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How to Avoid Mistakes When Purchasing Software in 2014

By December 17, 2013Article

Editor’s note: We asked several of SandHill’s content contributors and industry pundits for perspectives on how companies can avoid shortsighted software purchase decisions in 2014. Here is their advice. 

Paul ResslerPaul Ressler, Principal, The Cirrostratus Group:

Avoid buying software from firms that don’t have a well-articulated strategy for how their products operate in a cloud environment — including integration with other applications. Alternatively, buy from software firms that clearly state that their strategy is never to operate in the cloud. Avoid the middle ground where the strategy is unclear or there is not any real progress. These are the companies at the highest risk of failing. 

Amr AwadallahAmr Awadallah, Chief Technology Officer, Cloudera:

I know this is a cliche, but don’t sacrifice quality and future for cost today. Moving a big chunk of your enterprise infrastructure to a new software platform or cloud service is a very strategic decision that will have significant implications for years to come — especially when it comes to platforms. I advise buyers to pay very special attention to what is becoming the dominant market platform. Platforms are very sticky, and it is extremely expensive to migrate off of them in case of mistakes. 

I recall a story from my Yahoo! days. When Yahoo! was starting, they decided to standardize on FreeBSD as the dominant platform of choice for their servers. At that time FreeBSD had a clearly better architecture and a much faster/secure networking stack. However, Linux had the bigger community in terms of developers and applications. Roll forward 10 years and Yahoo! had to go through a very expensive migration project to undo that mistake. It was very costly and slowed down the business significantly as the migration took place. The moral of this story: Tracking the community/ecosystem maturity of platforms is much more important for the long term than tracking a missing feature here or there. If a vendor loses on a feature, they can always make up for that over time; but if they lose the ecosystem, they might never be able to come back. (Fact in point: Linux vs. FreeBSD and other UNIX flavors at large.) 

Dan MillerDan Miller, General Manager, Software Vertical, NetSuite

The market is littered with hundreds of examples of software companies that started on QuickBooks or on-premises ERP, then added standalone CRM, billing, HR and partner management applications as they grew, along with spreadsheets for revenue recognition and multi-currency conversions. The result is a snarled hairball of data silos and disjointed processes that needs a costly and disruptive rip-and-replace — just as the company enters a growth trajectory. We know the story well, as these companies frequently turn to NetSuite to help clean up the mess. 

Lately, we see more young companies sidestepping the hairball problem by launching their business on an integrated cloud business financial management solution. Tableau Software is a good example. The then-startup launched on NetSuite in 2008, reasoning that it would have a scalable platform for global growth without the headaches of a fragmented infrastructure. 

My advice to young companies is to think ahead, closely analyze future growth scenarios and make smart investments in core software systems that will scale with the company’s growth.  

For companies struggling with a hairball, don‘t exacerbate the problem with more workaround spreadsheets, third-party applications and point-to-point integrations that need laborious IT maintenance into perpetuity. Explore what a cloud business management platform engineered specifically for the billing, revenue recognition and other challenges unique to the software industry can offer in helping the company eradicate sins of the past and move forward. 

Tim Yeaton, member of board of directors and former CEO, Black Duck Software:

My advice, for what it’s worth, is to be disciplined about assessing open source and commercial alternatives. The pace of innovation in open source today is breathtaking, and many large customers are betting their next-generation IT infrastructures on open source technologies — wholesale. The option to invest in a technology being productized by many vendors and to also be direct participants in the community driving the development agenda for the underlying project, is worth strong consideration in 2014 by any organization that does even a modest amount of in-house development. 

Mike HoskinsMike Hoskins, Chief Technology Officer, Actian:

We’ve entered a period of wrenching change in the software industry where the sheer scale and complexity of data, particularly machine-generated data, threatens to overwhelm legacy software stacks. At the same time, there are a host of new entrants that employ modern, scalable architectural approaches that fully leverage modern patterns of parallelism to address data flowing at extreme scale. 

The question is which of these vendors has business integrity, comprehensive solutions and staying power. I’d advise software purchasers to focus on next-generation stacks and to do due diligence on the vendor’s financial strength, completeness of solution and investment in customer support and engineering innovation.  

Amr Awadallah is chief technology officer at Cloudera. Before co-founding Cloudera in 2008, Amr (@awadallah) was an Entrepreneur-in-Residence at Accel Partners. Prior to joining Accel he served as Vice President of Product Intelligence Engineering at Yahoo!, and ran one of the very first organizations to use Hadoop for data analysis and business intelligence. Amr joined Yahoo! after they acquired his first startup, VivaSmart, in July of 2000. 

Dan Miller is general manager, software vertical at NetSuite. He brings over 25 years of professional experience to NetSuite, most recently as SVP and CFO of Nexant where he managed accounting and IT corporate service groups, and led financing initiatives to support strategic growth plans. He began his career as a senior accountant with Deloitte & Touche, subsequently serving as senior treasury manager for Genentech and corporate controller for Extreme Networks before moving to executive roles. 

Mike Hoskins is chief technology officer at Actian and Actian’s technology innovation strategies and evangelizes trends in Big Data, and cloud-based and on-premises data management and integration.  Mike is a respected thought leader who has been featured in TechCrunch,, The Register and Scobleizer. He speaks at events worldwide including Strata, DeployCon, and Structure Big Data.  Mike received the AITP Austin chapter’s 2007 Information Technologist of the Year Award for his leadership in developing Actian DataRush. Follow Mike on Twitter: @MikeHSays. 

Paul Ressler is a consultant specializing in service delivery for SaaS, cloud computing and managed services. As the principal of The Cirrostratus Group, Paul helps his clients improve customer satisfaction, raise service margins, introduce profitable new services and transition to the SaaS business model. 

Tim Yeaton is a member of the board of directors and former CEO at Black Duck Software, which achieved 30 percent growth and built a worldwide operation in 24 countries.  Black Duck is a top 500 software company and named a Top Place to Work.  In his 30 years of experience, he was CMO at Red Hat, CEO of Avaki and EVP of Products at Allaire and VP/GM of UNIX/Middleware at Compaq. Tim was named one of the Most Influential People in the FOSS, and named a COPU Think Tank Advisor. 

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