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ROI (Return on Investment)
ROI measures how effectively the firm uses its capital to generate profit - the higher the ROI the better. If your firm has to live by that definition – why don’t your vendors? How many software vendors or development shops offer you any quantifiable return on your investment? How many of them can actually demonstrate that using their firm will give you a higher return than the next vendor? Very few I’ll wager. In fact the most common reason for choosing a particular vendor is usually one of the following:
While you may think those are valid reasons, it is not hard to calculate the ROI of those given strategies – nothing! Brand They are ‘so and so’ - so they have to be good! The funny little thing that companies fail to realize about big brands is that even those big conglomerates with their big names hire their staff from the same places you and all the other vendors do. While they may have key individuals that are the best in world, how many of those individuals are working on your project or in the consultancy divisions of their companies? None of them, those individuals are hidden away producing their core products and never see the light of day. So If they hire their main consulting staff from the same place you do, and the same place all the other vendors do, then it stands to reason that they have similar competence levels. What is the ROI of the brand itself then, if the knowledge resources are similar across the board? Even though your firm may achieve political and or market positioning from the brand (such as boosting a company's perceivable value in the eyes of shareholders), the brand itself offers no direct ROI. Few companies can afford more than one of these ‘positioning’ projects, as real ROI is needed to generate sustainable revenue. Past Reputation While basing a decision on past history will help you to avoid repeating a mistake, it does not guarantee future success in any way. Just because a vendor was good at something before, doesn’t mean they still are. As years go by software ages, and skills and techniques become outdated. Be sure that your vendor both has the most up to date skills and training (has it – not can get it – remember you are paying them because they are supposed to already have it), and utilize up to date technology to improve the way they used to do things. For example, a vendor that claims you should choose them because they have been the king of EDI for the last 10 years isn’t impressive unless they back up that claim by demonstrating that they have converted all of their legacy EDI (painful, slow and expensive way of doing EAI) to XML (faster, cheaper, much more flexible), which the majority of EAI vendors have not. Unless a vendor has improved the way they did things, how can they offer more ROI than they did before, let alone their competition? Personal Relationships This goes without saying, basing business decisions on friendships and old alliances has a high risk of failure attached. People rely on the myth that because they have friends in the vendor’s staff, the vendor won’t let them down. The two are rarely connected. Sometimes, regardless of how good a friendship you have not all things are within your friend’s control and regardless of his or her intentions things can go wrong. Then we come back to ROI – is the vendor’s ROI proposition so weak that they have to rely on personal relationships to open doors for them? While it is true that personal relationships always start the ball rolling – they should never be the deciding factor – ROI must be demonstrated! ‘I bought x from them so why not y’ This strategy is a gamble. Sometimes it pays off, sometimes it doesn’t. If you have already have a successful implementation of a vendor’s software and new product offering is available, it’s worth looking at. But be honest in your approach. Was the first implementation really successful – or was it just dubbed ‘successful’ because of internal politics. Find out from the real users if it was a success, not upper level management that made the decision, but the people that use it day to day. The biggest danger of this strategy is that some vendor’s buy other third party software and then ‘bundle’ it together with theirs – creating a ‘suite’. So while the vendor’s software may have worked great, the rest of the bundle could just branded as the vendors and have no cohesion at all. If there is cohesion, then your ROI will increase based on added value of integrated functionality – if not your ROI will decrease as a result of added cost and hassle from making disparate technologies work together. Promotion based on a vendor’s success Probably the most common, and by far the worst, reason why people choose a vendor again and again (whether or not they were successful) is because the people that chose the vendor and brought them in have built their careers on those decisions and cannot afford to be wrong (since they have already been promoted). Those kind of projects are deemed ‘successes’ according to management, but are never used or are hated by the people actually using them. You might think that this seems far fetched but a private survey of a major CRM vendor’s (name withheld to be nice) customers proved that out of 80 ‘satisfied customers’ on their web site, only 20 were even partially satisfied – the rest were either dissatisfied, had dropped the product or were in the process of dropping the product. The number one reason given by the customers why those projects were considered successes at the time (even though they were not) was because someone got promoted over the deal and it had to be deemed a success, but now that time had passed they could openly talk about it and/or ratify the bad decisions. This strategy produces anti-ROI, actually decreasing productivity of the employees forced to use an inferior solution because of politics. With these methods of choosing a vendor, no wonder companies are now refocusing on ROI... Sabertooth’s ROI proposition So why all the hoopla about ROI? We think we do offer quantifiable ROI. It’s no magic and it’s not even hard to calculate. We use our application framework (Sabertooth Application Framework, or SAF) to provide a base to build custom software in up to 60% less time than most other vendors or development shops. With our framework providing up to 60% of the functionality of an application, we can solely concentrate on your business problem at hand so you only have to be concerned with what you really care about it – your business! Because our framework is designed for the single purpose of extending it and building upon it, we have no trouble creating completely custom solutions without any pain and additional costs of altering third-party applications to suite your needs. Furthermore, because a large portion of the application is already built, tested and proven, your solution will have that much less risk involved. On top of all that we have developed turnkey solutions (complete solutions that only require deployment) to serve many eBuinsess needs – built upon our own framework so you can either purchase them ‘as is’ or have them customized – again drastically reducing your time to market. Faster time to market – now that’s Real ROI. What you do with that time is completely up to you...
Stand Out Our ROI value proposition is why we think we stand out from the crowd – differentiating us from most vendors and development shops today. In making the choice to use us as your vendor, you enable your firm to stand out from your competition as well! Let us quantify the ROI you will receive when developing a custom eBusiness solution with us. Contact our business services group for a custom development presentation:  Business ServicesRelated Information Read more about our Sabertooth Application Framework™ Read more about how we approach custom software development Documentation |
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