Enterprise software and service vendors are a tricky bunch. Like skilled magicians, they use sleight of hand and misdirection to pull cash from your company's coffers.
How do they do it? It starts with the demo (which always works perfectly). Then they offer a price that sounds too good to be true (because they plan to make up the difference in change orders and maintenance fees). Once they've got you, they'll lock you in using every tactic they can muster. Better check your bill, because odds are you're getting charged for stuff you didn't actually buy. And just when you've got everything running smoothly, you'll be hit up for an upgrade, whether you need one or not.
We dove headfirst into this nefarious world and identified some of the worst practices. Due to the sensitive nature of this material, some people's names have been changed. Though we don't call out the specific vendors for their dirty deeds, you'll probably recognize the tactics they employ.
Dirty vendor trick No. 1: The magic demo
Here's a classic from the sneaky vendor bag of tricks. Whatever your company needs, their enterprise software package can deliver it, and they've got a sweet canned demo and an impressive collection of PowerPoint slides to prove it.
Yet you wouldn't believe how many organizations including Fortune 500 companies, fall for this, says Natalie Petouhoff, a senior analyst who covers CRM, customer service and social media for Forrester Research.
"I think the software industry is kind of dirty," says Petouhoff. "The people who are buying the software may only see this kind of dog-and-pony show one or two times in their careers. They don't know that the demo is rigged. They think this is how the software actually works."
Most vendors don't start out intentionally trying to deceive customers, says Petouhoff. But they often find themselves competing with companies that do. And the vendor who does an honest warts-and-all demo risks losing that sale to another vendor that promises the moon, even if it can only deliver moon pies.
Some of the blame also falls on the customer, she adds. Many decision-makers don't have the experience to know when they're being snowed or enough interest in the technology to learn what it can and can't do. And the stakes for confusing the demo with the actual product can be huge.
In March 2008, Waste Management, the largest garbage collection company in the United States, sued SAP for $100m (£60m) after an ERP implementation went completely into the dumpster. In the suit, Waste Management claimed SAP faked the demo it used to convince its top executives to go with the SAP solution.
Five months later SAP countersued, claiming that Waste Management still owed it millions in maintenance and service fees. Last May the allegedly rigged demo mysteriously vanished, with each side blaming the other for its disappearance. Waste Management says it took a $30m (£20m) hit on its first-quarter earnings this year thanks to the ERP failure.
"I don't want to necessarily pick on SAP," says Petouhoff. "The entire software industry needs to clean itself up. When companies are spending millions on your products, promising to deliver something you can't deliver is fiscally irresponsible. If companies would just be straight and say something like, 'Our software isn't doing that yet, but we're working toward that,' at least customers would know what they were buying."
Or as they say in the waste management business: Garbage in, garbage out.
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