Technology vendor product investment speaks volumes

Often, enterprises expectations with regards to product investment aren’t met by technology vendors. They question where all the money they spend on support and maintenance contracts with software companies goes, especially in the context of cloud-based solutions. Roy Russell, CEO, Ascertus Limited, explores further.

Commonly, vendors struggle to make on-premises legacy applications in the cloud, be that because a cloud version of the solution is not developed, or that their half-baked cloud solution just doesn’t hit the mark – it simply isn’t designed for this medium, and so provides few of the benefits of a true multi-tenanted, elastic cloud solution.

Enterprises understandably want to invest in solutions that keep pace with their changing business needs and broader technology innovations. Switching business-critical applications is a time-consuming and complex activity – even in the cloud. And so, once enterprises have invested in a solution, some feel bound to the technology vendor, be that due to annually increasing solution maintenance fees or the quality of product improvements (or lack of) that are delivered to them.

On the other hand, vendors face challenges too – fast-paced technology advancements, increasing employee costs, requirement for newer skill sets and such.

Most software application providers try to make timely investments in their offering, but there are signs that can indicate a technology vendor’s approach to investment in their offering – especially from a cloud perspective.

Most noticeably, if legacy product improvements are slow or far and few between, it may be a sign that vendor resources are being diverted away from the legacy system development towards the new shiny cloud-based system. While this is understandable, it needs to be handled sensitively with enterprises who are reliant on those legacy systems for a much longer time and are paying substantial annual maintenance fees. However, in the case of cloud-based systems, with agile software development and cloud-based application deployment models, there’s really no excuse for lack of timely improvements and functionality updates.

A vendor’s approach to integration with other enterprise software solutions can be a give-away. While it’s unreasonable to assert that a provider of a single, multi-functional ‘jack of all trades’ standalone solution is innovation shy, the reality is that no one technology can deliver best-of-breed advantages on all counts. Technology vendors that keenly work with complementary solution providers are able to focus on the aspects of their solution that provide real benefit whilst demonstrating that they are devising ways of delivering value to their customers – and helping them maximise the ROI across all the deployed systems. With digital transformation projects underway, many enterprises are looking to create seamless work environments across the business in order to optimise their investment in technology, overall.

The long-term financing and funding strategy of a technology vendor is another tell-tale sign on their approach to product development. Inherently, the VC model is such that once a company that they are backing reaches a size or milestone, typically it is actively sold. Hence, it isn’t uncommon for a VC-backed technology provider to, at a critical stage in the lifecycle, focus on maintaining and growing annual subscriptions. A larger subscription base gives the company annuity, which significantly increases its value. The product development falls by the wayside and in some rare cases, even leads to product stagnation.

Of course, not all acquisition is bad. An established technology vendor that purchases an innovative start-up, giving the company a cutting-edge capability is a major positive for enterprises. Many enterprise solution providers have gained artificial intelligence capability through acquisition and embedded it into their products to deliver highly advanced systems that help organisations deal with complex business challenges. For example, in the current environment, vendors delivering artificial intelligence capability are helping enterprises deal with commercial contract related issues such as LIBOR and force majeure.

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