Re: Customers vs. ISV (was: New redpaper)

[Buck <kc2hiz@xxxxxxxxx>]

Charles Wilt wrote:
> > > If I was running Win95, I don't expect to be able run WinXP 
> > applications.

[Buck]
> > Probably not.  But like most midrange vs PC analogies, this 
> > one's weakness is the matter of support.  It's very unlikely 
> > that you are running your business on a Win 95 package that 
> > you pay support on.  It's
> >   way more likely that you are running your business on my package on
> > V4R5 and paying me for support.  You want bugs fixed and you 
> > want new features for your monthly fee.

[Charles]
> If a customer's back on v4r4, how much new functionality are they really asking for?  If they're
> stable, there're stable.  They really shouldn't need anything new.  By definition, they're not going
> to do anything with the new functionality anyways.

Right.  In all seriousness, customers are unreasonable.  They want to 
have all the newest wizbangs for free and they want the vendor to do all 
the work without having to supply an in house person to help integrate 
their business rules with the software.

It's a strange situation, that's for sure.  I have no doubt that Rob's 
story of a major ISV announcing a forced upgrade brought applause to the 
crowd.  I bet that there were no CFOs in that crowd either.  The tech 
people are very frustrated that 'the boss' won't allow an upgrade.  And 
so depending on who one speaks with inside a company, once can get very 
different impressions about ISV software.

The tech people have convinced the CFO that he needs to pay support 
fees.  But the CFO really doesn't understand support (maybe no one does) 
and he expects that his money ought to get him something more than the 
ability to make a phone call for help.  He doesn't care one whit about 
the tech people's mumbo-jumbo about OS400.  He wants value for his 
dollar.  Again, this is almost completely isolated to smaller companies.

> Does your v4r4 customer really expect to be supported forever?  Who gave them that idea?  It's
> certainly not something I expect when looking at packages.  Even while I worked at a small private
> company as 50% of the IT department.

Yes, they expect to be supported forever.  Our sales and management gave 
them the assurance that they'd be a customer for life.  This was an ERP 
sort of application that runs the entire business.  Maybe it's different 
for a tool vendor...

> How many new customers has the v4r4 customer helped you get?  

Referrals are another strange beast.  When you install an ERP system, 
the customer pretty much hates you for a year or two.  You've basically 
upended every single person in the office, forced them to learn new 
software and crammed their business into a different set of shoes.  We 
could probably never get a referral from a brand new customer.  On the 
other hand, the stable customer has got over their installation pains 
and are a very effective referral: 'We've been using Acme's software for 
10 years and love it.'

> Lastly, how many new customers have you missed out on since you're missing some functionality provided
> by the new OS versions?

Can't measure that easily, but it's probably more than we liked.  A 
bigger problem was the hardware platform is unknown to the Windows/Unix 
crowd that we competed against.  New sales to a Unix shop brought a slew 
of internal problems having to train/retain/hire iSeries people instead 
of Unix people.

> > The ISV is in a difficult spot - telling a customer he can't 
> > have the new goodies is very likely to see him stop paying 
> > for support.  
>
> Yep, sure will.  Is that bad?  Not necessary. The problem IMHO, is that the ISV sees that v4r4 support
> money as basically free.  This guy keeps sending checks, but he never calls since he doesn't do
> anything new and all I need to do is throw him a bone once and awhile by releasing a new version that
> doesn't make use of anything new in the OS; he doesn't even have to upgrade, and he probably won't
> since he doesn't like change.
>
> Now I've got a nice revenue stream with little costs.
>
> However, I'm not taking into account the costs associated with not being able to use the enhancements
> in the new OS releases.  Productivity improvements for my own developers and the value of new feature
> X to my customers.
>
> As a small ISV, if you're taking all the costs into account when you determine if it's time to up your
> minimum release for the latest version of your product and you decide it's not worthwhile.  Fine.
> That's a logical business decision and I can't argue with.  But make sure you're considering all
> costs.

Everything you say here is absolutely true and a very good summary of 
the issues.
  --buck