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Maximize Your Software Technology Investment March 24, 2004. Presented by Marcia McLean CapeCoder , Mashpee, MA. About CapeCoder. In business since 1998, incorporated in 2000 Specialize in web-based, database-driven custom business applications Current projects use Microsoft .NET

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Maximize your software technology investment march 24 2004 l.jpg

Maximize YourSoftware Technology InvestmentMarch 24, 2004

Presented by

Marcia McLean

CapeCoder, Mashpee, MA


About capecoder l.jpg
About CapeCoder

  • In business since 1998, incorporated in 2000

  • Specialize in web-based, database-driven custom business applications

  • Current projects use Microsoft .NET

  • Former manager with the MITRE Corporation, the ASK Group, Freedom Newspapers

  • Former Board member of the New England Employee Benefits Council

  • President of the Cape Cod .NET User Group

  • Member of the Cape Cod Internet Council


A major investment l.jpg
A Major Investment

Total IT costs are around 2.3% of revenue, or $5,000/employee*

Software and associated expenses account for 10-40% of total IT costs

Failures in information technology cost the U.S. economy $100 billion annually, with the price of software defect repair alone estimated at $59.5 billion **

*Computerworld 1996

**WorkSoft, automated software testing company


5 steps to maximize your roi l.jpg
5 Steps to Maximize Your ROI

  • Analyze needs, define requirements

  • Inventory what you have

    • Options available

  • Build or buy new software

  • Training, testing, maintenance, hiring

  • Evaluation

    Case study


Case study l.jpg
Case Study

  • Background

    • Motorcycle dealership with four retail stores

    • Safe riding school with 500 students

  • Requirements

    • Enroll students online and from the stores

    • Enforce business rules

    • Accurate enrollment headcounts

    • Change and correct customer (student) info

    • Reconcile credit card charges

    • Make information available among departments

    • Send info to Commonwealth RMV


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Case Study (cont’d)

  • Challenges

    • High administrative overhead

    • Long time to train new administrator

    • Hard to prevent overbooking

    • Information collected from various sources

    • Could not make changes easily

    • Burdensome to create reports to RMV

    • Different people needed information

    • Competition

    • Web hosting company was expensive and unresponsive


First step l.jpg
FIRST STEP

“DEFINE REQUIREMENTS”


Software requirements l.jpg
Software Requirements

  • Collection, organization, reporting, distribution of information

  • Start and end with your business needs

  • Examples:

    • Sales, cash flow and profit

    • Scheduling

    • Customer contact info

    • Inventory


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Questions to Ask

  • What information do I need to collect, organize, report and distribute?

  • Who provides this information?

  • How is the information provided?

  • Who collects, maintains and distributes it?

  • How is the information stored?

  • How is the information used:

    • How is it reported?

    • Who needs this information?


Case study what information was needed l.jpg
Case Study: what information was needed?

  • “Inventory”: class sizes, codes, schedule

  • Method and amount of tuition payment

  • Customer contact and demographic information

  • Attendance and grades

  • Credit card payment authorization codes


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Case Study: who provided the information and how was it stored?

  • Sales staff -> school administrator

  • Customer call-ins to administrator

  • Instructors

  • White boards, notebooks

  • Legacy dealer management system


Case study cont d who needed the information l.jpg
Case Study (cont’d): stored?who needed the information?

  • Customers

  • Instructors

  • Controller

  • Stockroom

  • General manager

  • RMV


Points of failure l.jpg
Points of Failure stored?

  • Information was lost

  • Hard to retrieve

  • Not organized

  • Not current

  • Hard to make corrections, changes

  • Not easily shared


Define requirements recap l.jpg
Define Requirements - Recap stored?

  • Determine what information you, your employees, your customers and your vendors need

  • Who provides it?

  • Who needs to see it?

  • Will it need to be changed?

  • How and how often does it need to be updated and reported?


Second step l.jpg
SECOND STEP stored?

“INVENTORY WHAT YOU HAVE”


Types of business software l.jpg
Types of Business Software stored?

  • Basic

    • Office Productivity Suites (Word Processing, Spreadsheet, Email)

    • Accounting

    • Virus Protection, Firewall

    • Website

  • One Level Up

    • Database

    • Specialty – POS, inventory, HR, medical

    • Server-based, multi-user


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You’ve Made An Investment stored?

  • Software accounts for up to 40% of total IT costs of $5,000/employee

  • 8% to 15% of software spending wasted

    • Goes to purchasing, renewing, and supporting contracts for shelf-ware, software which is not used because

      • Requirement no longer exists

      • “Point” solution whose functionality has been replaced by newer applications or suites


Basic software l.jpg
Basic Software stored?

  • Business Applications

  • Anti-virus

  • Spam, Spyware Filters

  • Website

  • Security

    • Firewall

    • Encrypted data

    • Restrict access to files and network

  • Backup

    • CDs

    • Tape

    • External hard drive

    • RAID-configured internal hard drive

    • Online backup service


Servers l.jpg
Servers stored?

  • “8 reasons your business needs a server”

    • File-sharing is easier

    • Easier back-ups

    • Specialized collaboration software

    • Mobile work force

    • Share high-speed Internet access

    • Offload files and tasks to server

    • Consolidate email accounts

    • Easier to set up new computers and deploy new applications

      http://www.microsoft.com/smallbusiness/reasonsforserver.mspx


Inventory recap l.jpg
Inventory - Recap stored?

  • Bundled office productivity applications

  • Specialty packages, like accounting

  • Custom software purchased with your business

  • Legacy database

  • Externally hosted web site

  • Utilities for network admin, anti-virus, firewall, spyware detection


But does it work l.jpg
But Does It Work? stored?

  • Does my software collect ALL the information I need?

  • Does it provide helpful built-in or ad hoc reporting tools?

  • How easily is the information shared?

  • Can multiple people use it at the same time?

  • How easy is it to learn and to use?

  • How expensive is it to maintain and upgrade?

  • Are my existing systems well integrated?


Slide22 l.jpg
No? stored?

  • Consider upgrades

  • Consider new software purchase

  • Consider consulting assistance to integrate, enhance

  • Consider consulting assistance to develop custom solution


Case study what was their investment l.jpg
Case Study: stored?what was their investment?

  • Legacy accounting and POS

  • Bundled office productivity suite

  • Servers, hardware, network

  • Integration was minimal

  • School information was kept on white boards and in notebooks


Third step l.jpg
THIRD STEP stored?

“BUILD OR BUY?”


Slide25 l.jpg
Buy stored?

  • “Shrink Wrap”

    • Advantages

      • Tested by vendor, support available and often part of purchase price

      • Forums, user groups and other resources readily available

      • Maintenance, upgrades, patches readily available

      • Fixed price, no surprises

    • Disadvantages

      • You get it “as is”, no customization

      • Vendor’s tech support may be inadequate

      • You can’t legally copy it or redistribute it.


Buy cont d l.jpg
Buy (cont’d) stored?

  • Checklist before buying software

    • Pricing, “bundled” (Office)

    • Single or multi-user

    • Shop around for best price and special programs

    • Release date of at least 12 months ago

    • Establish procedures for installation, updates and patches

    • Test and run parallel, especially “mission critical” app and/or on production servers


Licensing l.jpg
Licensing stored?

  • Grants you the right to use the software developer’s intellectual property


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Volume Licensing Discounts stored?

  • Transactional – # of purchases (new, renewed, maintenance)

  • Forecast – spreads orders and costs over fixed period, e.g., 2 years

  • Site – multi-user limited or unlimited

  • First order – price of future licenses receive same discount as your first order

  • Points - $ value of purchases


Freeware shareware l.jpg
Freeware, Shareware stored?

  • Freeware

    • http://www.tucows.com

    • http://www.download.com/

    • http://www.macoszone.com/

  • Shareware: “try before you buy”

  • Demo versions of commercial software

  • Beware of spyware, adware


Build l.jpg
Build stored?

  • “Customize”

    • Advantages

      • You have a resource your competition doesn’t

      • Meets your business’s unique needs

      • You and your vendor have complete control if you want changes, enhancements

      • You can negotiate licensing and ownership (buyer’s market)

    • Disadvantages

      • It always takes longer than expected to build

      • It is often more expensive that expected – this is controllable through contract negotiations and managing “scope creep”

      • It really is “Beta” – are you set up to deal with unexpected bugs?

      • Do you have time to work with the vendor on testing?

      • Do you understand your business processes well enough to help your vendor write a reasonably good statement of work?


Build31 l.jpg
Build stored?

  • Checklist before “building” software

    • Shop Around

      • In 2000, there were 127 technology consulting firms in Barnstable, Plymouth and Bristol counties providing custom software development services

    • There should be a contract and it should include:

      • Statement of work

      • Budget (fixed price, hourly)

      • Payment schedule (typically 1/3:1/3:1/3)

      • Schedule

      • Protection of privacy, ownership of code

      • Warranty

    • Expectations need to be clear up front

    • Work out communications (regular meetings, emails, phone calls)

    • If you are putting the job out to bid, tell your vendor


Build and buy l.jpg
Build AND Buy stored?

  • Combination: Build & Buy

    • Advantages

      • Can be best of both worlds – tested software that can be modified to your specific needs

      • Tech support MAY be available; user groups and other resources may be available as well.

    • Disadvantages

      • Comes with a price – more expensive. Companies need to recoup their development costs, and this kind of software is harder to write.

      • You HAVE to find a vendor who has deep knowledge of the software – and that may be hard to do.

      • Your vendor needs to provide excellent documentation and training – one more thing to worry about!

      • A good vendor is expensive: customization is a higher skill set.

      • Vendor is probably a VAR, which means they may try to “upsell” you.


Business software recap l.jpg
Business Software Recap stored?

  • Upgrades may be available

  • Buying new

    • Integration

    • “Hidden” costs of installation, running parallel, training, purchasing more licenses

  • Building

    • Requires good communication with vendor, in-depth knowledge of your requirements


Case study build l.jpg
Case Study: BUILD stored?

  • Maximize current IT investment

  • Unique business rules

  • Wanted exclusive ownership of the software

  • Enroll students at four stores and at trade shows

  • New central database independent of legacy system

  • Customer self-service component

  • Ability to administer servers and access data independent of their outside hosting service

  • Competitive advantage


Fourth step l.jpg
FOURTH STEP stored?

“TRAINING, MAINTENANCE & HIRING”


Training resources for commercial software l.jpg
Training Resources stored?for Commercial Software

  • Colleges, training centers , trade schools, community adult education

  • Vendor resources

  • Online forums

  • User groups

  • On-site training by a specialist


Maintenance hidden cost l.jpg
Maintenance: “Hidden” Cost stored?

  • Install upgrades and patches

  • Integrate with other systems

  • Administer permissions and privileges

  • Protect from viruses and other attacks

  • Testing and deployment

  • Server tuning

    Hosted software model is an alternative


Hiring employees l.jpg
Hiring Employees stored?

  • Degree/equivalent and 3-5 years

  • Network administrator: $44-60

  • Sr. network admin: $60-65

  • Tech support: $34-44

    2003 Cape Cod Compensation & Benefits Survey

    Cape Cod Human Resources Association

    Conducted by The HR Consulting Group


Hiring a vendor l.jpg
Hiring a Vendor stored?

  • Good Signs

    • This is a full-time business for them

    • Have been in business FT for 2 or more years

    • Have clients who have been with them for 2+ yrs

    • Have experience with similar projects

    • Have at least 3 credible business/technical references

    • Website is current (no dead links) and easy to use

    • Keeps skills current by participation in continuing education

      • Courses, user groups, publications


Hiring a vendor cont d l.jpg
Hiring a Vendor (cont’d) stored?

  • Warning Signs

    • Moonlighters, limited professional experience or just out of school

    • VAR for a specific software package (okay if you already own it)

    • Won’t sign or don’t have a written agreement which includes a statement of work, fees and payment schedule and confidentiality agreement

    • Not forthright about their strengths and weaknesses – NO ONE knows everything!


Case study41 l.jpg
Case Study stored?

  • Had a full-time IT manager

  • Ability and desire to perform back-end system administration (web and database servers)

  • Hardware and network was in place

  • School administrator (high turnover)


Fifth step l.jpg
FIFTH STEP stored?

“EVALUATION”


A major investment43 l.jpg
A Major Investment stored?

Total IT costs are around 2.3% of revenue, or $5,000/employee*

Software and associated expenses account for 10-40% of total IT costs

Failures in information technology cost the U.S. economy $100 billion annually, with the price of software defect repair alone estimated at $59.5 billion **

*Computerworld 1996

**WorkSoft, automated software testing company


But is it working for you l.jpg
But Is It Working For You? stored?

  • Mercer Human Resources Consulting Study

    • 50% of respondents indicated their organization was either ineffective or very ineffective when it came to capturing ROI from technology investments

    • Only 16% of respondents indicated they were effective in capturing ROI of their technology investments


Uncovering your roi l.jpg
Uncovering YOUR ROI stored?

  • Evaluation Checklist

    • Have you been better able to deal with unexpected trends in the marketplace (e.g., an increase in demand for your services?)

    • Are you/your staff better able to make changes and corrections?

    • Are you able to respond to internal and external customer needs more quickly and/or more thoroughly?

    • Have you replaced overhead with a profit center?

    • Are you seeing other areas where technology could make your business more profitable?


Primary reasons for failure l.jpg
Primary Reasons for Failure stored?

  • Failure to Clearly Define Requirements

    • Before leasing, purchasing or designing any software, organizations need to have a clear understanding of what it is they need the software to do. Define objective and goals

  • Failure to Consider All Costs

    • Annual maintenance fees and upgrades, the internal resource costs for implementation and the costs for training and change management are typical cost categories most overlooked in cost/benefit analysis


Primary reasons for failure47 l.jpg
Primary Reasons for Failure stored?

  • Failure to Understand the Challenges of Integrating with Other Systems

    • Integration is the hottest topic in IT today. “It ranks as one of the chief concerns due to the proliferation of applications within an organization”

  • Failure to Train

    • Introducing new technology does not automatically result in cost savings.

    • By-in and acceptance by users

  • Failure to Procure Adequate IT Staff for Implementation and Maintenance

    • “Pay $5,000 in the beginning to get it done right vs. $50,000 over the course of the technology’s lifespan to undo the wrong and get it working efficiently.”


Case study conclusion l.jpg
Case Study (conclusion) stored?

  • “The system” paid for itself in the first year

  • The system is in its fourth year

  • Training costs reduced

  • Overhead costs reduced: 1 FTE -> ½ FTE

  • Able to respond to unexpected changes in the marketplace – enrollments tripled over time

  • Errors reduced or eliminated

  • Can make changes easily

  • Can share information easily

  • Success-> more successes


Moving forward l.jpg
Moving Forward stored?

  • Software is an ASSET

    • Analyze your business needs

    • Seek information and professional resources

    • Select from variety of options what is best for business

    • Evaluate it

    • Train staff to use it


Online resources l.jpg
Online Resources stored?

  • http://www.cnet.com

  • http://www.zdnet.com

  • http://www.tucows.com

  • http://www.capeinternet.org

  • http://www.ccdevgroup.net

  • http://www.techsoup.com

  • Search engines


Questions comments l.jpg
Questions? Comments? stored?

Marcia McLean

CapeCoder

http://www.capecoder.com

mmclean@capecoder.com

(508)477-6141


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