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Are IT Experts Pulling Wool Over Your Eyes

Here is a statement:

“Organisations in the UK, especially in the public sector, could save anywhere between 25 – 75% of their IT costs, but don’t because it is not in the interest of their advisers to let them know and help them.”

Quite a claim. Am I qualified to make it? I believe so, yes, and firstly I will give you my history as an explanation.

From the start, I will be honest – for 25 years I have been a salesman in the IT sector. So I could be one of the “wool-pullers”. However for all of these there have been as many who want to see the developments in IT benefit business and society. If this were not the case the development would not been as quick as it has been. There are occasions where if I said the same thing now as I did 5 or 10 years ago, I would be guilty of wool-pulling, but I don’t. What was right then is not right now, such is development.

I have been aware of IT or, as I was first introduced, computers since the late 1960s. My father was one of the first salesmen based out of Silicon Valley, Santa Clara, California.

Then as a user in the early 1980s, I implemented a 4 user bi-currency (dollar and sterling) accounting, order processing and stock control system, which cost £128,000 including hardware and computer room. Then c. 1984 I was one of the first users of a dual floppy PC (XT I think) as a European Financial Controller.

When I graduated in 1985, I did not want to continue as an accountant, but did not know what I wanted to do. As a stop gap, my father recommended I go into computer (still called it that then) sales. With my computer literacy (I had also done some programming at school) and business knowledge I got myself a pioneering role in solution sales.

Solution sales meant that the technical side of sales was being reduced and business needs were coming forward to a bigger audience. It was also at about this time that my father decided to “retire”. He was a qualified broadcasting engineer and for the majority of his time the software had been effectively given away with the hardware.

So here was a major development. Computer systems that previously had only been available to companies who could afford large mainframes and related infrastructure were now becoming available at less cost and providing more.

My first job was with a reseller for one of the big hardware manufacturers. Our speciality was providing solutions to the textile industry. Up to this point the software had been run on the mainframe and mid-range computers of the hardware company. However just launched were a multi-user “micro” and a unix platform. With these we were able to provide our solution to a much wider business audience. Our software and service sales were the same, but we were able to decrease the hardware up front and annual maintenance cost.

This is where I first met the “wool-pulling” scenario. The company I had joined was a pioneer in the mid 1980s to move main-frame and mid range software to also run on micro and unix platforms. For existing users we were able to help them assess whether they still needed the large hardware they had with its related high costs or whether they could down size. For many of the manufacturing companies, they had to stay on the mainframe platforms as they still needed the “number-crunching” facilities only these provided at that time, because of their volumes. However other existing users required our functionality, but could downsize to such a degree that the repayment in annual maintenance and other infrastructure costs was almost immediate.

In addition to this the vast majority (almost all) new business was on the new, cheaper platforms. The hardware manufacturer was losing both upfront and annual revenue, while we were making bigger margin and increasing revenue through more sales. The support we received from the hardware manufacturer was less proactive. They did not want to help us “retire” their older platforms before they were ready, even though we were really helping to launch their new platforms.

We could openly see how the hardware manufacturer started to push their new platforms less to the resellers. They were effectively trying to slow down the availability of new technology to the end user meaning some continued to pay too much and others did not get the solution as they could not afford it. It did come back to biter the hardware reseller as they effectively lost all self developed presence in the micro and unix markets.

One of the other areas we were “pioneers” of was the move away from software tailored specifically to each user. As I mentioned above at the initial sale of a computer system the software was “given away”. What this meant is that the client got so much, but then had to pay to have their system developed proprietarily for them. There were teams of software developers at the hardware manufacturer or partner, independent specialist firms or in house writing and maintaining bespoke software. What it meant that the development cost, maintenance and amendment of the software was very expensive. It also meant that to keep the functionality, the user had to stay in the environment they were in or had to pay for a total re-write and/or implementation of the software with little or no help in migration.

Ultimately, should the source of the software cease to exist the end user could be effectively…up a creek.

What however started to happen was the development of “standard applications” for some tasks, which could then be configured to individual user requirements by the solution provider/user on each implementation. The understanding was that the application provider had only one source code to develop and maintain. This should mean more functionality for less cost initially and annually.

This started with important applications such as accounting systems even on mainframes and became more the norm as mid-range, Unix and Micro-/PC-based platforms were released and implemented. As more businesses could afford IT, software companies saw the standard route as the way to go, providing more for less work and more margin.

However many software companies did not see standard as 100% of the solution they provided. The accounting software may be standard, but the operations part of the business (manufacturing; order processing; trading) had to be bespoke. The software company was getting the benefit of standard packages and increased margin to some degree with bespoke elements added on or integrated with meaning the client was trapped once again, even if an element of the solution could be improved from another source.