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1998-03-11 08:37:54


Vendors' Mainframe Software: 18 Months to Install



All large companies and most medium-size companies rely heavily on vendors' software. These are customized packages. A large company may have a hundred or more software packages supplied by vendors. These separate packages must work together for the company's systems to function.

Medium size businesses are 100% dependent on third-party software. For example, construction industry packages are used by medium size firms. Something in the range of 50,000 firms are out there.

Normally, 5,000 new packages are sold and installed each year. Next year, it will be 20,000. The vendors do not have the personnel to install this many new packages.

The author does not mention something else: many vendors do not have 2000-compliant packages to sell this year. There is no guarantee that they will have such updates next year.

The conclusion is obvious. The author refuses to make it. It's too late. He says, as they all do, "start now." That sounds as though he is being positive. They all want to sound positive, even though the conclusion -- "get started now" -- is suicidal.

The accurate response is this: "Sell your business immediately to some fool who thinks he can make the deadline. Sell it for cash. Then convert the money to something that will be valuable in 2000."


* * * * * * * * *

The situation is different for companies that buy their corporate software instead of writing it.  Most of them will have to convert to new or upgraded software must be purchased.  That may be expensive but doesn't appear to require years of advanced planning.  Unfortunately, all the companies that don't plan in advance will face an installation crisis.  As an example, here are some statistics for construction accounting software: 

There are about 50,000 medium to large construction companies in the US.

Those companies purchase about 5,000 systems per year.

Construction software vendors have enough installation expertise to install those 5,000 systems, but most are already facing a shortage of qualified trainers and installers.  It takes as long as two years to properly train an installer.

This makes the average system life span about ten years, but that average is misleading.  Many of the systems sold are to new companies.  Other companies change systems frequently, perhaps every four or five years.  At the other end of the scale, many companies (perhaps as much as 30 percent), have not changed systems in fifteen years or more.  If these older systems are still actively supported and enhanced by a software vendor, their age doesn't matter.  Unfortunately, most of these systems aren't supported.  Companies using these systems usually have contract programmers who spend a few weeks each year to update the system enough to get along.  Changing the software to support year 2000 dates is a huge task.  Most companies will choose to buy new systems rather than spending tens of thousands of dollars perpetuating an obsolete system. All these companies will want to install new software in 1999.  There's the crisis. 

If the estimates above are correct, as many as 20,000 construction companies will want to install systems in 1999 (the usual 5,000 plus 15,000 older systems).  That's FOUR TIMES the installation capacity.  When the software vendors run out of installation capacity, it will be too late to train new installers.  They will only have two choices.  Some will probably raise their prices significantly to reduce demand and limit themselves to their capacity.  Others will overload their installers, and add new, inexperienced installers.  Being on the receiving end of either of these options will be an unpleasant experience, but the companies that wait until 1999 will have no choice. . . .

START NOW!  Selecting a new system takes at least three to six months.  The new system rush starts this year and there isn't much time left.   


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