Enterprise Software: Out of Site, Out of Mind

If large enterprise software companies pride themselves at charging millions, then customers should at least be able to spread what they spend across the entire business

Last week Computerworld ran a story about a recent NSW Auditor-General's report on the state's Dep-artment of Commerce enterprise software overhaul. The department will now shell out an additional $5 million of taxpayers' money to displace one of the core legacy systems, extending SAP's footprint to encompass the entire business.

The result of this looks promising. Savings are expected to exceed the $50 million mark over the next five years - hooray for prudent software contract management!

But that's far from the whole story.

The original contract inked by the department was set at $15 million but the AG's report stated the project value will increase to $20 million "mainly" due to a re-scope which involved the replacement of yet another system.

Without pointing the finger at anyone as to why the original project ran over budget by some 33 percent, this case definitely raises questions as to how diligently enterprise software procurement is conducted by the wider enterprise and government sectors.

To analyze the situation, let's take a step back. The Department of Commerce knew from the outset that it needed to consolidate its software infrastructure. To do this would require a significant investment in an enterprise app and the decision to go with SAP was as good as any other vendor in this space. With that in mind, why didn't the department refuse to sign anything other than an enterprise-wide SAP licence to the value of $15 million?

(Question for other enterprise software vendors - would you have said no to that?)

Scope-creep, re-scoping, or an honest to goodness blow-out, there will always be some variance when dealing with large software implementation projects, and with the sums we are talking about here the clear winner is the vendor.

Even a medium-sized business like IDG has site licences for a number of software products, which, at the very least, spares us from becoming embroiled in licence management paperwork.

All customers of enterprise software must be diligent in recognizing the scope of deployments. It's a tad late to sign off on a $15 million software project and say "oh, by the way, we have this legacy system we may as well replace while we're at it", and be forced to cough up an additional 30 percent. It's time to push vendorland into an era of site licensing as the norm - and put an end to this money-milking while we're at it.

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