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I'm a software engineer at a large IT company and I've been assigned to work on an ERM project since my first day in the firm. This product is a 'shelf product' - it was developed back in the 90s, and since then, only few features were added to it, but we kept selling it - currently there are no software engineers assigned to this project.

This software has approx. 3000 users nationwide spread over hundreds of customers.

I began working as a support techie and by time I got to actually develop new features in this software (mostly by demand from customers), so I got to know it real well by time, both code-wise and from a user point of view.

At some point, I was assigned on 2 other projects with higher priority so most of my time is invested in these two, while the ERM project is being neglected -

Most of the calls I get from customers that ask for technical help (Software malfunctions, other problems that need to be solved for the software to work well, etc) are answered with "Sorry, I don't have time to help you with this issue", which is, from my point of view, very bad for the firm. In some cases, customers wait over a week or two for assistance.

We've (me and project manager) contacted the HR manager demanding more manpower - but it seems like the CEO doesn't approve any extra recruitment.

How can we convince the management that happy customers and excellent service are more valuable than short-term extra profits? Research indicating added business value (increased margins, revenue ect) would be especially helpful.

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  • I'll bet there are some good case studies out there of companies that boosted profits significantly with increased customer satisfaction. It's not mutually exclusive at all. – Rarity May 4 '12 at 19:39
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    The question seems to contradict itself: (1) "I'm a software engineer at a large IT company and I've been assigned to work on an ERM project" (2) "currently there are no software engineers assigned to this project" (1) suggests that there are at least 1 software engineer assigned and (2) suggests that there are zero. Which is it? – emory May 5 '12 at 4:00
  • @emory, Point is that I was previously assigned on this project (and did some coding), and currently no one is working on new code. – Shai May 5 '12 at 16:47
  • @Shai - If you are not assigned to the project, then you cannot be held responsible for the problems the project has, nor the customer support required. I would agree saying "we don't have time" to a customer means they will likely no longer be your customer very long. Money solves a great deal of problems, suggest the customers must pay extra for said support, I bet you will have time then. – Donald May 7 '12 at 12:41
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The purpose of a business is to make a profit so arguing to the CEO that anything is "above extra profits" is likely to be a non-starter.

The better argument, though, is that happy customers and excellent service lead to extra profits. If there exists a pool of customers that are using the ERM product and are requesting new features, there would seem to be an unmet opportunity to do additional development that will lead to additional revenues for the company (new versions, new options, additional training opportunities, etc.).

The CEO is likely to be very receptive to an argument along the lines of "If we add extra developers at a cost of X, we can deliver additional functionality Y which would be worth Z to the customer as a new version of the product and would generate W in additional revenues for other departments (i.e. training) and would make it easier to add new customers".

You could also make an argument that customers that have to wait excessively long for assistance are likely to migrate to a competitor's product, costing the company something in foregone maintenance and upgrades or that they are less likely to buy other products from the company but those can be harder to quantify.

  • The purpose of a business is to create customers. Profits are a requirement to staying in business, but not its purpose. – Matthew Flynn May 4 '12 at 19:54
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    @MatthewFlynn - The purpose of a business is most definitely to make a profit. Generating customers and keeping them reasonably happy is a generally necessary part of this. But the CEO should care first and foremost about profitability. A business that has millions of customers but makes little or no profit is not a successful business-- it's pets.com. A business that has few customers but makes a great deal of profit is a successful business. – Justin Cave May 4 '12 at 19:58
  • Love the answer - to add to it, there is also the value of the upsell of other products. Making this product better may lead to selling more of other things in the product line. But be aware before any big presentation of the counterargument - if this product is becoming end-of-life and there is no way to keep it up to date without re-writing it, the risk of additional manpower may exceed the estimated value of improvements. – bethlakshmi May 4 '12 at 20:38
  • "Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business." - Peter F. Drucker. – Matthew Flynn May 4 '12 at 21:33
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    @MatthewFlynn - If you go to any CEO and ask whether they would rather double the number of customers while cutting their profits in half or double their profits while cutting the number of customers in half, I can pretty much guarantee that they'll vote in lockstep to increase profits. Creating customers is useful only to the point that creating customers creates profits. It is the purpose of making profits that drives the marketing and innovation that create customers. – Justin Cave May 4 '12 at 21:41
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I like the answers so far, but I want to give my own perspective to this.

There is such a thing as a BAD CUSTOMER

I am not saying that the clients of your ERM tool are necessarily bad customers, but the CEO is probably privy to certain information that normally isn't disclosed with software developers. He is probably already well aware of at least a rough estimate to provide the requested features but may also already be well aware of what those clients are willing or able to pay for such functionality. It is very likely that these clients wouldn't have the budget to pay for extra features on an OLD project, and believe me, adding features to OLD software is extraordinarily expensive and difficult. Users are not the only stakeholder to consider, unfortunately.

Now others have pointed out that the main responsibility of a CEO is to ensure that the company makes profit and this correct, however there is another equally as important role that the CEO plays and that establishing company mission, long term goals and company focus. Granted this important role plays a much tinier role in publicly traded corporations where the majority of the shareholders are seeking short term gains, however in many private small to mid-sized corporations the shareholders tend to be making a longer term committment so they have a vested interest in a CEO that lays the foundation for long term success.

Where am I going with this? Assuming they do have the money to pay for such things you have the consider if this older product is a relic and out of place within the company mission and goals. Consider the history of Wells Fargo the mega bank that once had humble beginnings as an express mail carrier, and safe delivery company during the mid 19th century during the gold rush of the western United States. At one point they had decided to abandon that fiercely competitive market as a lost cause and eventually refocused and became a bank. When refocusing it is detrimental to have any attention wasted on activities that don't fall in line with that goal, because even if the old goal here will make a little bit of money, it doesn't fall in line with the long term growth goals of the company in a market they are trying to expand and reprioritize into.

The CEO may be wanting you to focus your energies primarily on the future endeavors and is merely wishing you to provide minimal support for customers they are no longer interested in.

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    +1 Also note that they may not be 'bad customers' so much as this being a 'bad product' - better to transition them to some other product, or other high level business strategy. – Kirk Broadhurst May 10 '12 at 5:37
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The concept you're looking for is called "lifetime customer value"

http://en.wikipedia.org/wiki/Customer_lifetime_value

Look at your company's customer-retention rate, and calculate how much more money they'd make if it increased by even a small amount (5% for example). If that number is large enough, executives will listen.

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    This question deserves a more detailed answer than this. Please keep in mind that short, simplistic answers are not a service to the community. – Nicole May 5 '12 at 8:45
  • @NickC: I understand and agree in general, however, lifetime customer value is not a simplistic concept, and wikipedia.org explains it better than I can, hence the link; the OP's precise political situation is unknowable (my personal opinion is that he/she is wasting his/her breath) – Steven A. Lowe May 31 '12 at 2:17
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You might be able to suggest adding features that help sell other products.

My company has renewed development in an older product by increasing the interaction between it and our newer product. So customers come to us interested in the new product, and we say if you also buy this product you get these additional features added by it, therefore up-selling them with a product that is stable and low-maintenance.

I'm not sure if anything like this could work for you, but its one way to get renewed funding of an older product.

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