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http://www.investors.com/editorial/IBDArticles.asp?artsec=17&artnum=2&issue=20070131
Amid Software Shift, User Groups Give Customers A Voice
BY J. BONASIA
INVESTOR'S
BUSINESS DAILY
Posted 1/31/2007
The business software industry has
never been known for being customer-friendly. In many cases, buyers spend
millions of dollars on systems that take months to install but don't work
right. Then they can spend millions more on consultants to fix the problems.
This dynamic has started to
shift in recent years. Users are shying away from large software installations
in favor of smaller, bite-size projects.
That's forcing software
makers to focus more attention on customer satisfaction, says Jim Shepherd, an
industry analyst with AMR Research.
One sign of this shift
involves software user groups, clubby networks of customers who meet, exchange
ideas and serve as an informal liaison between a tech firm and its customers.
Such groups have been
around since the dawn of the computer industry. But lately they've gained more
stature and clout with their respective vendors.
Virtually all the big
software makers work closely with independent groups of their software users.
"Vendors have woken up
to the fact that this is a relationship business," he said. "Now the
goal is to build a long-term relationship with the customer, as that's where
the opportunity is."
In general, group
organizers volunteer their time. They conduct online surveys or hold focus
groups to gather user opinions.
Most groups are self-funded
to maintain autonomy. Yet users and vendors often partner on marketing efforts
or hold their conventions in the same place.
Members can network at such
events to share insights about the best ways to use tech products. By joining
together, they can also sway vendor decisions about future prices, features and
upgrade plans, says Robert Rosen. He stepped down last summer as the president
of Share, an IBM (IBM) user group.
"This is a very
synergistic relationship in which both sides benefit," Rosen said.
"IBM had a past reputation of saying take it or leave it, but now they've
come a long way in giving customers what they need."
Rosen should know, having
been a member of Share since 1970. He's also the chief information officer for
the National Institute of Arthritis and Musculoskeletal and Skin Diseases at
the National Institutes of Health.
Rosen remembers one
instance when IBM retooled its approach to grid computing based on user input.
Grids pool computer resources to share computing power.
"IBM was not giving
sufficient consideration to grid security," Rosen recalled. "That
made it hard for customers to run their payroll or corporate data on big
grids."
In another case, Share
suggested that IBM employees could benefit by attending their regular user
event. About 100 IBM staffers regularly attend the event each year.
Share, the granddaddy of
all tech user groups, was founded in 1955. That's just two years after IBM
released its first computer.
"IBM has been doing
this work for a long time with user groups," said Al Zollar,
general manager of IBM's
Higher Expectations
User groups help vendors
spread their message about plans among the user base, says Julie Silverstein,
president of SmithBucklin, an association management
firm. SmithBucklin runs events, marketing campaigns
and financial services for about 200 groups, including 18 tech user groups such
as Share.
"Vendors have a much
higher expectation of user groups than in the past," Silverstein noted.
"Relations between the two were a lot more adversarial in the early
years."
Case in point: the
14-year-old Independent Oracle User Group [IOUG]. It has grown to include more
than 20,000 members worldwide. Yet only in recent years has Oracle (ORCL) become more responsive to the group's
concerns, says
"The biggest change since
1993 has been in how Oracle views its customer-driven focus," Kaplan said.
"Oracle had a former standoffish attitude toward user groups. Now they are
more cooperative."
This change of heart makes
business sense. Software makers such as Oracle can glean valuable feedback from
user groups. Such input helps vendors to pinpoint technical concerns or
business-related problems. The findings can then be used to improve future
product designs.
In short, user groups serve
as "the collective voice" of customers, said Rod Masney,
president of
Another Point Of View
ASUG has about 2,000 member
firms and 50,000 individual participants. That broad reach lets SAP (SAP)
understand the "pinch points" shared by many users, Masney said.
"We help them see
where there is real pain in our business, and how they can eliminate it," he
said.
ASUG convenes what it calls
influence councils to discuss hot topics with SAP software developers, such as
data security or risk management. Higher-level executive exchanges connect
C-level executives with SAP product managers to work on long-range strategic
issues.
SAP commits four full-time
executives to support ASUG, says Stefan Kneis, SAP's executive liaison to ASUG. The internal team matches
concerned users with the right SAP product experts, Kneis
says.
"It is important to
get an unbiased view from the customer so that we can tweak our own investment
decisions." he said.
SAP cited the group's role
in helping it develop a new sales and operations planning product launched
Wednesday.
At times, tensions flare
between vendors and users. Masney recalls one heated
meeting at which he suggested ways for SAP to improve the root design of NetWeaver, its middleware product.
"From my perspective,
I offered my opinion," he recalled. "But I was politely coached to
not tell them how to architect the solution, and I think that's
appropriate."
Such discussions aren't
always comfortable, Masney admits. But it often takes
healthy debate to identify "those golden nuggets of value" that will
benefit users and vendors, he added.
"Ultimately, it is not
for ASUG to tell SAP how to do software development," he said. "It's
more about us describing our business plan, and finding ways that they can save
us money, drive more revenue or reduce our inventory."
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