Why Don’t We Ever Learn? Partnership Matters

Measurable performance, partnership, fiduciary responsibility – these are fairly consistent themes within the Demand Foresight blog.  These themes and values were highlighted again through a couple of stories in the news over the past 10 days or so. One was an Oracle Implementation for the Air Force; the other SAP’s announcement that they are raising rates for their maintenance services.

For the Oracle story – and the 80 to 100 million dollar budget that ballooned into 1 Billion dollars spent, a cancelled project and no measurable performance of any type.  Some of you reading will say that is the military or big government for you – that always happens with scope changes etc.   Realizing that this is a professional website, let me adjust my normal wording and say that that type of reasoning is a bunch of malarkey (yes – a real word – I looked it up).  The consulting company involved, the Air Force and Oracle were all willing participants in this very sad story, and it reinforces the very strange fact that software projects are very often not held to the same operating principles that drive normal business operations. Would the Air Force allow a critical supply mission of weapons and provisions to fail – would they just cancel the flights because of some tough conditions on the ground? Of course they would not – they are the U.S. Air Force – operational failure is not an option.  But software – completely different story – why?

And to our way of thinking, Oracle is part of this – they got their license fees, so what if it doesn’t work.  Where was their skin in the game?  Where was their commitment that this critical project was successful?  Until the buyers of software start holding suppliers accountable – and this can and should be done in contracting and even in choosing who the potential bidders can be (if you don’t offer a performance guarantee, you cannot bid)  – these type of results will continue to happen and they absolutely should not.

Similarly, SAP is raising prices for maintenance support.  Mind you, they are not simultaneously offering any improvements or new services within the support programs.  They are not tying the maintenance to improved utilization of the functionality.  It is just an across the board increase.  And as it turns out, a lot of their customers really have no leverage to contest the increase.  Because many of their clients have committed to an integrated IT platform under a single brand name, they are completely at the mercy of their supplier – in this case SAP. So from one perspective – you can’t really blame SAP. They are taking advantage of a situation that they worked very hard to create. More power (and $ to them).  However, what does that say about the fundamentals of their ‘partnering’ with their customers?

And to the companies that bought into and continue to support sole source, single vendor integrated IT strategies – when do you start to think about IT just like any other strategic vendor.  If you are manufacturing or assembling cars, or vacuum cleaners – you would never have just one option for sourcing motors or engines – why is it okay to trust just one supplier of mission critical IT functionality?

Where is the sense of fiduciary responsibility by the company executives to shareholders and private owners to rethink the approach to IT vendors and approach it in the same way that operational initiatives are treated?  And what are IT providers doing to help make that happen?

Until the culture and expectations around IT implementations are radically rethought, these types of stories highlight the risk associated with critical projects like improving S&OP capabilities and taking advantage of profit optimization opportunities – the types of initiatives that really drive bottom line improvements, and that is what is really unfortunate.

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