Hopeless? You're describing an organization so riddled with inertia that they'll keep using (and paying for) an obsolete system they are comfortable with it and have no team inside capable of building something better?
Your problem will be building something that actually IS more useful than what they've evolved towards. The big problem is here though:
> the guys who cut big checks
Why would any organization like that pay significant funds up front for something that has no value to them. If this market is worth it, the way to succeed is to give them a low cost / high trust system that complements the way they work. Charge them next to nothing for the basic version and once they've used it bill for ongoing support and further development.
Your problem will be building something that actually IS more useful than what they've evolved towards. The big problem is here though:
> the guys who cut big checks
Why would any organization like that pay significant funds up front for something that has no value to them. If this market is worth it, the way to succeed is to give them a low cost / high trust system that complements the way they work. Charge them next to nothing for the basic version and once they've used it bill for ongoing support and further development.