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SANTA CLARA, Calif.—Commercial software developers need to focus more than ever on quality and get their potential corporate customers involved earlier in the application design process.
This was some of the advice offered by four CIO-level executives speaking at the Sand Hill Groups Software 2005 conference here Thursday.
Corporate IT departments discretionary budgets for new software acquisitions remain tight, the CIOs agreed. Thus they are being very selective, targeting new software acquisitions toward their most significant problems.
For British Petroleum PLC, that means acquiring software that “adds unique and specific value” to the companys computing assets, said John Leggate, BPs group vice president for digital business. This includes advanced data analysis software, trading and customer-facing applications, and software that helps “80,000 people collaborate around the world,” he said.
BP has carried out eight major acquisitions since 1998, which has more than doubled the size of the company, Leggate noted. Along the way the company has accumulated more than 10,000 software applications of “every type and flavor you might want to know about,” he said.
BP spends about $120 million a year on software, about $90 million of that total supporting existing applications, Leggate said. That leaves about $30 million for new acquisitions. “We care deeply about innovation, and we are always scanning for the next things,” he said.
But that also means looking for new applications that wont cause integration and support problems, he said.
However, for software developers that might be interested in doing business with BP, Leggates advice is: “Come and talk to us first before you start inventing good stuff. Building a dialogue is a good way to start.”
For Kaiser Permanente, the West Coast HMO, a key issue is software quality and the need for vendors to take full responsibility for application safety and performance, said David Watson, chief technology officer with the HMO, based in Oakland.
“The quality of the software I receive is abysmal,” Watson said. Thats a serious problem because “Im in a business where if I put in a bad piece of software I can kill people,” he said.
Next Page: Putting skin in the game.
Skin game
Kaiser Permanente wants to work with vendors who take software quality and safety “just as seriously as we do,” Watson said. Watson said he wants to work with vendors “who have skin in the game with us.”
However, the current situation, he said, is that the medical system providers typically try to protect themselves with warranty provisions that minimize their potential liability for software flaws that might cause injury or death. Rather than standing by the products reliability, the warranties are written to “eliminate the downside, and I dont think that is a fair exchange of value,” he said.
Aerospace technology producer Lockheed Martin is also a company that has a lot at stake both in the quality of the software that it develops and that it purchases, said Joseph Cleveland, Lockheed Martin CIO.
Lockheed Martin produces and maintains “more lines of code than Microsoft,” Cleveland said. “The difference is that the product has to work because lives are at stake and missions are at stake,” he said, referring to the many military flight and weapons systems his company produces.
Cleveland said a major challenge is the amount of money he has to spend to protect Lockheeds systems from viruses and hacker attacks. “Its a difficult problem, particularly with the threat environment we are facing today,” with the number of viruses and hacker exploits increasing each year, he said.
Under such conditions it can be difficult to find money in the budget for new technology when the company is spending large amounts of money protecting and patching the software that it already owns, he said.
All four CIOs on the panel said they are only in the early stages of evaluating or using open-source software technology.
Lockheed Martin hasnt done much with open-source systems because “we have to satisfy ourselves with the security and reliability” of the software, Cleveland said.
For consumer products company Unilever N.V., open-source software “is just part of the menu,” said Neil Cameron, Unilevers CIO. “We use it where it is appropriate” for relatively small projects, he said. But it hasnt become a “matter of economics” where there are compelling reasons to use open source, he said.
When you talk to IT technicians about whether its a good idea to use open-source software, “they will either give you a million reasons why you should do it or a million reasons why you shouldnt do it,” Cameron said.
BP used open source-software to develop a system that runs in a small division in Iran that generates about $25 million a year in revenue, Leggate said. The company used open source to “absolutely adhere” to “American law and American pressure,” not to transfer any strategic technology to Iran, he said.
However, there is no other fundamental advantage to using open source over other available technology, he said. Operations in Iran, Leggate said, “are not remarkably cheaper to run than in another country.”