Software

Six dirty tricks from enterprise vendors

Enterprise software vendors sometimes play unpleasant games to sell their products. Here are six tricks vendors use against customers.

This is a guest post from Michael Krigsman of TechRepublic's sister site ZDNet. You can follow Michael on his ZDNet blog IT Project Failures, or subscribe to the RSS feed.

Enterprise software vendors sometimes play unpleasant games to sell their products. InfoWorld describes these tricks in a story called, Dirty Vendor Tricks, written by veteran journalist Dan Tynan, who has covered many stories of IT failure.

Here's Dan's list of six tricks enterprise vendors use against customers, but the descriptions are mine:

  1. The magic demo. Using presentation slides and canned demonstrations, the vendor claims to solve the customer's most challenging problems. It's all good, except when there is no real product to back up the promises.
  2. Underbid, then overcharge. A beautiful trick often played elegantly by consulting companies and system integrators. These folks neglect to inform the customer that the initial software purchase price does not include much higher associated costs for equipment and implementation services.
  3. The customer headlock. One of the cleverest tricks in the book, this one uses high switching costs to lock-in customers. The time, cost, and hassle of swapping enterprise systems mean vendors have their customers by the... well, you know what.
  4. The billing "mistake." Really a utility services game, providers over-charge customers with incorrect invoices, knowing few will notice and complain. Sleaze at its finest.
  5. The forced upgrade march. Upgrades make the software business a beautiful thing-for the vendor. The customer's system may work well, but when vendors tell customers to upgrade or lose support, the buyer has little choice but to play sheep.
  6. The clueless customer. Less a trick than an unpleasant fact, remember there are two parties to all these tricks: vendor and customer. Inattentive or inexperienced customers are often their own worst enemy.

The project failures analysis

Strategic enterprise software purchases are complicated to buy and expensive to implement. Since these products automate core business functions, they reflect genuine complexity in the buyer's organization. Some vendors use this complexity unfairly to manipulate potential customers into making uninformed and poorly considered purchases.

In general, the software itself is not to blame; these are human, not technical, issues. It's worth noting that some observers incorrectly believe that faulty software causes most IT failures. That perspective is wrong and misinformed.

Enterprise customers should treat software purchases with the same care and attention as buying a home: research the vendor, talk with other customers, and ask objective, third-party experts for advice. Although enterprise software is a minefield, many customers do buy and implement successfully.

The tricks described in this post range from subtle persuasion to outright deception. However, they all rely on aggressive vendors taking advantage of uninformed customers. In the end, caveat emptor applies and education is the great force for achieving success.

Have you seen vendors play these tricks or others? Please share your thoughts!

35 comments
mark.silvia
mark.silvia

It never fails to amaze me how some vendors are so non-transparent on their software products. They commonly do the #1 and paint a rosy picture. But never address specific questions such a technical specifications such as imports/exports (lack there of), database back-ends, APIs, language the software is written in (chances are, it is written in Powerbuilder, Cobal, MS Access). The other irritating aspect is extracting the true costs of purchasing and operating the product. Some products are a real maintenance nightmare while performing poorly. Other nickle and dime you to death on features, add-ons along with forced 'upgrades'.

dsanco
dsanco

The new one I've been seeing is the online test to determine your computers vulnerabilities or limitations and demonstrate through the advertized free tool how your system would benefit from the overpriced program. registry cleaners antivirus tools etc.

JMStevens
JMStevens

I was brought on as a PM for two of the four enterprise level strategic projects.. within a couple of months, I started asking for the detailed invoices and it took another four months before they were actually delivered. In there, I found charges for dryer sheets, car rentals on the other side of the country and subway charges for people who worked in a town with no subways... In that one month, I found a 35% discrepancy in the amount that was charged to the company. Needless to say, that vendor only lasted through one more billing cycle.

Sneferu
Sneferu

These 'stuff' will continue to occur as long as middle and upper management continue to get 18 months to 2 years of Big Vendor software on their resumes. Its not about the software - and it will never be about the software. 5 x 2 years Big Vendor makes me a attractive hire. I can travel anywhere in the industry and I'm a highly paid and respected GURU of Big Vendor. Big Vendor - knows, trades and in fact nurtures this process.

drowningnotwaving
drowningnotwaving

BIG HINT #1: If you don't know what you are doing, [b]pay[/b] for expert "independent" advice. Here's the checklist ... #1 - The demo: -ask the person a couple of questions 'on the fly' - get them to show you how it works there and then - you'll soon find out if the software is real or not. - ask for, and spend time speaking with, [b]references[/b]. - Don't be like the "kid in the candy store" - which in reality is the easiest type of IT buyer to sell to. #2 - Underbid / overcharge - Do your homework and analysis FIRST. - Understand a fundamental rule: if your needs change, your costs will too. - Don't walk into a project with a pre-set $$ amount, before you've spoken with peers, references, the other company across the street, whatever. EG: [i]We need a 30-concurrent user manufacturing system for process and BTO, incorporating design and quoting, job costing and web integration - of yeah and our budget is $20k.[/i] I got that call on Wednesday last week. What I am saying is - don't set yourself up for failure before you even begin. #3 the Headlock. ??? This is life. I move into my new house and interia sets in. I may like the one that just came up for sale down the road, but am I really going to sell this one now?? I buy a new Flat Screen - am I likely to buy the new one next week with all the zappy new features?? The average ownership cycle for Software is around 9 years. Get expert advice upfront as it is a long partnership. 4. The billing ?mistake.? [b]Really a utility services game[/b]. Nuff said. Get weekly signoffs for consultant's time cards. Tell the Vendor to provide actuals versus project reports. MOST reputable vendors do these things proactively as they are sick and tired of waiting 90 days for cash, when they have to pay consultants per month. - [b] Check your invoices[/b] ferchrissakes !!! How hard is that? DON'T PAY until flaws are corrected. 5. The forced upgrade march. - Check references and make sure you ask the questions: -- how often? -- how many $$? -- Did you get any real business benefit? -Be careful of "Mature" products - if a product has been around for 15 or more years, the fact is that it is probably as function-rich as it is likely to get. Future functional enhancements are usually for a small subset of particular clients who want something especially set up for their industry - that is, will have little benefit to the overall installed base. - Of course, the appeal of those products is that they are as function-rich as they are likely to get!! - Expert advice, listen to references, make an advised judgement, and understand that once you're in - just like a real estate lease - you can get out of it but it is expensive. { I simply reject this as a real issue. For 20 years I have made a living selling "new business" ERP solutions, to clients that have installed solutions and are looking for something more/better/cost-effecetive/whatever. OF COURSE I am aware that the incumbent supplier is (often rightfully) pointing out to the client the expense of moving away - that is their job, after all. But mostly I beat them.} 6. The clueless customer - "A man's got to know his own limitations". Nuff said. Funnily enough most reputable vendors usually try to avoid idiot customers - the short-term gain isn't worth the long-term pain. Here's big hint #2 ... Clients, especially IT people, like to think that they make advised judgements upon sound and objective criteria and hence are most likely to end up with the right solution. They (almost) never do, god bless them !! Like, 95% of decisions are SUBJECTIVE first, and then backed up with objective information which is (go figure) designed purely to support the subjective decision. There are only two major criteria for most decisions in business - self-interest and tribalism. Understand your own real motivation for decisions and then you'll maximise your chances of getting the process right, and thus hopefully the decision itself. If anyone wants to understand more about this, there is over 100 years (of hundreds of thousands) of research papers on individual and buyer motivation. Understanding such motivation is at the heart of most commercial operations, and hence the quantity of research from business, economic, medical and social faculties around the world. Go to any Business School or business book shop for detail. edit: I found at least two spellink erras.

Gis Bun
Gis Bun

Don't forget the Apple's dirty tricks. They've been on "OS X" now for how many years? Charging every time you go from 10.1 to 10.2 to 10.3 to .... In roughly the same time frame Windows XP has been alive and well and will continue for another 4+ years and you don't pay for service packs.

GSG
GSG

Number 1 can be solved by creating an RFP and making a vendor fill it out. You always include, at the very beginning, that if they make it to the contract process that the RFP is a part of the contract. Don't forget to make them sign the RFP. Also, get copies of all of the presentations, and when you do your contracts put a paragraph in there about the presentation (and the RFP) and that you expect the software, at a minimum, to do what the presentation says it does. The key to #2 is to get it all in the contract. We've had vendors try to pull this stuff on us, and because we added a section to the contract that states that the attached hardware schedule is a list of all required hardware, we've gotten the vendor to provide it at no additional cost. Do you know how expensive a fetal monitor or an EKG machine are? Vendors have tried to get us on #4, but each Project Manager follows the life of the product that we've purchased, and we're expected to know our contracts and we have to sign off on all invoices. AP can't pay until we've signed off, and our manager has co-signed. I've caught "over-bills" (attempted theft) of over $190,000 split between 3 bills from one company. I'm dealing with #5 right now. We get upgrades for free as long as they don't include "substantial technical changes" to the database or user interface. They've completely changed their database around, and customers who've upgraded are having no end of problems. I'm sitting back and waiting. I'll need to upgrade my hardware in a year or so, and by that time, the system will be old enough that it will be time to send out RFPs to the top rated vendors. Of course, the current vendor will also be expected to fill one out. That gives me leverage in my negotiations, and I may find another system that will serve our needs with a lower TCO.

paymankhoda
paymankhoda

Hey Michael, IBM Global Services, Oracle, Microsoft, SAP, Accenture, all engage in at least half, if not ALL of your practices, except the last which is customer related. What's new? The software business is all about "the upgrade," all about the inability to switch, even after you find out you got the shaft, all about the "upsell." At least a third of the business, even at the highest level would be extortion by any other name, except in our business, we get to hide behind a veil of complexity.

jmarkovic32
jmarkovic32

Vendors like to quote you the mythical "Base Model" that they no doesn't fit 99% of real customer needs. You know the SAN with one controller, one 10 GB HDD, and basic firmware with 90% of the options locked and in need of a serial key. However, they recommend that you purchase the "Standard Edition" if you want all of the aforementioned benefits of the software/device mentioned during the PowerPoint presentation. We call that the old Bait and Switch! #5. Face it, we're all slaves of our vendors. Soon the cutting-edge stuff we have humming in our datarooms and datacenters will no longer be supported by the vendor, leaving us on an island when things go wrong. So out of self-preservation, we live up to our reputations as "cost centers" and reluctantly inform management of the need to upgrade.

Ed Woychowsky
Ed Woychowsky

The customer headlock; six weeks after the new system was put in and the customer wasn't happy, the vender said, "Well it's too late now, all of your information is in the new system. There's no way to go back to the old system." Upper management quickly realized that the vender had a lock on all of the business data and they had paid big bucks for the privilege. What followed was the vender quoting amounts in the tens of millions for "updates" and managers looking a suicide as a viable option. Unfortunately for the vender, a lower-level manager had taken it upon himself to ignore upper management and continue to run the old system in parallel. I don't think the lawsuits are settled yet, but that lower-level manager earned a rather large bonus that year.

drnz_54
drnz_54

OK guys...not every vendor or salesperson is a snake. Channel partners are sometimes easier to deal with and can and will give greater discounts than the vendor. They also typically profit from the services numbers, not the software $$ so the good ones are more consultative and more willing to fit to your requirements and budget.

david.valdez
david.valdez

I just saved my company tens of thousands by noticing a consultant attempting to do #2. Sadly for that vendor, I was around (Accounting was doing the bid process, not IT) and we've switched to a vendor that properly quotes.

gareth.husk
gareth.husk

you need to move to system XYZ because all your competitors have and if you don't you will fall behind. Of course the earlier sales pitch to the others was, get an ABC% advantage over your competitors by moving to system XYZ

dephillipsvm
dephillipsvm

I can relate to the billing mistake tactic. At my last employer I found incorrect invoices for T1 lines that added up to over $28,000.00. After a year of fighting with the carrier I finally got a credit for my employer.

rlmink
rlmink

An old joke fits the bill here, How do you know when a salesman is lying? His lips are moving.

paul.simmons
paul.simmons

Think hard about contracting and putting the vendor at risk for most of these. You want a functioning system for a set price including upgrades needed to maintain functioning. If you go to the latest version of Windows, they should be obligated to provide a free upgrade. They want a fortune for nothing. Remember that the guy who sells the product probably does not care what happens to his company afterwards because he is under pressure to make the sale and get the commission. Do not forget contracting requiring cooperation in the event of termination. If you can not get them to include or price forseeable occurances then why buy?

alangkerr
alangkerr

Sounds just like windoze to me!

DuaneRoach
DuaneRoach

I've seen the first five. And because I'm not #6 I'm working to replace the current software.

NotSoChiGuy
NotSoChiGuy

In general, I'm not overly fond of the idea to move major services to the cloud (security concerns). However, taking these tactics into consideration, I can see why some businesses would decide to move to such an environment, and why the 'cloud movement' seems to grow more and more traction. In some cases, vendors using these tactics pose almost as much of a risk to the organization than does moving services into the cloud. I've seen some vendors come close enough to these tactics to cause a bad taste to form, but not so far for me to 'out them' as being outright deceptive. I'd always advocate strong due diligence when entering into vendor negotiations; which would help negate quite a bit of this. The Waste Management-SAP fiasco is the 'Bogeyman Story' I use to hammer this point home. Good topic and post. Thanks!

The 'G-Man.'
The 'G-Man.'

Took great pleasure when I announced 'our new vendor' to them and stopped their payments.

drowningnotwaving
drowningnotwaving

"The Client's Personal Resume" - the real drive behind lots of objective decisions !!!

The 'G-Man.'
The 'G-Man.'

should be treated with caution until they prove otherwise.

MichaelPO
MichaelPO

The last I checked, Channel Partners are still sales people with quotas and commissions. If you blindly trust anyone you get what you deserve.

Ian Thurston
Ian Thurston

Not funny! I suspect you don't get the kind of service from salesmen that you deserve. I mean, they probably continue to serve you despite your attitude. When you treat someone as a liar and cheat, why do you expect exceptional service from them? Honest salesmen are like honest mechanics: they exist. And so do cynics. Try not to be one. Disclaimer: I'm the son of a physicist-turned-salesman, I've done sales to government in my time, and I give my business regularly to an honest mechanic. And I'm a recovering cynic.

jeff
jeff

What's the difference between a used-car salesman and a software salesman? The used-car salesman _KNOWS_ when he's lying.

The 'G-Man.'
The 'G-Man.'

the same should go for a Car. If you go to the latest version of the car, they should be obligated to provide a free. They want a fortune for nothing. I think not.

viveka
viveka

ROI has gone out of fashion, but was a great tool, and it is still used to show benefits for single point solutions. Ease of deployment is the big one now. I do not know how moving from captive infrastructure to a SaaS is an easy migration. In the BI space, saying KPIs solve operational problems is a big ROI myth - as long as it does not provide decision options....

The 'G-Man.'
The 'G-Man.'

with an attitude like that. Remember that person is the buyer. Sales guy's just sell the product and then you never see them again. Most of them are motivated by the $ or ? rather than helping the actual customer. I should know having spoken to many such individuals.

Neon Samurai
Neon Samurai

To a degree yes but not entirely. If you want ongoing security patches Win98 and win2k have to be upgraded. Leaving those OS in place with a network connection is not a great decision. winXP will only recieve support from it's single developer for so long before the choice to upgrade is imposed on end users. Granted, these are proprietary platforms so one can't expect to get newer platform from the family for free. In this regard, Apple seems to be aproaching the treadmil with a little more focus on the end user rather than shareholder. For those who eventually upgrade from unsupported platforms, they now also have the need for new hardware to push the heavier resource demands of the newer versions. They have the choice to upgrade there hardware imposed on them unless willing to look at alternative platforms designed for lower resource needs. Entertainment industry is a pretty good example though too; "why yes, we feel it is absolutely essential that you purchase the same content over and over with each new delivery format and yes, you'll need to replace all your hardware too by our whims". Eesh.. Phone company; F them, I'll use skype for voice chat over long distance unless the information needs better security. Media.. I can rent what I can't wait for Zip.za to send. Pop music, .. not much there I feel the need to hear a second time after the first radio play. Don't get me started about the cost a movie in the theater or the exorbitant amounts actors and sports layers now demand.

The 'G-Man.'
The 'G-Man.'

when you butted in. The other post (which I replied to) was suggesting that all versions of Windows that we upgrade to should be made free. Windows versions (say XP) get supported for 8 years + so there is no forcing to upgrade within 3. You also chose to upgrade. The old versions will still work regardless! Now let me see....the entertainment industry. There is Perfect example of forcing peope to upgrade equimpent and buy the same songs, fims and games over and over again. So if you've come in off the street And you're beginning to feel the heat Well listen buster You'd better start to move your feet To the rockin'est, rock-steady beat!

richard.ots
richard.ots

It's about software industry, and it's about the mechanism of forcing customers to upgrade to new versions. Who does that, the software industry or the car industry? Exactly. Thank you.

The 'G-Man.'
The 'G-Man.'

so 3 years is not really a valid timeframe as support goes on long after. XP is still supported.

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