Finance chiefs know the drill well. A salesman for a software vendor, eager to convince a CFO to OK an upgrade to the vendor's latest release, puts on a full-court press. The calls are endless, the promises grandiose. But the salesman's arguments are well honed, persuasive. The new software addresses all the problems in the earlier version of the program, he says.
The new software incorporates suggestions from customers. It's Web-enabled. The application will allow for a seamless transition to the next "major" release from the vendor, scheduled sometime in the next paleontological era. Eventually, the CFO relents to the pressure and signs off on the upgrade. The salesman remodels his den.
So what's wrong with this picture? These days, a whole lot of software salespeople are going without the wood paneling. Indeed, business customers seem to be responding to software upgrades the way toll-booth attendants respond to large bills. Barbara Crane, vice president of IT at Aramark Corp., a Philadelphia-based outsourcer of food and uniform services, says there must be a truly compelling reason before she will even consider updating an application. "An upgrade under any condition would certainly not meet our business needs," says Crane. "Each project needs to be weighed carefully."
Crane's wariness reflects an increasingly foul mood among purchasers of business software. Makers of such products don't have far to go to figure out who to blame for this vitriol. Years of endless — and regular — software re-releases have soured many corporate executives on the virtues of upgrading. In some cases, corporate customers have found that much-ballyhooed releases are hardly upgrades at all—merely tweaks and fiddles to perfectly good programs. In other instances, upgraded programs have offered an overabundance of new features. "There are some software upgrades that just don't seem compelling enough to companies in terms of value," says Michael Silver, a software industry analyst from Gartner, a technology advisory firm located in Stamford, Conn. "And there are others where the change is so big that it makes the upgrade hard to do."
The corporate reluctance to upgrade Microsoft Windows XP is typical of the problem vendors are facing. Microsoft released Windows XP Service Pack 2 (SP2) in August 2004, flogging the operating system's (OS) security updates, management tools, and bug patches. But according to a recent survey of 251 North American corporations conducted by Ottawa- based IT consultancy AssetMetrix, business customers are not exactly flocking to SP2. Only a quarter of the 136,000 XP-based computers operated by the respondents have been upgraded to SP2.
What's more, 40 percent of the surveyed companies have a very low percentage of computers running SP2. That's a telling statistic, considering the upgrade is free. "We have complained bitterly to Microsoft about SP2 because they included new features that we didn't want," says Crane. "We then had to turn them off, which meant additional development time for us."
No Support Group
For businesses with hundreds or thousands of computers, installing even a minor upgrade (much less a sweeping revamp of a critical application) is far from a trivial matter. It takes time and effort to distribute, install, and, in many instances, troubleshoot upgraded software.
In addition, the latest versions of applications are often larger and more complex than existing software. That, in turn, forces some businesses to soup-up current computers (with additional memory and storage capacity) or purchase more-powerful PCs. Throw in the cost of the software itself — as well as employee retraining — and you can see why many corporate customers are choosing to stick with the software they are currently running.
Taking a pass on upgrades can prove nettlesome, however. Many companies are required to accept upgrades as part of their maintenance contracts with the software publisher. "As it's turning out, some companies may not want the maintenance," says Silver. "They just want the technical support."
Moreover, upgrade duckers ultimately run the risk of overseeing systems that are vulnerable to malicious code, or don't work properly with new hardware and software products. Worse, businesses that steadfastly refuse to upgrade their software may eventually find themselves cut loose from vendor product support.
Microsoft, for one, has already withdrawn support from products such as Office 95 and Windows 95, which continue to be used by hundreds of thousands of businesses. Support for Windows 98 is set to expire next year. "What happens is the software company turns off support, and so you're out there on your own," says Barbara Ashkin, vice president and chief operating officer of CXtec, a voice and data networking-products reseller headquartered in Syracuse, N.Y.
A skilled IT team can help a business cope with unsupported software. But Ashkin admits that it's Pollyannaish to expect in-house programmers to match the knowledge and insight of the company that created an application. "That's impossible," she says.
In deciding whether to upgrade software, business users must be able to differentiate just what kind of update they are looking at. An "update" upgrade is issued to address a security vulnerability or operational problem, while a "new edition" upgrade typically features new or improved capabilities. Corporate resistance to an upgrade generally varies, depending on the type of upgrade. "With a new edition, the [customer] objection is usually focused on cost," says Steve O'Halloran, managing director of AssetMetrix's research labs and product architect. "With an update, the worry is often that the software will impede or interfere with business-critical applications."
Concerns over upgrade malfunctions are not entirely unfounded. At SP2's release, Microsoft listed more than 50 products that it warned might not work with the new OS. The list included several of its own products, along with various antivirus tools, Web-server software, and games.
When it comes to upgrades for less well-known applications, business users tend to get even more jittery. In fact, many companies conduct their own tests on updated software. Aramark, for example, carefully evaluates all upgrades to make sure the new programs won't interfere with existing hardware and software. "We're investing staff, resources, and tools," says Crane, "because we feel that what we receive from our vendors is not tested well."
Another way a company can help protect itself against unexpected upgrade bombs is to get publishers to commit to a basic level of support and cooperation. Says one IT consultant: "Security-based updates and bug fixes should be part of a contractual agreement in which the product [upgrade] still has to work in context to the environment it's in."
Of course, a software publisher may be willing to guarantee that it will help a business incorporate an upgrade into its existing IT infrastructure. It's not very likely, however, that the publisher will agree to compensate a user for damage caused by a malfunctioning upgrade.
In the future, analysts say companies may have little choice but to accept upgrades from vendors. The reason? More and more, software publishers are delivering their software over the Internet. And software delivered over the Internet affords vendors greater control over customers.
Case in point: Microsoft initially gave its Windows XP users a reprieve from installing SP2 after some business managers protested the company's initial plan to rapidly upgrade its entire customer base. But last April, the software giant followed through on its pledge to disable a blocking tool on its "Automatic Updates" service.
From Microsoft's perspective, disabling the blocking tool made sense. The tool allowed customers to receive incremental software updates, such as critical security fixes. But it also barred SP2 downloads. Indeed, when the blocking tool was lifted, users that had not disengaged "Automatic Updates" got a nasty surprise. The full upgrade was automatically downloaded to all systems that hadn't yet received the software.
Although Microsoft gave its customers advance notice of its intention to force through the upgrade, some industry watchers howled. They contended that, with Microsoft establishing the precedent, future upgrades from other software publishers may arrive with little or no warning.
Mandatory upgrades could backfire, however. The threat of being force-fed software might drive businesses away from automatic-upgrade systems. "I really can't think of a reason why we would choose automatic upgrades," offers Crane. "In all the years I've been in IT, I've never allowed a vendor to automatically upgrade anything."
(Editor's note: See "Windows-watching" for a chart of past Windows upgrades, with our comments.)
John Edwards, author of The Geeks of War, is a regular contributor to CFO.