INTERNAL PREPARATION Assuming that your vetting process results in a business deal, you should still prepare your staff for the possibility of failure. Doreen Griffith, CIO and senior vice president at securities-broker service provider Securities America (SA), recalls when a software vendor (she won't name names) made a shift away from the company's industry space, potentially leaving Griffith with an orphaned product that is part of a core offering to more than 1500 representatives. But, she says, her company's entrepreneurial culture saved the day: SA bought the source code and continued development on its own.
That same philosophy applies to several open-source products that SA uses as well (including a clustering platform from Emic Networks, the MySQL database and open-source voice-over-IP technology from Asterisk). Once the product comes in-house, SA developers learn it inside out, in case they need to support it on their own sometime down the road.
Midsize companies such as SA aren't the only ones that can benefit from this "once you have it, you own it" approach. PPG Industries, a 30,000-plus-employee global manufacturer of glass and related chemicals, followed the same philosophy when it sought a tool to track idea generation across the company. PPG was ready to build its own Web-based idea generation and tracking system to replace its manual process. But as the company was about to get started developing the system on its own, a call from a start-up vendor, MindMatters Technologies, led to the installation of a prebuilt system that delivered what they needed without the hassle and expense of going through a large development effort. And, says Jim Johnston, PPG's IT director of enterprise architecture and advanced technology, the fact that his company was prepared to build the software itself meant that MindMatters' going under wouldn't be as big a problem as it might have been. Part of the contract puts MindMatters' code in escrow, and PPG would pick up the development effort itself should the unthinkable happen.
LIMIT THE SCOPE Narrowing the scope of a new technology can also help, even if the tech will be running some critical part of your business.
"Would we have put our entire Western Hemisphere network on something that looked like a JRG? No," says Pilkington's McCreary. Instead, JRG's hosted service let the company more closely manage operations at a single plant, allowing for faster switchover to different products and helping maintain the near-real-time manufacturing environment the auto industry requires.
If things hadn't panned out with JRG, McCreary was certain that it wouldn't cripple the company. "Had this failed, we'd be back on spreadsheets," he says. "We'd be working Saturdays and Sundays and have higher costs, but the customer wouldn't have seen anything." And purchase contracts with JRG arranged by plant manager Wait helped guarantee minimal financial losses if things didn't pan out. "We set up the business structure to minimize risk, Wait says. "There wasn't a lot of money up front." And the fact that JRG was a hosted service only loosely coupled to the company's data meant the plant could disconnect quickly and stop paying for it at the same time - a far cry from tightly integrated ERP systems with long-term support contracts.
DON'T GIVE AID TO THE ENEMY There's one other risk that might not occur to some companies until well after the implementation: Your efforts may ultimately help your competitors.
Epsilon's Coakley, for instance, expects some of the labour that his company put in to ensure that Netezza's data-mining box works well for Epsilon will now benefit Epsilon's big competitor, Acxiom, which bought Netezza products last summer.
Coakley notes that early adopters might be able to arrange exclusivity agreements with their vendors. But those agreements will cost money. "If you don't make that decision to go exclusive, then you know ultimately it's going to open up to your competitors," he says. The key, he cautions, is determining if you'll still be able to take good advantage of the product, even when you're no longer the only user. And even if Netezza's products no longer provide the leapfrog advantage they used to, Coakley says, he feels Epsilon can still take good advantage of the products to add value to its offerings. And if he'd never gone with Netezza, he reasons, he never would have got his initial jump. The reward was simply worth the danger. "You never want to be in the position where you're going: 'Me too.' You always want to be viewed as a leader," Coakley says.
PPG's Johnston reiterates the mentality that drives companies to risk early adoption. Taking a cue from PPG's own drive to constantly create new products, Johnston says: "If you're first to the market, you capture that market. You can always follow other companies and take their breadcrumbs. But I'd rather be out there."
SIDEBAR: Eight Steps to Success
- Get other people involved in the early adoption decision, preferably from outside IT.
- Check finances, particularly at start-ups; contact backers to confirm funding.
- Investigate the vendor's management team and its track record.
- Escrow the source code in case of vendor collapse.
- Leverage your early customer status by providing input on product development.
- Consider exclusivity agreements so that your contributions don't help competitors.
- Limit the scope of implementation to reduce damage if something goes wrong.
- If you're an early customer, ask for deep discounts to limit your financial risk.
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