The question of who innovates in our industry and whether customers are getting enough to justify their maintenance fees is the story that just won’t die. Fellow EI Dennis Howlett took his knowledge of baseball on the road with a scorecard approach to the debate that has been rolling about the EI crowd, including Vinnie Mirchandani, Bob Warfield, and, Paul Greenberg, as well as Larry Dignan from ZDNet.
I just posted a reply to Dennis’ last post, which I have expanded on here:
Tormented sports analogies aside, there are actually multiple threads going on here at once, all of which could crave some more data and/or definition.
1) What do we mean by innovation? One person’s innovation is another person’s waste of time. I think in general we haven’t really arrived at a common definition of the term, and may never do so. And customers’ appetite for innovation varies tremendously: keeping the lights on is often the main priority, especially if IT is not seen as a strategic differentiator.
2) What do we mean by innovation spend? There are lots of early stage companies that can and do produce truly innovative products for next to nothing (as they should) and there are companies, like Microsoft, that spend zillions on products like Vista, and, after my week spent fixing my wife’s computer, have clearly wasted every penny they spent (slight exaggeration, but — did you know fixing bad sectors in Vista involves using Chkdsk? If you can get Vista to actually perform a Chkdsk. This is 20 year old technology, make that 25 year old, at least.) Point is, measuring innovation by spend doesn’t measure innovation delivered, only innovation attempted.
3) What is a user and what is a buyer? This is a complex issue. I have spent a lot of time talking to end users recently, as part of my attempt to understand the casual user phenomenon I’ve wrote about here. One thing for sure, they don’t think like buyers, and for the most part couldn’t care less or are oblivious to the issue of cost. Buyers are a different breed: caring only about cost, and, I would argue, less connected to the issue of functionality (and by the way, innovation) than many of their users. I would love to see the survey that looked at both satisfaction with functionality and satisfaction with TCO across these two populations, and then tried to correlate the different populations and their attitudes. I think we would see a very broad and complex picture that would probably make all of us in this debate look very right and very wrong at the same time.
3) What is an appropriate return on R&D spend in our industry? Or any industry? And how do you even measure that return, based on the fact that so much of R&D is just the R part, and never makes it to the D part. I asked one of the top tier vendor CEOs how much of his research ever makes it into product, and he said about 50%. But, he added, the other 50% is actually useful, even it is has no direct impact on product (see point 2 above). Does that lost 50% mean someone wasted their money?
5) How the heck can we really compare one company’s innovation spend and success with another? In addition to the subjective issues raised above, one major player, Microsoft, simply doesn’t break out any numbers regarding its ERP spend or revenues. And, I applaud the green-eye shade types like Dennis who can actually sift through the annual reports and even begin to find some of these numbers. But we’ll really never know for sure.
The bottom line is that the debate continues, and from what I can see this debate can and should go on for quite a while.