by Steven Sulkin, MBM Productions International
Not too long ago, the biggest buzz in the meetings industry wasn’t spend management software, but online registration software. Application Service Providers (ASP’s) sprang up everywhere trying to be the company to capture the market, to charge a per attendee fee or no fee at all so as to attract millions of users to their site for future gain. Everyone it seemed wanted to get in on what was perceived as the lucrative ASP model of licensing (essentially “renting”) registration software to millions of users via the web. Eventually this turned into what so many Internet models turn into and that is a commodity with a small group of companies providing a low cost web based service to millions.
Our industry then turned to browser available meetings management software again with ASP’s vying to become number one in that space. That was more difficult as meetings management is a much more complex proposition than online registration, harder to commoditize. No one has come out the clear winner in that space.
Now the buzz is understandably, given this economy, all about meeting spend management software, which is yet another increase in complexity, far beyond online registration. While online registration and certainly meetings management can be complex for sure, spend management adds in the complexity of financial accountability, accounting standards, the need to coordinate with other well established financial software tools in place at public companies that may be controlled by government regulation and oversight, a far cry from online registration. And the level of intricacy in this software space is still evolving. Yet nonetheless meeting spend management software is the buzz everyone is talking about with software makers and meeting companies scrambling to create the next off the shelf or ASP product that will become the template leader, as popular as PowerPoint, to the meetings spend management industry.
But the difficulty in trying to create this holy grail of spend management software is the template approach. While every ASP and off-the-shelf provider touts their ability to customize their software to the needs of each situation, they begin with the premise that tailoring a pre-created product as opposed to creating a custom product is the ideal route to take, or even possible. The difficulty with the concept of customizing spend management software rather than creating software anew, is the enormous complexity that exists within each corporation due to their other existing financial software.
Any good-sized company has a complex web of enterprise software products they use in-house from SAP to Oracle, which manage the finances and systems of their corporation. For spend management software to be useful and even more basically to simply be valid, it needs to pull and push data into and from those systems. Off the shelf software that’s customized to try to make it work in every situation simply cannot do a very credible job, or some would say, work at all. Spend management software to properly interface with complex corporate software already in place must be created from scratch. Internal software at corporations are simply too complex and unique to do it any other way.
But instead of creating software from scratch the more common approach has been to purchase off the shelf software or license ASP web based existing spend management software products and attempt to modify them to make it work. Because this modification is referred to as customization, and that term is so close to custom, the marketplace can get easily be lead down the wrong road. This is not unlike the custom home market, which often uses the term custom to mean one can purchase a home and be able to change the shutters or other easily modifiable variables. That’s customization, not custom. A true custom home is a product designed specifically for the needs of an individual situation.
When customization is chosen over custom in spend management software, the procurement department of a corporation is often left with software that is deficient; that “can’t do this” but “can do that.” Or they are left with software that relies on double entry systems where employees have to, using spreadsheets, hand correlate reports from various pieces of software, a situation that would not pass any accounting standards. Ultimately this leads to the decision to find new web based or off the shelf software, customize that and the cycle begins again with software ultimately dubbed deficient.
The way to break this cycle is to create custom software from the ground up. To some that sounds like a daunting task, only available to mega companies and in any case, enormously expensive even for them. The actuality couldn’t be farther from the truth.
Due to a whole range of changes in the software industry relating to “rapid application advancement” (simply put, creating software more quickly), custom software is an extremely doable task, not only for mega companies but also even for small companies. Filemaker Pro, Salesforce.com, Adobe® Flex™, Web/PHP and other software creation platforms now make designing software a simpler, less expensive and easier process for engineers.
And there’s another realization beginning to emerge. When a company uses web based software or desktop software that they don’t own, that is analogous to renting, there’s a continual never-ending licensing cost. That’s how software-licensing companies make money. But when one has software created specifically for their company, they own it. It’s theirs. It literally gets put in the asset column of their balance sheet rather than the expense column of their profit and loss statement.
The morale of the story is this: Years ago, the tools did not exist to create customized software. But just like everything in our world, customization is now so much more possible because of the digital age. I can go to the mall and get hundreds of customized consumer products that were impossible to produce except at large factories just a decade ago. The same is now true in the B-to-B software business.