Business-focused custom software

News stories about software development projects gone bad are published regularly. One such story is this recent article about the Minneapolis convention bureau "Meet Minneapolis", who decided to develop and sell software. The bureau, which gets most of its money from the city, asked for a $2.5 million loan from the city to develop and market software for managing convention sales accounts, hotel vacancies, amd convention registrations. As of now the loan is up to $9.1 million, still without showing a profit.

Of course, hindsite is always 20-20. Still, it is apparent to me that several factors known at the beginning that should have made it clear to the city council that this was a risky proposition.

• Meet Minneapolis' core business mission has nothing to do with software.
• I see no evidence that the organization had people involved who know anything about the business of creating and selling software. None of the staff listed on the site or key officers of the board seem to have a software product background.
• For actually building the software, they partnered with an organization in Singapore. Managing a software project on the other side of the planet has many additional challenges and risks that Meet Minneapolis was likely unprepared for. 

The ignorance about the risks of the project is stunning. For example, the article quotes Council Member Paul Ostrow saying when the project started "We're quite confident that this is relatively low-risk." Yikes!

Software development practices are improving all the time, and I'm not saying that all projects are doomed. Still, organizations need to be careful not to stray too far from their core businesses.  Developing packaged software for resale to multiple organizations is a specialized business. Organizations should carefully consider the risks before attempting to become software providers, or they may end up on life support.