Firms look at ‘buggy’ software to outrun rivals

Lisa Baertlein

PALO ALTO: No pain, no gain has long been a mantra in the gym, but it's often
true for companies installing new software. Even knowing that pricey new office
system software is sure to bring bugs, resentment and resistance, corporations
still hope it will give them an edge over rivals and wring out cost savings.

Among those who have traded pain for the promise of improved efficiency and
cost savings are candy giant Hershey Foods, which blamed delays in 1999
Halloween candy deliveries on software; athletic shoe maker Nike Inc, appliance
maker Whirlpool Corp and Gore-Tex maker W L Gore & Associates.

"As always, the pioneers are the ones with the arrows in their
backs," Bill Ablondi, senior analyst at Boston's Summit Strategies, told
Reuters. Bugs or defects are software's dirty little secret. Virtually all the
new offerings have them, yet few vendors own up to them.

"You name the software it has bugs," said Steven Pare, who's
heading up a three-year plan to automate purchasing at the Bank of Montreal and
two of its subsidiaries with a set of products from Oracle Corp.'s 11i
e-business software suite.

While the bugs are an industry-wide issue, Redwood Shores, California-based
Oracle, which is banking much of its future growth on 11I, has long been under
fire for shipping that software at too tender an age. Reported bug counts in 11i
have reached as high as 5,000.

Pare said his team has installed several of Oracle's so-called patches to
correct for glitches. "The frequency is such that no sooner do you finish
one than the next one comes," Pare said. While the defects have not been so
severe as to crash the system, the patch frequency is a concern because
technicians have to test the software each time they make a fix, he said.
Despite it all, Pare said, "we're happy with the way the software
works."

Human trials

Then there are the non-technical hazards. "The hard problems aren't
software-related. They're business-related or people-related," said Peter
Staadecker, solutions architect for U.S.-based small and medium business at
software titan SAP AG. Small companies may be put off after parent firms forces
them to switch software and pick up the bill. Long-time employees might be
resentful if the change means they have to do their jobs differently or take on
new duties, he said.

"You need to make trade-offs and decisions. It's easy to lose sight and
it's easy to get bad advice. With all their best intentions (consultants and
other hired hands) may not understand your business vision," Pare said.

As software technology matures, vendors are working to make new products
easier, cheaper and faster to install. Those advances, however, are colliding
with a lackluster economy to make early adopters more vulnerable when mishaps
occur.

"It really is a big magnifying glass on your business processes and the
quality of your data, said Michael Labriola, vice president of TriVirix
International, a medical device contract manufacturer. When the economy is good,
it's easy to mask software-related problems with good news from somewhere else.
When times are tough, industry analysts and customers say, there is nowhere to
hide.

Cookie cutter approach

Installing new software at a large company with offices around the world is
a mammoth undertaking that can run into the hundreds of millions of dollars and
last for several years. Egged on by weak technology spending and customer
demands for faster returns, SAP, PeopleSoft Inc. and Oracle - corporate
software's big three - have begun selling packages of software that address
particular needs rather than reinventing the wheel for each sale.

They refer to the products as templates. A templated order management system
for retailers might include software that can track incoming orders, check a
product's availability, set up and bills customer accounts and tracks the order
as it moves toward fulfillment.

"With the template approach, a lot of the decisions are pre-made and
tested," Sharon Ward, vice president of enterprise solutions at the Hurwitz
Group, said. Many companies can get 80 per cent to 90 per cent of what they need
from new out-of-the-box software, software makers say. If customers want more
than that, however, they still face a trip down the long, complicated and
expensive road of building customized systems.

Guts, a vision and lots of luck

While some software makers say their new products can create orderly
day-to-day operations where none existed before, analysts and customers say the
best candidates are companies with step-by-step strategies that expect the
software to accent already strong practices, not fix them.

"It's very similar to my 19-year-old son who says, 'Give me a Palm so I
can get organized'," analyst Ablondi said, referring to the popular
hand-held electronic organizer. Lori Faris, a senior vice president at financial
services consulting and software company Carreker Corp., said she's applying
lessons learned during previous implementations as she oversees what has thus
far been a "smooth" installation of PeopleSoft 8 - the latest offering
from the Pleasanton, California-based software maker.

"We've taken the approach of partnering with them. That's helped a lot
when we do run across issues ... people are naive to think there are not going
to be issues," said Faris, who has been charged with improving operational
efficiencies by installing software to enhance collaboration among employees,
customers and suppliers.

It also takes a steely stomach, a lot of vision and a bit of luck. Mark Tanis,
vice president of information systems at TriVirix, said his company decided to
"skate to where the puck is going" by betting on Web-enabled portal
software from SAP before the German software maker had it to sell. "It's a
success story today, but if they didn't get there it would be really bad,"
TriVirix's Labriola said.

(C) Reuters Limited 2001.