VERTICAL TAKEOFF, Part One

by Wayne M. Krakau - Chicago Computer Guide, November 1996

It’s happened again. For the umpteenth time one of my clients had their business disrupted and possibly even endangered by their reliance on really shoddy vertical-market software. This trend is now at an epidemic level.

Vertical-market applications are written for specific industries or for narrow segments within an industry. The legal and medical fields are two of the most obvious examples of vertical markets. Different narrow segments within these disciplines could be divorce law versus product liability law, or individual medical office practice versus hospital supplies management.

There is no technical reason why vertical-market software products could not be created to be extremely high quality. They could be equipped with modern, user-friendly interfaces. They could be programmed using the latest productive languages and programming tools. They could be designed to use contemporary safe and efficient network-optimized non-proprietary databases. They could use a well-defined, properly documented file format. They could contain flexible report creation and modification capabilities. They could contain reasonable data import and export options. They could be delivered with enough user and technical documentation to avoid the necessity of making technical support calls. For that matter, they could be backed by some reasonably qualified and available technical support plan.

Sorry, Toto, we’re not in the land of OZ, we’re back in Kansas - or at least two states away in good ol’ Illinois. Here in the real world, your vertical-market software wishes seldom come true. There is just too much opportunity for the ethically-impaired to take advantage of the situation.

Note that my use of the term "ethically-impaired" is specifically meant to include both those who plan to actively cheat people for fun or profit, and those who conveniently decline to recognize their actions as unethical - in this case, by refusing to acknowledge the limits of their training and experience (and perhaps the lack of limits of their egos). This refusal leads people to ignore the lack of weaknesses in their software, client training, support programs, upgrade practices, billing procedures, bug-fix policies, and customization charges.

Think of it in comparison to running over and killing someone with a car. Within the legal system, it matters whether you meant to run that person down or did it by accident as a result of, for instance, speeding. As a practical matter, it doesn’t matter to the victim. He or she is still dead.

In the same way, business owners and managers don’t really care about the motive behind the ethics lapses that are crippling businesses. The fact that the problems exist is the important thing.

Often, a software company gets the attention of some type of industry association. Since these associations are run by people in the appropriate industry, it is quite easy to impress them enough to get on their "approved" or "recommended" lists. Once you are on such a list, you are almost guaranteed a continual stream of customers. The nasty thing is that you don’t have to update or improve your software to stay on these lists. If you got on the list ten or more years ago when there was little or no competition in a specific industry, your product can still be listed as "recommended" even though it is now archaic and no longer fits your customers’ needs.

When a new client implements your product, they are normally comparing it to either totally non-computer methods or to some grossly inappropriate software that they have discarded. It is easy to impress them enough to get them to agree to supplying a written recommendation praising your product. Once they catch on and realize what they have gotten into, you don’t care, because you already have their written endorsement and their company is already dependent upon your software.

If you have planned things carefully, you have made it nearly impossible to transition from your software to a competitive product. If your customer threatens legal action to force you to stop using their endorsement, or, when called by your prospects for their opinion, tell the brutal truth, you can threaten to withhold support, thereby maiming or destroying their business. That ought to shut them up. (This scenario is not fiction - I have seen it happen.)

Once you have established yourself as a "standard" within your narrow market, sales are a lot easier. Very few potential customers have access to serious research material regarding software. They will have heard of your product and perhaps just a few others (most likely at least as bad or even worse than yours). It will be easy to convince them that you are the only game in town.

I have lost track of how many times I have been introduced to a new client who has just chosen a vertical-market product after what is sometimes a multiyear search. Invariably, they are absolutely sure that their search was very comprehensive. It often takes me only a few minutes of research to find alternatives that they had not considered. These clients just didn’t have the resources that a systems integrator has in terms of both qualified personnel and information availability, to do a thorough product search and subsequent product analysis.

In Part Two of this article, I will cover some of the other pitfalls of vertical-market software. In case you think there is no way to get industry specific features in software, make sure you read Part Two. "Vertical-market" doesn’t have to mean disaster.