New (left) and old (right)

Why did it take two decades after the Loma Prieta earthquake before we got a new Bay Bridge? We know we need to invest in infrastructure: it’s a desire as old as humanity ourselves (from caves and fires to labs in space). But, it seems, we are loathe to RE-invest in infrastructure once we have it.

Are we rewriting the old saying as “if it ain’t broke YET don’t fix it?”

This week I’ve been pondering the forces that make someone choose to abandon old technology in favor of something new. You know the process … how do you decide when it is time to buy a new car, or new TV? What about enterprise software? Is replacing your legacy business system (payroll, order entry, inventory management) subject to the same forces that drive consumers (cars, TV’s) and governments (bridges, roads) to get the latest shiny object in their living room, garage or spanning their Bay?

Cost is probably the number one concern for purchasers, corporate or consumer. How much will it cost to replace the old system? Cost can be calculated in many ways. The purchase price and the cost of having experts install, configure, migrate and train are the costs we see in the checks we will have to write.

But there is also a cost of keeping on doing the same thing. There is the lost opportunity cost from using a system that is to slow to satisfy customer demand. The system that is too hard to use or that keeps failing and drives potential customers away.  The cost of the additional manual effort required to keep a system going because it can’t be brought up to date. The cost, and the cost of the risk, of using old hardware and software that is no longer supported, or has security vulnerabilities or which no longer meets the needs of federal, state or internal compliance. While these are often much harder to quantify and rarely involve writing a check they are still real costs.

Fear is a strong motivator. I need a helmet if I am going to be a cyclist. For an organization fear comes in many forms. Regulations like Sarbanes- Oxley are not optional. Publicly traded companies fear an audit finding needing to be included in their annual report lest it affects their share price. Fear of falling behind competitors technologically and missing entry into new markets because the product or service can’t be delivered on the new platform, for the new methodology or using the new social media.

Spreading FUD (fear, uncertainty and doubt) is also an ancient motivator and sales technique.

FUD is also the cause of all too many wars not least of which, the First World War 100 years ago this year, was entirely caused by FUD

Familiarity is a surprisingly powerful driver of change. So may business decisions are based on what we know, who we know rather than on rigorous research into alternatives. A new executive in a new job will often retool the department in their previous image organizationally, culturally and technically on the basis of what worked before is tried and tested and will work again.

Whether it is Caesar or the CIO, there is a trend of bringing “your people” with you from position to position: many people’s careers are in the wake of a former boss.

Fashion followers spend hundreds of dollars on branded sunglasses to make a statement. In the corporate world fashion is another strong buying driver: though we are less open about our fashion-passion than the average shopper on Rodeo Drive. Justifications such as “it will attract the best talent”, “we’ll be seen as industry leaders and that’s good for sales” and “it gives us a competitive edge” are common when, too often, the choice is made because everyone was talking about it at a conference or the buyer see it as a résumé enhancement opportunity.

Often these purchases are made at events with all the attendant pomp that would accompany a Hollywood awards ceremony and this just adds to the cachet of the purchase.

Summary: so what do we learn? What drives an individual to replace their dishwasher is pretty much what drives them to purchase enterprise software. The only difference is whose money is being spent.

I don’t have a recipé for success here. But I do have a recipé and, as they say, the proof will be in the eating.

1. Cost: be clear. Don’t mess around with pricing: choose the price that represents the value of your product and stick to it. If the prospect says no – move on. Nothing proves that you believe in your product more than a sales person walking away from a deal.
2. Cost: be real. Have your ROI nailed ahead of time: show 5 years of the cost of doing nothing (costs that are provable and measurable) and show all the costs of your solution over 5 years. Breakeven better be within 18 months or your not going to win.
3. FUD: be truthful. Show case studies of customers who missed the market, had unexpected outages or who failed an audit.
4. References: be local. Chances are your prospect will know someone or know of someone who already uses your product or service. Enlist their help. Most people will be honest and balanced in their views. We all know there is no perfect solution or perfect vendor. Being prepared to let your prospect talk to your customer says a lot about your confidence and integrity.
5. Cool: is a crowd. List the customers who have adopted your product or service in the last few months. And ping the prospect every time a new one joins the club. Nobody wants to be the last one to be picked to play.