How Lack of Investment in Technology Affects Your Business

Technology is changing – faster than ever before. For most businesses, they don’t have time or money or the knowledge to keep up with everything and rely on their technology and software vendors to make the investments to ensure their systems continue to work and are compatible with newer technologies. However, some vendors invest very little into technology products – either because they don’t have a substantial customer base to make those investment or they are working on their next-generation product and not investing in their legacy applications that are planned for sunset in the coming years.

If you find yourself on a business application where there are infrequent updates and the updates are getting smaller and smaller with each release then you are safe to assume that the product is not going to be around for the long-term. This means that you either need to find a replacement product or you need to make the necessary investments yourself to protect, grow, and extend your business applications.

Some companies like having the ability to build their own systems. They buy source code licenses, hire a team of developers, and they can do whatever they want to with the software. But ask yourself if this is in the best interest of your company.

If you’re a medical company or a distributor, or a manufacturer – do you really want to also be a software developer? Or would you rather do what you do best and leave the software development to someone else. Think about it another way – would you construct your own building if you weren’t a general contractor and had no experience in construction? Would you fill your own cavities if you weren’t a dentist? It’s relatively absurd to think that most companies are better equipped to develop their own software when their core business is anything but software or technology. Granted, you might be able to figure it out and yes – there could be situations where there is nothing available and internal development makes the most sense. But in most cases, companies are best served by leaving software development to the experts and seeking out the right products and the right vendors from the open market.

If your software vendor is not making a major investment in the products you depend on then you really have no choice but to look for alternatives. Most software companies provide at least one major release of their software every one to two years with smaller releases in between. SaaS companies tend to have more frequent release schedules with smaller feature sets since it’s much easier for them to deploy changes in smaller releases to get features to the market faster.

It’s not out of the question for companies evaluating new platforms to ask vendors how much they’re investing in research and development. And make sure to ask specifically how much is being invested in the product you’re evaluating. Just because they spend 20% of revenue on R&D doesn’t mean it’s going to the product they’re trying to sell you – it could be going toward the development of a replacement product instead.

Intel, Amazon, Google, and Microsoft historically invest between 15% to 20% of revenues into research and development. Apple invests about 10% and Facebook just under 5%. Most ERP and business software companies invest between 10% to 15% of revenue on research and development annually. Those with larger product portfolios tend to spend more on their strategic products and less on legacy products that are nearing the end of their life.

A lack of investment on the part of the vendor puts the burden on your organization to ensure that the software will continue to run on newer platforms, to invest more in integration and custom development because it’s unlikely that you’ll get new modules or features down the road unless you do it yourself.Read the entire article here.

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