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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

Maximize YourSoftware Technology InvestmentMarch 24, 2004

Presented by

Marcia McLean

CapeCoder, Mashpee, MA

about capecoder
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
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
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
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
case study cont d
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


software requirements
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
questions to ask
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
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
case study who provided the information and how was it stored
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
Case Study (cont’d): who needed the information?
  • Customers
  • Instructors
  • Controller
  • Stockroom
  • General manager
  • RMV
points of failure
Points of Failure
  • Information was lost
  • Hard to retrieve
  • Not organized
  • Not current
  • Hard to make corrections, changes
  • Not easily shared
define requirements recap
Define Requirements - Recap
  • 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


types of business software
Types of Business Software
  • 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
you ve made an investment
You’ve Made An Investment
  • 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
Basic Software
  • 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
  • “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

inventory recap
Inventory - Recap
  • 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
But Does It Work?
  • 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?
  • 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
Case Study: 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


  • “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
Buy (cont’d)
  • 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
  • Grants you the right to use the software developer’s intellectual property
volume licensing discounts
Volume Licensing Discounts
  • 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
Freeware, Shareware
  • Freeware
  • Shareware: “try before you buy”
  • Demo versions of commercial software
  • Beware of spyware, adware
  • “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?
  • 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
Build AND Buy
  • 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
Business Software Recap
  • 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
Case Study: BUILD
  • 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


training resources for commercial software
Training Resources 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
Maintenance: “Hidden” Cost
  • 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
Hiring Employees
  • 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
Hiring a Vendor
  • 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
Hiring a Vendor (cont’d)
  • 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
Case Study
  • 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


a major investment43
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

but is it working for you
But Is It Working For You?
  • 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
Uncovering YOUR ROI
  • 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
Primary Reasons for Failure
  • 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
Primary Reasons for Failure
  • 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
Case Study (conclusion)
  • “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
Moving Forward
  • 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
Online Resources
  • Search engines
questions comments
Questions? Comments?

Marcia McLean