by Luanne Johnson
Copyright ©1997, Luanne Johnson, All Rights Reserved
One of the biggest challenges facing vendors of applications
software products in the 1960s and 70s was overcoming the Not-Invented-Here syndrome. It
was really hard to convince customers that software that had not been written specifically
for them could handle their business processes properly.
This was a different sales problem from that faced by the companies
selling systems software during that period. Customers understood that they would need
standardized systems software such as operating systems, utilities, and language compilers
to be able to use their computers effectively. But they expected to get systems software
from the computer manufacturers for free so the challenge to was to convince them that a
systems software product sold by an independent vendor was worth paying for.
For those of us in the applications software business, the challenge
took a different slant. I started Argonaut Information Systems in 1971 to sell a payroll
system and an accounts payable system for IBM 360/DOS computers that I had acquired the
rights to from a company that had gone out of business. For the first couple of years, the
sales process with every one of my prospects consisted of trying to convince them that my
off-the-shelf software would be able to do the job for them without requiring a lot of
modification to either the software or their business practices. We managed to sell twenty
or thirty systems a year, helped by the fact that the cost of buying off-the-shelf
software was so much less than the cost involved in having their in-house programmers
write an entire system from scratch. Customers were often willing to make some changes to
their business practices so they could take advantage of the lower cost of using our
software. But every sale that we lost was because the customer had decided that they would
be better off doing it themselves rather than buy a software package.
Early in 1974, I suddenly realized that things had changed. I had
lost three sales in a row to other software vendors rather than to the customer’s
in-house staff. At first I was shocked and a little frightened to realize that I had that
kind of competition. But it didn’t take me long to figure out that this was a very,
very positive development. Competing against other software vendors meant that I no longer
had to invest in the time-consuming process of educating the customers about the
advantages of using off-the-shelf software. They were already convinced that they could
and would use a software product, so it was a matter of defining how our price and
functionality compared to those of our competitors.
We had tough, aggressive competitors with good products so it
didn’t mean that running a software products company got easier or less challenging.
But the change in the environment meant that the energy that had previously gone into
getting the customers to accept the idea of buying off-the-shelf software could now be put
into differentiating our product from those of our competitors and zeroing in on the
customers whose requirements most cleanly matched our products’ functionality.
The company really took off from that point on and I’ve always
felt that the 1973-1974 time period was a very important one for the software industry in
terms of a shift in customer acceptance of off-the-shelf software.
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