training Resources Training Resources for Commercial Softwarefor Commercial Software
Colleges, training centers , trade Colleges, training centers , trade schools, community adult educationschools, community adult education
Vendor resourcesVendor resources Online forumsOnline forums User groupsUser groups On-site training by a specialistOn-site training by a specialist
Maintenance: “Hidden” CostMaintenance: “Hidden” Cost
Install upgrades and patchesInstall upgrades and patches Integrate with other systemsIntegrate with other systems Administer permissions and privilegesAdminister permissions and privileges Protect from viruses and other attacksProtect from viruses and other attacks Testing and deploymentTesting and deployment Server tuningServer tuning
Hosted software model is an alternativeHosted software model is an alternative
Hiring EmployeesHiring Employees
Degree/equivalent and 3-5 yearsDegree/equivalent and 3-5 years Network administrator: $44-60Network administrator: $44-60 Sr. network admin: $60-65Sr. network admin: $60-65 Tech support: $34-44 Tech support: $34-44
2003 Cape Cod Compensation & Benefits Survey2003 Cape Cod Compensation & Benefits Survey
Cape Cod Human Resources AssociationCape Cod Human Resources AssociationConducted by The HR Consulting GroupConducted by The HR Consulting Group
Hiring a VendorHiring a Vendor Good SignsGood Signs
• This is a full-time business for themThis is a full-time business for them• Have been in business FT for 2 or more yearsHave been in business FT for 2 or more years• Have clients who have been with them for 2+ Have clients who have been with them for 2+
yrsyrs• Have experience with similar projectsHave experience with similar projects• Have at least 3 credible business/technical Have at least 3 credible business/technical
references references • Website is current (no dead links) and easy to Website is current (no dead links) and easy to
useuse• Keeps skills current by participation in Keeps skills current by participation in
continuing educationcontinuing education Courses, user groups, publicationsCourses, user groups, publications
Hiring a Vendor (cont’d)Hiring a Vendor (cont’d) Warning SignsWarning Signs
• Moonlighters, limited professional experience or Moonlighters, limited professional experience or just out of schooljust out of school
• VAR for a specific software package (okay if you VAR for a specific software package (okay if you already own it)already own it)
• Won’t sign or don’t have a written agreement Won’t sign or don’t have a written agreement which includes a statement of work, fees and which includes a statement of work, fees and payment schedule and confidentiality payment schedule and confidentiality agreementagreement
• Not forthright about their strengths and Not forthright about their strengths and weaknesses – NO ONE knows everything!weaknesses – NO ONE knows everything!
Case StudyCase Study
Had a full-time IT managerHad a full-time IT manager Ability and desire to perform back-Ability and desire to perform back-
end system administration (web and end system administration (web and database servers)database servers)
Hardware and network was in placeHardware and network was in place School administrator (high turnover)School administrator (high turnover)
FIFTH STEPFIFTH STEP
““EVALUATION”EVALUATION”
A Major InvestmentA Major Investment
Total IT costs are around 2.3% of revenue, or Total IT costs are around 2.3% of revenue, or $5,000/employee*$5,000/employee*
Software and associated expenses account for 10-40% of total Software and associated expenses account for 10-40% of total IT costsIT costs
Failures in information technology cost the U.S. economy $100 Failures in information technology cost the U.S. economy $100 billion annually, with the price of software defect repair billion annually, with the price of software defect repair
alone estimated at $59.5 billion ** alone estimated at $59.5 billion **
*Computerworld 1996*Computerworld 1996**WorkSoft, automated software testing company**WorkSoft, automated software testing company
But Is It Working For You?But Is It Working For You?
Mercer Human Resources Consulting StudyMercer Human Resources Consulting Study 50% of respondents 50% of respondents indicated their organization was indicated their organization was
either ineffective or very ineffective when it came to either ineffective or very ineffective when it came to capturing ROI from technology investmentscapturing ROI from technology investments
Only 16% of respondents indicated they were effective in Only 16% of respondents indicated they were effective in capturing ROI of their technology investmentscapturing ROI of their technology investments
Uncovering YOUR ROIUncovering YOUR ROI
Evaluation ChecklistEvaluation Checklist• Have you been better able to deal with Have you been better able to deal with
unexpected trends in the marketplace (e.g., an unexpected trends in the marketplace (e.g., an increase in demand for your services?)increase in demand for your services?)
• Are you/your staff better able to make changes Are you/your staff better able to make changes and corrections?and corrections?
• Are you able to respond to internal and external Are you able to respond to internal and external customer needs more quickly and/or more customer needs more quickly and/or more thoroughly?thoroughly?
• Have you replaced overhead with a profit center?Have you replaced overhead with a profit center?• Are you seeing other areas where technology Are you seeing other areas where technology
could make your business more profitable?could make your business more profitable?
Primary Reasons for FailurePrimary Reasons for Failure Failure to Clearly Define RequirementsFailure to Clearly Define Requirements
• BeforeBefore leasing, purchasing or designing any software, leasing, purchasing or designing any software, organizations need to have a clear understanding of what it is organizations need to have a clear understanding of what it is they need the software to do. Define objective and goalsthey need the software to do. Define objective and goals
Failure to Consider All CostsFailure to Consider All Costs• Annual maintenance fees and upgrades, the internal resource Annual maintenance fees and upgrades, the internal resource
costs for implementation and the costs for training and change costs for implementation and the costs for training and change management are typical cost categories most overlooked in management are typical cost categories most overlooked in cost/benefit analysiscost/benefit analysis
Primary Reasons for FailurePrimary Reasons for Failure Failure to Understand the Challenges of Integrating Failure to Understand the Challenges of Integrating
with Other Systemswith Other Systems• Integration is the hottest topic in IT today. “It ranks as one Integration is the hottest topic in IT today. “It ranks as one
of the chief concerns due to the proliferation of applications of the chief concerns due to the proliferation of applications within an organization”within an organization”
Failure to TrainFailure to Train• Introducing new technology does not automatically result in Introducing new technology does not automatically result in
cost savings. cost savings. • By-in and acceptance by usersBy-in and acceptance by users
Failure to Procure Adequate IT Staff for Failure to Procure Adequate IT Staff for Implementation and MaintenanceImplementation and Maintenance
• ““Pay $5,000 in the beginning to get it done right vs. $50,000 Pay $5,000 in the beginning to get it done right vs. $50,000 over the course of the technology’s lifespan to undo the over the course of the technology’s lifespan to undo the wrong and get it working efficiently.”wrong and get it working efficiently.”
Case Study (conclusion)Case Study (conclusion) ““The system” paid for itself in the first yearThe system” paid for itself in the first year The system is in its fourth yearThe system is in its fourth year Training costs reducedTraining costs reduced Overhead costs reduced: 1 FTE -> ½ FTEOverhead costs reduced: 1 FTE -> ½ FTE Able to respond to unexpected changes in the Able to respond to unexpected changes in the
marketplace – enrollments tripled over timemarketplace – enrollments tripled over time Errors reduced or eliminatedErrors reduced or eliminated Can make changes easilyCan make changes easily Can share information easilyCan share information easily Success-> more successesSuccess-> more successes
Moving ForwardMoving Forward Software is an ASSETSoftware is an ASSET
• AAnalyze your business needsnalyze your business needs• SSeek information and professional eek information and professional
resourcesresources• SSelect from variety of options what is elect from variety of options what is
best for businessbest for business• EEvaluate itvaluate it• TTrain staff to use itrain staff to use it
Online ResourcesOnline Resources
http://www.cnet.comhttp://www.cnet.com http://www.zdnet.comhttp://www.zdnet.com
http://www.tucows.comhttp://www.tucows.com http://www.capeinternet.orghttp://www.capeinternet.org http://www.ccdevgroup.nethttp://www.ccdevgroup.net http://www.techsoup.comhttp://www.techsoup.com
Search enginesSearch engines
Questions? Comments?Questions? Comments?
Marcia McLeanMarcia McLeanCapeCoderCapeCoder
http://www.capecoder.comhttp://[email protected]@capecoder.com
(508)477-6141(508)477-6141