The Malaise in Software. Why it is happening and what to do about it?

Sorry, but the news is grim. The customers are unhappy and rebellious.

• CFO.com“Unhappy Returns” Over the past year, have your IT investments produced the returns you expected?A whopping 40% say “No.”

• BPM magazine “Most users are not very satisfied with their performance management software.Less than 20% said they are satisfied with any aspect of their business performance management software.”

The result is impacting software companies in a very bad way.

“Open Text CEO sees small to flat earnings growth.” CEO to investors (Depressed-looking CEO at right.)

“Cognos takeover potential looms as shares fall.”

“Cognos disappoints again.”

There is a malaise affecting the software industry.What can Software CEO’s do to get out of this rut?

First and foremost, software CEO’s need to think differently about their businesses.Rather than focusing on technology, they need to focus first and foremost on customers. In fact, they ought to start by looking closely at their business through the eyes of their customers.They must challenge themselves to answer difficult questions, such as if their customers were to ask them these questions:

1. Does your product offer me value greater than alternative uses of capital? If so, how can you prove it to me?
2. Can we trust you to deliver? How can I be certain that the ROI I promise to our CFO is actually delivered?
3. I know you have features and benefits. I have people and business issues. How do we come together?
4. I’m busy and so are my people. How can you cut through the clutter?

It is my belief that software companies need a different approach. Rather than the traditional model:

• R&D develops products
• Marketing promotes products
• Sales sells products
• Services installs products
• Support maintains products

We need a new closed-loop, continual improvement approach. My model is this:

1. Marketing studies customer needs and documents Go to Market.
2. Marketing trains R&D and Sales to customer needs and approach.
3. Sales and Marketing work together to win business.
4. Everyone is responsible for customer success. We make measurable ROI and customer loyalty part of compensation plans, especially for salespeople.
5. Last and most importantly, our top executives must spend at least 25% of their time on the road with customers — not selling, but rather asking questions and listening.

It is my belief that software firms that get this approach will win in tough markets and steal market share from those who do not.