Chapter 11: Competition

August 17, 1987, Chicago, Illinois

"Another plane crash?" Jessica asked as I scanned the newspaper while we ate breakfast.

"In Detroit," I said. "About 7:30pm last night, when we were all in the sauna. Afterwards, we went right upstairs to work on making a baby, so we didn't watch CNN at all!"

"Priorities, Snuggle Bear!" Kara giggled. "I suppose I shouldn't laugh. The picture looks bad."

"150 or so dead, but a little girl on the plane survived somehow. It crashed onto a freeway, and some people in cars died."

"Wow! Any idea what happened?"

"It's too early to tell. The article says that the NTSB is on site, so we'll see a report at some point. It says here that a center for the Phoenix Suns was reported to be on the flight. I've never heard of him, but Dave or Katy might have; they follow the NBA."

I put the paper down, finished my breakfast, and we walked Jessica to the hospital.

"Have a good first day of class, Kara!" Jessica said as they hugged and kissed.

"I can't believe I'm a Senior already! Of course, I have two more years to go after this one for my Master's. Have a good day in the ER!"

"You know, I wonder exactly what a good day in the ER would be," I said. "Lots of patients and nobody dies? No patients?"

Jessica smiled, "Well, I'm training, so I need to see lots of patients. Saving every single one of them would be good. Curing every one would be better. I'll settle for no mistakes."

I kissed her and hugged her, and then Kara and I walked to the NIKA office. She kissed me, we hugged, I wished her a good first day at school, and then went inside and started the coffee. When it was finished, I poured it into a Pittsburgh Penguins mug that I'd found for sale in The Hockey News and went to my office.

My first order of business was to add search features to the module I was working on, so I pulled up Greg's new code and discovered that there were no comments and that the documentation had not been updated to describe the new algorithm. I looked at the code and found a number of things that were a bit confusing, especially because many of the variable names were cryptic. I sighed and made a note to talk to Dave after the staff meeting. I had other things to work on, so the early morning wouldn't be a total loss.

Unfortunately, because school had started, neither Penny nor Tasha would be full time for a while, which would increase the load on the other programmers. Between Charlie, Heather, Terry, Alonzo, Greg, and me, we'd have to pick up the slack. Dave had a team meeting planned for right after lunch, where he'd discuss assignments. Penny and I were very close to being finished with the 2.5 release of the legal software, and with a bit of help from Heather, we'd be ready to release by the end of the month.

At the staff meeting, Cindi had a disturbing report that she'd confirmed with Zeke, Barbara, and Mario. On Friday, nearly all of our customers east of the Mississippi had received letters and phone calls from Boston Legal Systems touting a new release that they claimed was faster, more efficient, and more importantly, much cheaper than our solution. And, worst of all, they were offering credit for any remaining support contract.

"Do we know if anyone is seriously interested in their offer?" Julia asked.

"No," Cindi said, "but if someone was going to switch, it's not likely that they would tell us about it."

"How does their feature list compare with our version 2.5?" I asked.

"It comes up short. It compares reasonably favorably to our version 2.0, though I can't tell if they have a system-wide search feature implemented. How soon can we release 2.5?"

"That's up to Dave," I said. "I'm on schedule with bug fixes, though with losing Penny and Tasha, because classes start today at IIT, I'll need more help from Heather."

"I think we're on target for September 1st," Dave said. "Barbara has been doing a lot of QA, and Ford, Jackson, and Finch have been using it for the last two weeks. They're really happy with the new features and the stability. Once we give them the revised search and indexing modules, they'll be ecstatic."

"Cindi, did we send out the feature list for version 2.5?" I asked.

"Yes. All of our customers received it at the end of July."

"Is their system really faster?" Alonzo asked. "What did they test against? And how?"

"I don't see how it could be significantly faster," Cindi said. "The efficiency claim could be because of our menu system, but the customizable menus and the new custom reporting tool will be in version 2.5. As far as we can tell, they have no features that we don't have in 2.5. The problem is, about a quarter of our customers have not upgraded from version 1, and the rest are running 2.0. We don't know for sure that anyone actually read our update letter, or has paid any attention to our newsletter articles on the new features. But cost grabs attention."

"What do you propose?" I asked. "They're offering their software for about half of what we charge, and their maintenance is cheaper. And they're offering to supply credit for any time remaining on the support contract."

"Remember," Cindi said, "it's hard to get someone to change — we've seen that, and we've lost very few customers to them. They've taken two from us, and we've taken three from them over the last two months. What they did probably didn't cost them much, and they have us scrambling to respond. I'm not sure we actually need to do anything except what we're doing — get our next release out. It's new customers that might be an issue."

"Do we know how big they are?" Barbara asked.

Cindi answered, "As best as Julia and I can tell, they have two programmers, one phone support person, and one sales person. They are a really small shop, which is how they can keep their price so low and stay in business."

"That should be a selling point for us," Dave said. "With a larger staff, we can provide better support and be more responsive to requests. Just ask our friends in Los Angeles. Does anyone think we should lower our prices?"

Everyone shook their heads.

"I assume you all read the weekly financial report that I hand out," Elyse said. "You'll see that the support charges basically cover the costs of providing technical support and developing and fixing the code. We can't really cut our support fees without somehow reducing our costs in that area, and I think that's a very bad idea. Because a majority of our profit comes from new sales, I'm reluctant to reduce our price. Granted, we have other profitable work, like Purina, Waukesha, Novell installations, and custom programming, but it doesn't make sense to me to simply break even on our legal software. The same thing could happen with the medical software as well."

"Are you having trouble making sales?" I asked.

"No," Cindi said. "The pipeline report I handed out on Friday is pretty consistent with the past. We'll keep an eye on it, but sales of all of our software packages are trending slowly upwards. The one that's kind of lagging is the logistics software, but you know what happened there."

I nodded. I was expecting a call from Jamie at some point today about that situation.

"How do we respond?" Zeke asked. "Do we do the same thing back to them?"

"For now, I think we keep doing what we're doing," Cindi said. "Our real coup is the presentation I'm giving at the regional ABA meeting next month. I also have presentations scheduled at the Bar Association meetings in Wisconsin, Illinois, Ohio, and Missouri. I'm trying to get into Michigan and Indiana as well. As far as I can tell, Boston Legal Systems isn't doing anything like that."

"Are you presenting our software?" Zeke asked.

She smiled, "No way! They would never allow that. I'm talking about applying technology to the law. I do not discuss NIKA Legal Solutions directly. But, my name and the company name are on the agendas, and I am allowed to put our flyers and other material on a table in the room where I'm speaking. The goal is to become the nationally known expert on computerization of law offices."

"What about California and New York?" I asked.

"One step at a time!" Cindi said. "If we're successful regionally, we can expand. But if I'm going to be doing that, we'll need another sales person."

"Cindi," Elyse said, "please keep track of inquiries that you receive from these meetings. If it goes the way you think it will, we'll use that information to justify hiring another person to the Board of Directors."

"We should track the source of every inquiry," Mario said. "I've tried to do that informally, but we really should get a better grip on what is working and what isn't."

"Sounds like your team has some work to do, Cindi!" Julia said.

Julia had a few more things to discuss, and when we finished the meeting, Dave, Cindi, Elyse, Julia, and I went into the small conference room.

"Now that it's just the management team, how big a threat is this?" I asked.

"I don't think we'll lose any customers, though it's always possible," Cindi said. "I'm going to have Zeke and Barbara call every single site contact and remind them about the no-charge upgrade that's coming next month. I'll have them do a quick satisfaction survey as well. We usually just take a random sample of the customers each quarter, but I think we need to do more so we can nip things in the bud."

"What about the dozen or so clients who have dropped maintenance?" Elyse asked.

"Those would be the ones to worry about," Cindi said. "But I've talked to all of them in the past couple of months. They're basically happy with the software and they just didn't feel the need to pay for support or our quarterly patches."

"It might not be a bad idea to offer them an upgrade to version 2.5, though I'm not sure what we'd charge for it," I said.

"Maybe 50% of the purchase price of new software?" Dave said.

"But that's more expensive than annual maintenance, so I doubt that many of them would go for it," Elyse said. "What if we offered it for the equivalent of a year's maintenance, provided that they do the install themselves? That's money that we're not going to get otherwise, so it's pure profit, minus the cost of calling them, duplicating and sending the diskettes to them along with new manuals."

I chuckled, "I like it. We're planning a major release every eighteen months or so, and if they buy the updates, we'll get two years' worth of maintenance instead of zero!"

"That's a great idea!" Cindi said. "I'll work up a letter offering it, and then we'll call them to follow up."

"Good," I said. "I do need a private word with Dave now."

Cindi, Elyse, and Julia left the conference room, and I explained to Dave what I'd found.

"I saw that when I was doing a code review on Friday afternoon. I plan to deal with it this morning. I think once it worked, he declared it done, and he moved on to the next thing on his list."

"I need to integrate his new routines into the 2.5 code immediately if we're going to make September 1st. Your code freeze date is this Friday."

"I remember," Dave chuckled. "I set the schedule."

I went back to my office and called Heather in so we could go over the remaining tasks. Penny would be in on Tuesday and Thursday afternoons, but she'd be working on things for 3.0 because she had limited time and we couldn't count on her being able to finish anything that was due for Friday. Heather and I divided up the work, and she went back to her workstation.

Just before lunch, Kimmy came to tell me that Jamie was calling for me. I pressed the button on the phone and lifted the handset.

"Three months' pay plus her attorney's fees," he said as soon as I'd said 'hello'.

"How much are those?"

"About $500. He spent a couple of hours on this, most of which was us negotiating."

"OK. That works out to about $3500 or so. Let me clear it with Julia and Joyce, but I think we have a deal. Did Elyse tell you what she suggested Kaitlin would ask for?"

Jamie laughed, "Yes, she told me. Her lawyer would NEVER allow her to ask for that in a settlement agreement. He'd be disbarred if he did!"

"I'll have an answer for you by the end of the day," I said.

We hung up, and I went to talk to Julia. Elyse had gone home to feed Matthew, but I knew that she'd agree with the amount. I explained it to Julia, and she quickly agreed. We called Joyce in Georgia to discuss it with her.

"I hate the idea of paying her anything," Joyce said. "But Elyse is right. It would cost us more than that to defend ourselves. And there's a real risk of losing. Pay her. You don't need full Board approval for that amount."

"I'm going to check with my dad, just on principle," I said.

"He did put up half the seed capital," Joyce said.

We thanked her, then dialed my dad. He agreed with Elyse and Joyce and told us he felt we should make the settlement so we could put the whole thing behind us. He said that he'd see us next week for the Board meeting, and after we hung up, we called Jamie to tell him to make the deal. He promised he'd call back when he had a signed agreement with a complete release. We thanked him, and I headed home for lunch.

Stephanie had started school again, and she wasn't home for lunch, so Elyse and I ate together, then took the boys to Washington Park. Carol surprised me by saying that she'd gone out on a date on Friday night, and I let her know I was happy to hear that. She was nice, sweet, and good looking, but she did have the impediment of having two young children. Fortunately, that didn't seem to matter to the guy she went out with, and they had another date set for Friday night.

"You could leave the kids with me," Elyse said. "I'm sure that Jesse would be happy to have Francesca visit and Frankie will be no trouble at all."

"I think you're right! Those two are more or less joined at the hip, aren't they?"

I suppressed a smirk, because it wasn't hips those two would be joining in about twelve or thirteen years if they continued the way they were. When I had to go back to the office, Elyse decided to stay in the park, so I hugged her, kissed my sons, and then headed back to work.

At Dave's staff meeting, he went over our coding and documentation standards without naming any names, reiterating how important it was to follow them, and that following them was a key criterion for performance evaluations for programmers. I saw Greg roll his eyes, which concerned me. Greg had the skills and intelligence to be outstanding, but his attitude needed some serious adjustment, but I'd leave that to Dave, at least for now.

Once we completed the work on version 2.5 of the legal software, we would make a full-court press on version 2.0 of the medical software. Dave had completed the design work and he, Cindi, and Julia had agreed on the feature list. Charlie and Terry would be working on Dante's projects, with help from Zeke for the networking. That left Heather, Alonzo, Greg, and me to work on the medical software, with Penny and Tasha doing bug fixes for the other systems.

After the meeting, Dave came to my office to talk about Greg.

"He's working on commenting the code and updating the programmer documentation. It should be done when you get in tomorrow morning. If not, let me know."