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Summary:
Excellent support and service would cost $1,500,000 - $2,000,000
in expenses and $4,500,000 - $6,000,000 in opportunity cost yearly.
Details:
Having 'listened' to this list for several months now, my
interpretation of what folks are requesting in terms of
excellent service and support from Omega is:
1) Incremental fixes in the existing code base solving very
bothersome or critical problems on a regular basis (bi-monthly).
2) Add-on tools or additional incremental features to solve
bothersome or critical problems on a regular basis.
3) End of day and/or back data with problems corrected for all
highly trade stocks and contracts.
4) Highly responsive support personnel that have the knowledge and
time to answer difficult and lengthy questions.
5) Updated and complete documentation for the existing product(s).
I may have missed some particulars, but I think I covered the
magnitude of the effort required. Doing a back of the envelope
calculation based on a decade in the software industry, I would
estimate this level of support would require 15 to 20 full-time
people. Perhaps more if the volume of support calls was very
high. A $100,000 estimate as the cost per person is not out of line
once salary, benefits, matching tax contributions, infra-structure
(equipment, office space, etc.) and training are considered. So in
round numbers, excellent support would require 1.5 - 2 million dollars a
year in direct costs. In addition, there is opportunity cost. If these
same people were working on creating a major upgrade to an existing
product or if these folks were building a new product, I would be
targeting *at least* 3x the cost of the staff. In other words, if staff
costs an average of $100,000 a head, I would be building products that I
believed would bring in at least $300,000 a head per year. This
multiple pays for things like cost of goods, overhead, failed product
ventures, and profit for shareholders.
So excellent support and service would cost $1,500,000 - $2,000,000
in expenses and $4,500,000 - $6,000,000 in opportunity cost, and the
benefits are customer goodwill which *may* translate to sales at some
future date. Given the current level of sales and product price, I
don't think Omega can afford this level of support. Perhaps someone
who has Omega's quarterly report can confirm or deny this assertion.
I can think of several programs that Omega could implement to try
and provide this level of support, but they all involve getting more
money from us the users. They could dramatically increase product
price, they could move from a sales model to a lease model, they
could charge for user support, they could provide a special level
of support that includes the support items I listed only to customers
that pay for the service. My guess is that if Omega tried any of the
above, there would be some screaming on this list. How much would you
be willing to pay on a month basis for excellent service?
With my above thoughts, I don't mean to condone the worse aspects of
Omega's interactions with their customers. But I did want to provide an
alternate interpretation to why they may be happening. As I read all
the "Omega bashing" I get the sense that folks are saying, "If you
[Omega] would only listen to us, and do what we say, your problems would
be solved." And when Omega does not listen (or at least does not
communicate that they are listening), the interpretation is that the
people running the company are arrogant and don't know how to run a
business. However when I see a company withdraw customer
communication, I think that the people at company are overwhelmed (not
arrogant). Having been on the inside of software projects, it is my guess
that Omega is desperately trying to ship the new version, which is way
late and far over budget (like most software projects). Any spare resources
that could have gone to better support are sucked up in the new effort.
Problems that should have been solved long ago by the new release
hang around as the project slips out.
Several suggestions have been made that moving to new products or
additional product competition will solve the problem. If my
above assertions are correct, then the problems are inherent in
a product of TS's complexity and in the pricing model.
== Rob ==
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