Sunday, December 26, 2010

The Failure of Large Business Applications

There was once a day when do-it-yourself software ruled. Companies hired scores of programmers to create COBOL applications that drove the business cycle. Then along came the software vendor who promised massive savings by splitting development costs across multiple businesses. The argument made sense so it wasn't long before in house applications were being replaced by purchased applications. The teams of in-house programmers were released as companies looked forward to large software savings.

But the costs continued to rise. . . and rise. . . and rise. . .

Those teams of in-house programmers were replaced by armies of contractors and off-shore developers who customized, tweaked and upgraded the newly purchased applications. To put it bluntly business applications have been an IT disaster. It is not hard to see why.

Fact: Software vendors make money on initial sales
Result: Initial sales are driven by the addition of new features.

Fact: Software vendors make lots of money on support
Result: Upgrades justify support

Fact: Supporting multiple versions costs money
Result: Only the most recent versions are supported

Overall Result: Businesses are forced into an upgrade cycle that only benefits the software vendor and costs businesses enormous amounts of money. While initial acquisition costs have dropped the total cost of ownership has spiraled out of control.

I believe there are solutions--which I will address in an upcoming post.

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