Some older readers would remember my days in the 80s and 90s creating and running what was in the 90s, the PKF Technology software business (Corporate Register System and Superfund SMSF admin software) before it was sold to Solution 6 (now part of MYOB) in 1999. It was an exhilarating time being in the vanguard of the PC revolution, but also a very challenging time as continual technology shift required ongoing reinvention of the products and the business.

We are seeing the same challenges today. Incumbent software suppliers are being challenged by the cloud. You can’t simply move your existing software to the cloud except if you move your whole desktop to the cloud and use a hosting platform to run your desktop software. That does not unleash the power of the cloud. Cloud software requires a rethink. How is data gathered and fed into the software? How do people collaborate regardless of where they’re working and what other people may be doing? How are results presented and sent to clients and other third parties? How is data stored? How can data be searched? How can large cloud based databases be leveraged using artificial intelligence and data analytics? How can the systems and data be secured? All these questions and many more must be answered as new cloud based systems are designed.

If you’re an incumbent supplier this represents and huge challenge. How do you embark on developing software for this new world while you keep your existing platform competitive? It requires a huge investment. Having had to deal with the move from text based DOS to Windows applications in the 1990s I can sympathise. Developers have to learn new skills (or new developers found), teams have to be duplicated. Bets need to be made on development tool kits many of which can be quite immature themselves.

Inevitably development on the existing platform slows as more investment is made in the new technology. A sense of urgency occurs as new entrants with no legacy platform to support are able to move faster. Customers become frustrated as they see little product improvement from the money they pay.

A real danger in this environment is that software is “announced” before suppliers can be sure they can meet their own timelines or software is released that is immature, lacking in core features. This can be a big challenge for incumbent suppliers where customers will compare the new product with the existing software and find the new product lacking in the comprehensive feature set of the legacy platform which may be have been developed over 10 or more years. In this environment customers can become disillusioned. Incumbent suppliers need to be very mindful of this challenge and ensure that they don’t over promise and under deliver – a chronic problem in the software industry. Honesty in messaging is required – acknowledging mistakes, providing clear realistic timelines and being very clear about the feature sets that will be delivered. It is important that suppliers retain their customers trust during this challenging transition period.

I recall 25 years ago in around 1990 we shipped a poor version of our rewritten CRS software. Very quickly we travelled around the country talking to customers and told them exactly what went wrong and what we were doing to fix it and the timelines we’d meet (which we did meet). Despite the frustrations we gave our customers we were praised for the way we kept them informed and were honest in what went wrong. The experience was sobering but actually strengthened our customer relationships.

The rush to today’s new cloud paradigm also brings with it risks that deep industry knowledge is lost, as those involved in the design and development of the legacy platforms are pushed aside by the new breed of cloud savvy techs. More and more I am hearing messages from firms that many of the people they’re dealing with in the software companies don’t understand how accounting firms work and lack the detailed understanding and nuances of the operation of an accounting firm. We need the modern day savvy techs but we also need those that “get” how a firm works and can be an effective bridge between the techs and the customers. These people need to have a key role in building development plans and detailed functional specifications.

There are many disillusioned firms out there, not knowing where to jump next when it comes to technology. There is a big opportunity for suppliers to learn from the past, get their communication right and make the right investment in people and technologies to provide the software, services and relationships that firms are looking for. Suppliers that do so will be the long term winners.

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