November 27th, 2009

The Future of Financial Force.com - How Salesforce.com Benefits, too

Posted by Brian Sommer @ 3:25 am

Categories: CEO Interview, Current Affairs, ERP, Financial Software, Future of Application Software, Mergers & Acquisitions, Selling & Marketing Software, Selling & Marketing Software, Software Marketing, Software Vendors, The Applications Market, software, software. applications

Tags: Salesforce.com Inc., Financial, Benefit, Jeremy, Financial Accounting, Finance, Brian Sommer

Or, Why You Should Cut a Joint Venture with Your Cloud Platform Partner

Last week, I spent some time with Jeremy Roche, CEO, of Financial Force.com. This is the new entity created by Saleforce.com and Unit 4/Agresso to market the former Coda2Go financial software product line.

When I first chatted with Jeremy, it was early in the week and before the Dreamforce activities really cranked up. Later, I met with him Thursday just moments before I left the event. My opinion about Financial Force changed materially in that time. Here’s why.

1) In three different sessions, companies that were users of Salesforce.com’s CRM products or users of all new applications they had built using Salesforce.com’s Force.com architecture indicated that they had outgrown their current financial software solutions and would be checking in with Jeremy specifically or Financial Force.com in general for new software.

2) Marc Benioff, CEO of Salesforce.com, even offered, publicly, to introduce two different executives in different plenary sessions to Financial Force/Jeremy to help them with their financial software needs.

3) A panel of four Financial Force.com customers was anything but demure in their praise for the product and the very, very short time it took to implement.

So, what should this mean for Financial Force.com and its owners? I believe it’s a pretty rosy future for now unless they have some sort of service meltdown. Honestly, every customer at that show knew that Financial Force.com is the top-end financial software vendor of record for the Force.com platform. Many of them also know that Financial Force.com is a joint venture that Salesforce.com has a stake in and supports.

So, if Financial Force.com only markets to the Salesforce.com customer base, they’ve got a huge built-in market waiting for them for the next couple of years. That’s a great problem to have. Jeremy’s biggest challenge will be secure more of the mid-to-high end customers within that market segment as that’s the old Coda sweet spot.

Let’s see how they perform.

November 19th, 2009

Guerilla Marketing @ Dreamforce

Posted by Brian Sommer @ 2:03 pm

Categories: CRM, Current Affairs, ERP, Fun With Tech, Humor, Marketing, PR, SaaS and Beyond, Selling & Marketing Software, Selling & Marketing Software, Software Events, Software Marketing, Software Vendors, The Applications Market, sales

Tags: SugarCRM, Marketing Research, Marketing, Brian Sommer

What a sweet thing SugarCRM did

If you’re into Marketing, you’ve got to watch the user conferences of HOT software vendors. At those events, you’ll find lots of smaller firms deploying low cost but effective marketing methods. They’ll use the draw and concentrated prospect base of a large, popular vendor to get their message out.

The fun is watching how they do it, how they get away with it and how little it can cost. In a perverse way, I like to see how the big dog reacts to it, too.

This week at Salesforce.com’s Dreamforce conference, I looked around at the guerilla marketing materials that were handed to me on the street, slid under my hotel room door, etc. The winner, in my opinion, was SugarCRM.

SugarCRM was handing out books with a size, artwork and cover color scheme that resembled Benioff’s latest book on the cloud. SugarCRM competes with Salesforce.com’s CRM product. SugarCRM had people handing out copies of their ‘book’ at the various intersections leading to the Moscone Center – the site of Dreamforce.

Can You Pick the REAL CRM/Cloud Book?

Look at the covers of these two books. Where Benioff used a blurb from Michael Dell, SugarCRM quotes Kim Jong II. You gotta love it. This takes the phrase “imitation is the sincerest form of flattery” to a whole new level.

As it turns out, their ‘book’ has a few bits of SugarCRM editorial and content in the first few pages with the rest of the book available for one to take notes. Personally, I thought it was a great gimmick.

November 18th, 2009

A Tale of Two Software Worlds: Old ERP vs. SaaS

Posted by Brian Sommer @ 11:20 am

Categories: Current Affairs, ERP, Financial Software, Future of Application Software, HR, Implementing Technology, Selling & Marketing Software, Software Development, Software Marketing, Software Vendors, The Application Software Buyer, The Applications Market, Think About IT, software

Tags: Software, Software-as-a-service, Solution, Customer, ERP, Survivors, Software As A Service (SaaS), Managed Hosting, Cloud Computing, Emerging Technologies

Watching the train wreck as SaaS continues its assault on the on-premise software world

Charles Dickens began his famous book “A Tale of Two Cities” with this opening statement:

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going to direct to heaven, we were all going direct the other way, “

This week, I’m in Silicon Valley. Yesterday, a colleague, Dr. Katherine Jones, and I visited with executives from WorkDay, Taleo, Ariba and Financial Force (the Salesforce.com and Unit4/Agresso joint venture). Today, I’m at Salesforce.com’s Dreamforce event. These visits have confirmed for me what CIOs have already indicated to me: SaaS (software as a service) has really moved mainstream. Big ERP (enterprise resource planning) vendors that cannot, will not or are unable to offer these solutions are in trouble. Yet, to hear it from the old school crowd, these firms are:

- still vetting the SaaS space as they aren’t sure it’s for real
- saying that their customers aren’t asking for SaaS
- having trouble retro-fitting their old-premise solution to a SaaS environment
- do not know how to make a solution multi-tenant despite spending hundreds of millions of dollars in research and development
- etc.

LET THEM EAT CAKE

Or in this case “let them pay 25% maintenance that generates 90+% margin for us”. The arrogance, indifference or lack of empathy old school vendors have for their customers is appalling. They behave with the imperious attitude of the royalists of yore. But, like the old royalists, they did not recognize that the world around them was changing. Instead, the royalists found themselves increasingly on the other end of a pitchfork, ax or guillotine. The end of an era is coming and vendors can choose to embrace or fight it. But will the fighters win?

In the executive meetings yesterday, Katherine and I heard, consistently, these sentiments:

- Interest in SaaS products is growing rapidly. Vendors find they are challenged by internal concerns (e.g., how to accommodate their sales professionals’ commission problems as these companies are shifting from on-premise to SaaS sales) not market acceptance. Nonetheless, the smart firms don’t let their internal issues impede what their customers want. These vendors are sorting out the issues and moving forward.

- Marketing SaaS products is not a problem for SaaS vendors but successfully implementing the customers they are winning is. SaaS vendors are almost universally focused on building solid customer references as they know that reputation really matters in a space where a few minutes of service disruption could kill one’s brand.
- Market interest in SaaS products is expanding. Once, where customers would entertain some HR or CRM apps running on the cloud, Finance applications are now being seen as very viable solutions to use.

Katherine and I asked these vendors about the software products they are replacing. No surprise here: they are uninstalling old school products – many of the products being replaced were implemented to alleviate Y2K (year 2000) issues. Those aging products, many of which were implemented in the mid-to-late 1990s, are the ones being booted to the curb. More on this in a subsequent post.

Why are the old products falling away? Vendors told us that their customers and prospects are looking to SaaS as:

- The TCO of existing solutions is out of whack. Ever higher maintenance costs were frequently identified as major customer pain point and a driver of SaaS sales.

- Customers don’t like being stuck on older releases because they can’t justify the commitment of funds, time, third parties, etc. to implement upgrades.

- They have run out of time waiting for their old ERP, HR, or Finance software vendor to get on the SaaS bandwagon or deliver long-promised SaaS products.

One SaaS vendor executive described the ‘transition points’ that trigger the initial contact with their firm. These include, but are not limited to:

- The prior old school vendor requires a re-implementation of the product to utilize a new release.
- The old school vendor requires its customers to re-license an application as it is being re-platformed or re-badged.
- The customer is experiencing declining fortunes yet the old school vendor’s license fees and maintenance amounts will not change to reflect the new economic reality.
- The customer is outgrowing the old solution. The number of customers that are now global is huge and growing yet some solutions do not scale in size, functionality or global reach.
- Etc.

CIOs are adding to the market interest as they are choosing to use SaaS applications whenever some of their servers are due for retirement/replacement. CIOs realize that they would like to avoid new capital expenditures, want to have software that always remains current, use software that doesn’t cost them anything to upgrade, use software that frees up their IT staff to work on more strategic matters, etc.

Vendor after vendor reaffirmed for Katherine and me that customers are realizing 50% TCO savings over older on-premise products. (Salesforce did so this morning, too).

Now look at what’s going on at Salesforce.com’s Dreamforce event. 19,000 people registered for this event. The main auditorium of 10,000 was filled and an overflow room of 3,000 people was filled, too. In this economy, such a large number of people don’t go to a show, miss work and incur travel costs unless they’re serious about the subject.

A crowd of 19,000 people is a lot. Maybe only two or three application software vendors could deliver that kind of crowd. And some of those are struggling to do so as the lack of innovation, the lack of timely delivery of product, the high cost of these passé solutions, etc. makes market interest in these products fade.

Will SaaS displace on-premise solutions? Not entirely. But significant market share losses could start showing up in the next 24 months. Latecomers to SaaS will find their existing customers and new prospects to be especially leery of their solutions. Why? It’s taken Salesforce.com a decade to perfect their platform, their reliability, their sandboxes, etc. Untested SaaS environments will be viewed as risky propositions. CFOs, Controllers, CEOs, etc. will prefer to go with solutions from vendors with a solid track record and credentials in SaaS and the cloud. Newbies will have a really tough time.

Dickens opened his book with the best/worst dichotomies not just to get a reader’s attention but to point out that everyone in France at that time, royalists and peasant, had starkly different opinions of the current situation. Some royalists thought good times were still ahead while others correctly saw the sea change coming. Ditto for the peasants.

Survivors are the ones who correctly assess the market situation. Casualties are the ones who live in denial or in some unrealistic but idealized view of the world. Old school, on-premise vendors are in trouble. Of that I have no doubt. What amazes me is the level of denial still present in some of those firms. Pain is coming to those firms soon.

October 20th, 2009

Demand this from software vendors

Posted by Brian Sommer @ 4:49 pm

Categories: Analytics - Performance Management, ERP, Financial Software, Future of Application Software, Notable Research, SaaS and Beyond, Selling & Marketing Software, Software Vendors, The Applications Market, software. applications

Tags: Vendor, Customer, Sales Strategy, Tools & Techniques, Software As A Service (SaaS), Sales Force Management, Enterprise Software, Sales, Management, Emerging Technologies

I was getting a briefing last week from a software executive. We got to a point in the conversation where the discussion was focusing on existing products. I moved the conversation to a different space, though. If you’re getting a pitch from a vendor, you should move the conversation, too!

Still Market Relevant - When the vendor dialogue is all about existing customers buying more of the old product line, it’s not all that intriguing. Yes, it tells me that the vendor is still relevant to its customer base but these sales are mostly in-fill sales. You remember these sales, don’t you? They’re like those customers who had previously bought most of the ERP suite but now need the CRM (customer relationship management) modules.

Gaining Market Share - When a vendor is getting all-new customers for its existing products, then that’s a bit more newsworthy. This means that the products are appealing to new buyers and these just aren’t the existing customers. That means the products are still fresh and delivering competitive advantage. Alternatively, this market momentum could also signal that the software vendor has a great sales and marketing organization or is buying its way into ever greater market share. Wall Street likes this quadrant but a vendor can’t stay here forever as its products will age and lose their market appeal or luster.

Re-enlistments – These are the customers who are re-affirming their commitment to the vendor. They are choosing to upgrade their applications to the all-new application suite, new platform, etc. These firms are making a major financial commitment and their decision to do so is not trivial. Re-enlistment scenarios often occur with major technology platform changes (e.g., going from client-server architecture to Web 2.0 applications).

Hot Space - The top right quadrant is the really high-interest zone. This is where all-new products are attracting all-new customers. This stuff is red-hot! It’s the kind of software that makes the customers of other software vendors abandon their old products and switch to the new stuff. When you think of this quadrant, don’t just think of replacement technologies. Think about the products you bought for the first time. Think about your first cell phone, spreadsheet program, MP3 player, etc.

I want to hear more Hot Space stories. They are undoubtedly more interesting than the other stories and they are really rare. If a vendor has been around a while and has 1000 customers, probably 900 are in the Still Market Relevant quadrant. The rest are scattered across the three remaining quadrants with fewer than a dozen or two in the Hot Space quadrant.

Over the last few years, the numbers of customers and stories in the Hot Space has been in decline and, worse, as a percentage of total customers, experiencing a very real decline.

Innovation in ERP, for example, has been so bogged down in technical infrastructure changes (e.g., middleware/SOA platform changes) and business model changes (e.g., from on-premise to SaaS (software as a service)) that real value-adding, business-relevant improvements to products are far and few between. Look at the ‘amazing’ value that business analytics hasn’t brought in to date. Analytic applications are still crunching internal transaction data. The lack of imagination and innovation here is an embarrassment to the technology sector.

When a software vendor comes knocking on your firm’s door, ask them to segment their customer base along the lines of the four-quadrant picture above. Then, only ask them to describe the value derived and experience of these all-new customers buying all-new solutions. If they struggle with this exercise, this vendor is selling you yesterday’s technology. Your users will love this old-time solution the vendor is pitching as much as they’d want to buy a newspaper from last week. Even if the vendor has some stories in this quadrant, these may actually reference old technology. Watch out for this. If it doesn’t have sizzle, differentiation and freshness, then it’s old news. Don’t reward vendors for re-packaging an old product in new wrapping. Make them innovate or make them get out of the way.

** UPDATE **
I read the comments many of you post to these blogs. Thanks.
A reader of this post raised a couple of points I’d like to clarify. Were a vendor to approach your firm about an existing product, one that has been on the market for a while, am I suggesting you not consider it? No, I’m not but I would caution you that the product you could be considering may be a bit long in the tooth. I wouldn’t pay too much for old-tech. But also remember that the vendor that has nothing in the top right quadrant is also a vendor with a limited future. This is an area where the vendor’s future sales momentum will occur. Without something to entice new customers into the fold, this firm will be lucky to make in-fill sales to existing customers. So, if you need something now, any product in any quadrant will do. But, if you want a product with a future, find a vendor who is building for the future.

October 9th, 2009

SMART Selling in the SaaS world

Posted by Brian Sommer @ 10:58 am

Categories: HR, Implementing Technology, Marketing, SaaS and Beyond, Selling & Marketing Software, Selling & Marketing Software, Software Marketing, Software Vendors, negotiate, negotiations

Tags: Software-as-a-service, Katherine Jones, Software As A Service (SaaS), Managed Hosting, Cloud Computing, Sales Strategy, Emerging Technologies, Sales, Brian Sommer

What we all could learn from Sonar6

Post #3 from the HR Technology show

SaaS (software as a service) is supposed to cost less. At least that’s what all the vendors tell me. It’s also supposed to be easier to use and easier to implement. I’ve often wondered if these lower cost ideals are really true. Why am I such a Doubting Thomas? Because most SaaS vendors are on-premise converts to SaaS. These firms haven’t really changed anything about their business. They still sell the same way. They still implement software the same way. And so on. If it’s all the same, except for the business model, how can it be cheaper?

I saw the answer last week and I got it from a different kind of vendor. Their lessons are important for all SaaS and SaaS wanna-be firms to study and copy.

So, imagine you’re a software vendor, like Sonar6, trying to sell into the North American market. Now suppose that your firm is based in New Zealand. It’s at least 6,000 miles between Auckland and San Diego and over 8,000 miles from Auckland to NYC. Can you imagine Sonar6’s cost of sales if they need to send over pre-sales personnel for even some of their larger prospects?

Cost of sales for many software firms is one of their largest cost items. I’ve seen old school firms fly in 6-8 product experts, sales people, industry experts, change management specialists, project managers and the ever-present ‘regional/ industry client relationship’ executive. That last person flew the most air miles, spent the night in the most expensive hotel room and won’t remember one of the prospect’s names by nightfall. But, he/she will pay for dinner and breakfast for ‘the team’.

Prospects will make these folks come in at least three times to do product demonstrations. They may need to come back two more times to explain the proposed work plan. Next, there could be three more prospect visits by a negotiating team to try to close the deal.

The cost of sales includes a lot of travel costs, time spent in non-billable activity, time spent responding to RFPs and prepping for demonstrations and more. The opportunity cost, that is service time that could have been billed, is huge, too. It’s expensive and customers pay for it indirectly.

Sonar6 looked at several of these components and changed their way of doing business. Here’s their approach:

- they put their software pricing on their web site. Without the haggling, they can avoid a lot of wasteful and expensive negotiation trips

- they make their product available for free for 30 days. If you like it, you can buy it. If you don’t, that’s okay too as Sonar6 hasn’t spent anything with this sales effort.

- they created their applications to be so logical, so intuitive and so compelling that they sell themselves. Seriously, if you’re going to sell an application that runs on the Internet, it ought to be so obvious and straightforward to use that it doesn’t require a phalanx of trainers and change agents to help explain its myriad eccentricities.

When you do these things, your cost of sales plummets. You don’t need to hand-hold prospects. You don’t need to play time-consuming negotiating games. You don’t need to create expensive work programs. You get the point.

The second big area of change to win in SaaS applications is to achieve true multi-tenancy. Katherine Jones is covering that point in a companion post. Suffice to say, if a vendor can apply upgrades to hundreds of customers simultaneously, then the cost of their operation plummets. An old-school application that is hosted is not multi-tenant and it can’t be operated as cheaply as a SaaS product. SaaS applications need to be cheaper than packages and bespoke software. When they are, SaaS vendors can win. Cost of operations, like cost of sales must be reduced.

Cost of SaaS operations also go down when the vendor is smart about where they run their operations and what they use for hardware. Some of the vendors we met at the HR Technology show use low cost cloud service vendors like Google and Amazon. When it’s all done, I’ll bet these providers may be far less costly than the data centers many SaaS operate themselves.

So, when you’re evaluating a SaaS vendor, see what they’ve done to reduce their cost structure, especially in the cost of sales and cost of service delivery. Yes, look at their SAS 70 compliance efforts but also look inwardly to see if they truly understand how to get their costs, and yours by inference, down to record lows. That’s the smart way to evaluate SaaS vendors. And that’s how your costs will come down, too.

October 8th, 2009

Selling that Technology: Functions, Features & Fools

Posted by Brian Sommer @ 10:07 am

Categories: Fun With Tech, Humor, Marketing, Selling & Marketing Software, Selling & Marketing Software, Software Marketing, sales, software

Tags: Advertisement, Vendor, Sunshine, Data Centers, Sales Strategy, Storage, Hardware, Data Management, Sales, Brian Sommer

Post 2 – What we saw at the HR Technology show

Katherine Jones and I got a lot of pitches from technology companies at the recent HR Technology show in Chicago. Each of us asked vendors “What are the top 3 things we should remember about your firm?” and often we were met with:

(a) blank stares,
(b) a litany of functions and features, or,
(c) that rarest of all, a polished set of messages any analyst or prospect would love.

Since Katherine took the lead in yesterday’s post, here’s my take on what’s wrong with function/feature selling. Does any of this apply to your technology firm?

The Pareto rule usually applies here as 80% of the technology pitches I get aren’t that good. The solutions are derivative, unoriginal or packaged poorly. Sometimes, the presenters are pretty bad, too. But, thankfully, 1 in 5 might actually have a couple of good nuggets within them.

I like vendors that understand who they are, the customers they serve, how their solutions add value and what direction/vision these companies have for the future. Their stories aren’t just interesting, they’re engaging and relevant. Marketers and sales people love these companies as it’s easy to sell something that sells itself. Marry great positioning with talented sales people and you’ve got a potential best seller on your hands.

Technology marketers often sell functions and features. Their copy and presentations are choked with TLAs (three letter acronyms). You’d get a headache reading the stuff if only you could understand it. Here’s the way many of you start your pitch with me:

____________________________________________________________________

Vendor: “Brian, glad you could make the call today. We’re introducing a revolutionary new upgrade to our 37-year old data center management product: B-Zerko. This tape backup and punch card scheduler now has a virtualized human interface that permits remote SOA in a non-SQL platform on quad-core processors. Additionally, we’ve added support for flat-files, virtual tapes and semantic scheduling of off-line paradigms. We think customers are really going to see the value these new capabilities bring to this product.”

Me: “Really? You think customers will go crazy for this?”

Vendor: “Absolutely – We’re even telling our VCs to get the IPO ready! This one is going big time!”

Me: “Does this upgraded product have a new name?”

Vendor: “When it was in our development lab, we called it Project Boring. But, now that we need to sell this baby, we’re calling it the B-Zerko Annihilator!”

Me: “Does it slice, dice and make julienne fries? Does it come with a bamboo wok steamer?”

Vendor: “Better! It now comes with 44% more acronyms. Several of which we’ve invented just for this product. For example, we’re telling customers about IVD – Infinite Value Delivery – that’s the time it will take for customers to get any real value from this solution. We’re also discussing Q-squared. This stands for Questionable Quality. This software is still in pre-Alpha so we’re not sure it’s working yet. However, Q-squared lets our customers take advantage of our most dangerous, unsupported and dubious products as early as possible.”

Me: “I get it that you’re excited about this. But how do you know that customers really need this now?”

Vendor: “Brian, baby, we’ve been collecting user requirements for over 34 years. This new product version incorporates some of the features people have been wanting for over two decades.”

Me: “Such as….”

Vendor: “Like a stable release, like a release that works on the customer’s technical platform. Do you know we sold over 22,000 copies of this to customers with CICS/VSAM environments and our product didn’t support this? Now it does – sorta.”

Me: “So you’re just getting around to honoring commitments made decades ago?”

Vendor: “Hey, it’s not like we lied or anything. Every vendor does it. But, now we can say that we have tested this product for over 30 years. Most of the bugs have got to be out of it by now”

Me: “So what’s next? What’s the future hold?”

Vendor: “Glad you asked. Lately, we’ve been hearing there’s a lot of buzz around two new, emerging technologies. I don’t know if you’ve heard about them but they’re called the Internet and cellular phones.”

Me: “Are you sure they’ve got staying power?”

Vendor: “We’re still on a wait and see status for them and this other thing called Unix. We’ll schedule another briefing when we think they’re gonna pop.”

Me: “Well, be sure and do that then. Oh, look at the time! I’ve got to run to another call”

______________________________________________________________________________

What technology marketers need to do is steal a page from the consumer products marketers. They need to sell the ‘experience’ of using a great technology not its functions and features. They need to cultivate the ‘feeling’ one has once they strap on the industry leading accounting package. That sort of marketing is called ‘experiential’ marketing.

Here’s how it works.

McDonalds did the ultimate function/feature ad years ago. It featured a hamburger’s bill of materials set to music. Who doesn’t remember: “ two all beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun”? Later, they went experiential. Those ads showed scenes like a dad and his son near the store window, having breakfast. The sunshine is beaming in through the window, the son is thinking about the soccer game he played and the dad is beaming with pride. What McDonald’s isn’t doing is touting the calories in that sausage biscuit the dad is eating. They are trying to connect their product with good memories.

Coca-Cola did the same thing with the young folks on top of a mountain singing “I’d like to teach the world to sing…”. If Coca-Cola was sold using the function/feature approach, we’d get an announcer proudly declaring the percentage of corn fructose syrup, caramel coloring, caffeine and other ingredients found in the 20 oz. polycarbonate container replete with a reusable, plastic screw top fastener. Try and convince me that function/feature advertising for soft drinks sounds appealing. It isn’t for soda pop and it isn’t for technology.

I saw a car ad that simply showed a good looking, 40-ish couple driving a convertible down California’s Pacific Coast Highway in the twilight hours. They were enjoying the drive and the creature comforts of this vehicle. Not a word is spoken during the ad. Only the car maker’s logo appears at the end of the spot. If a technology marketer got to do this pitch, it would be a loud recitation of the function/features of the car’s engine. We’d hear all about the engine’s gaskets, its chrome/moly piston rings, its 4-valves per cylinder, etc. and we’d be bored to tears. Mind you, some of us might want to hear it but most want to live the life of the good-looking guy driving the hot car with the hot babe down that highway.

So, you’re going to call on your next technology sales pigeon/prospect. What’s your approach going to be: function/feature or experiential? I sure hope it’s the latter.

August 12th, 2009

So you're going to sell software or work a trade show booth...

Posted by Brian Sommer @ 2:15 pm

Categories: CRM, Marketing, Selling & Marketing Software, Selling & Marketing Software, Selling Professional Services, Software Marketing, sales

Tags: Software, Trade Show, Empathy, Sales Strategy, Telemarketing, Tools & Techniques, Sales Force Management, Healthcare, Sales, Marketing

…it’s time to get it right!

I get pitched software 24/7. Along the way, I hear and see some pretty amazing things but too often I get my ear bent for way too long by folks who can’t get to the point. Why? Because these pitchmen and women:

- lack empathy
- are too close to the product and not close enough to a prospect’s business needs
- don’t know what their product’s key differentiators really are (This assumes they exist!)
- can’t sell

In course after course, I tell people that I cannot teach empathy. Empathy is, to a very great extent, inherited. Some folks are so egocentric or narcissistic that they’ll never really hear what others say or care. I can’t ‘fix’ bad DNA or bad pathologies.

But, I can help those who listen and want to change. So, here’s a very abridged version of what you need to do to be successful on the convention trade floor or in a face-to-face meeting with a Fortune 500 CEO.

Great meetings and great outcomes occur when you are really prepared. If you’re a ‘shoot from the hip’ player, you waste a lot of time and burn a lot of bridges. You will say the wrong things and leave people guessing why they should even consider your solution. It takes too long to get serious time with a top executive so why blow it by being unprepared?

The preparation is needed not because you don’t know your product but because you don’t know the prospect! Stop right now – I can sense you want to pick up your phone and do that ‘dialing for dollars’ bit where you give your standard, undifferentiated pitch to strangers. Is it any wonder they almost all tell you “NO THANKS”? If you won’t even make the effort to understand even my most basic needs, I will not do business with you at all.

Stephen Covey had this maxim in his bestseller Seven Effective Habits book “Seek first to understand before being understood”. If you sell anything, brand or tattoo this saying onto yourself so you never forget it.

Great preparation means that you take the time to understand:

- the business, market, economic, budget, personal, political and other challenges confronting your prospect

- which of these problems are likely the most crucial 2-3 issues this individual must resolve. No one can focus on more than a couple of problems. If you’re in someone’s face gabbing away about something that’s down at the number 17 spot on their list of issues to fix, they don’t care. Their mind and career are wrapped around bigger issues – issues that you aren’t prepared to help them solve.

- how much the problem is (or problems are) costing this person’s business. If you don’t know how big the problem is, you’re probably not going to get the person to act on your suggestions. Worse, if you don’t know how big these issues are, you might be furiously selling the wrong solution. Either way, you fail and you wasted the prospect’s time.

- how a few critical aspects of your solution can really solve the most pressing of the prospect’s problems. For you sales people who can’t sell without giving me and others the 2-day function/feature demo-thon, this point may be wasted on you. Nonetheless, your best demos occur when you focus them on just a couple of critical process or function points. The value of your demo is to prove your solution has the critical capability someone needs and that it can do so elegantly and efficiently. Nothing more. When car companies sell autos, they talk about how great you’ll fell with the moon roof open, driving down the Pacific Coast Highway with some major hottie by your side. They don’t disassemble the engine and transmission and show you the platinum coating on each of the engine’s spark plugs. Sell the sizzle not the cow.

In trade shows, it’s worse than ever. At a trade show, I get accosted by people who want to scan my badge immediately before we even get talking. When they go for my badge, my flight response kicks in and I leave. When they do this, they’re saying that they just want to get my particulars so that their telemarketing people can badger me tomorrow. I haven’t even decided if I want, need or like this company and they’ve already decided that I am to be punished with unwanted sales pitches. That’s rude and it shows a serious lack of empathy.

Next, bad trade show people mistakenly believe I’ll come in for a sales pitch just to get an ink pen, Frisbee knockoff or enter in a contest for a chance to win a wheel of cheese. Nope – I don’t go there. First of all, these gimmicks are in no way connected to or indicative of the product/solution the company sells. In the seconds that I spend drifting by this booth, if I can’t figure out what you’re selling, I’m gone. Second, these ‘gifts’ aren’t even original. Hey MarCom folks, here’s a hint: If you can buy this gadget/giveaway in a catalog, someone’s already done it before. Find something original or relevant! UPS gives away little trucks that are painted in the Brown colors of UPS. I get that. But, the t-shirt you gave me is in my garage being used a car wax rag.

When you approach me at a trade show, try this tack:

- Start off by warmly greeting me – learn my name and tell me a tiny tidbit about you. I don’t need your life story but I do want to learn what role you play with your firm.

- Next, tell me the top three business problems your solution solves. Don’t give me software modules names (e.g., General Ledger, Accounts Payable, Analytics) and don’t tell me about your software delivery model (e.g., “We’re the leading SaaS HR vendor on the planet”). No, tell me about the kinds of business problems you solve (e.g., “We help firms identify who their best and worst managers are so that they dramatically reduce voluntary turnover” or “We help firms save billions of dollars annually through better hotel expense management”). Try saying “We help firms solve their _____ problem” three times.

- Then, tell me the enormity of the problem you are addressing and why so many companies need help with it (e.g., “Our research indicates that hospitals cannot find enough emergency room nurses and, worse, seem unable to retain them. This is causing hospitals to spend billions more in recruiting fees and bonuses. One hospital alone is now saving over $45 million annually because of our solution.”).

- Now, tell me three differentiators about your product/solution. Each of these must be polished into a compact phase that would fit on a bumper sticker. This is not the time to fire up a sales soliloquy. It is time to crispy impress the booth visitor that your solution warrants a deeper dive at their office. When you craft these three messages, think of this “What short little messages do we want this person to remember and to play back to their superiors when they get back to the office?”

If your messages are muddled, long, unfocused, rambling or weak, the prospect has nothing to take back to the office. Rehearse these with peers and don’t be surprised that no one in your firm can even agree as to what their top three differentiators are. Think of things like: 1) no one solves the frammerstammer problem like our firm; 2) our solution is years ahead of the competition – just look at our patent count!; and, 3) no one has better value delivery customer stories than us.

- Finally, let me leave gracefully. Thank me for my time and interest and then, and only then, ask if it would be okay to follow up with me. And, more to the point, tell me who will be following up. I might want to speak with you and not start all over with some contract telemarketer. You’ve done a lot to get my time and respect so don’t blow it now with a bad handoff.

Why did I do this post? I’ll be going to a lot of conferences this fall and I’d like to see a better exposition floor out there. So, if you’re going to the Oracle OpenWorld, HR Technology or other show, know this: I might be there and I might just write about your booth and my booth experience.

July 21st, 2009

Google, Microsoft and Zoho

Posted by Brian Sommer @ 1:17 pm

Categories: Current Affairs, Future of Application Software, Google, SaaS and Beyond, Selling & Marketing Software, Selling & Marketing Software, Software Marketing, Software Vendors, The Application Software Buyer, The Applications Market, Think About IT, Web/Tech, software, software. applications

Tags: Desktop, Google Inc., Zoho, Microsoft Corp., Software Purchase, Tools & Techniques, Microsoft Office, Management, Office Suites, Software

The Battle for the Desktop and Beyond

Microsoft is in the news lately with its Office 2010 announcements. It contains, no surprise, a number of tidbits to make more of the application suite more cloud friendly and less costly. Implicit in this strategy change are signs that more corporate and personal buyers of the suite are looking ever harder at Google’s offering, Zoho’s suite and other products.

For certain, competition is coming at Microsoft’s Office suite. It’s been building for some time and the near monopoly Microsoft’s had here may be at risk. Sun had a pretty good offering out there the last few years but this time the stakes may be different. (Full disclosure: the original version of this post was prepared in Microsoft Word.)

Software markets tend toward standardization. In almost every sector of software, customers eventually move to a few or one ‘industry standard’. The industry standard doesn’t have to be the best technically or the most loved or the cheapest. It can be hated, expensive and a pile of garbage but, at least, everyone else is using it. We’ve seen industry standard solutions appear even when standards bodies are urging the market to adopt something completely different.

Why does this occur? Well, too many people think that software buyers are logical, rational purchasers. News flash: They’re not! Software purchases are:
- emotional
- financial
- political
- technical
- business
- etc.
decisions.

It’s this soup of buying factors that helps create monolopies or duopolies.

Yet, in time, innovation, obsolescence, regulation and competition break down these ephemeral monuments to market share.

Google has been coming at Microsoft for some time. Like Microsoft, they have deep pockets and a couple of key products to fuel the cash generation machine. Microsoft also possesses a few nuggets of cash creation and big cash balances. Where one is strong (e.g., Google Search, Microsoft Windows), the other is weak.

These battles are about momentum and not about protecting market share. Google only wins by tackling the market share that Microsoft has in Office. Microsoft wins when its search tool (i.e., Bing) displaces Google.com as everyone’s default search. To win either of these markets is a coup in and of itself. To win both could be a staggering victory for the winner and a going out of business sale for the loser.

Google’s Apps have a couple of hurdles for corporations. Yes, they’re cheap to use but many companies still don’t want their internal information on someone else’s cloud. If Google can’t convince very large numbers of large companies to cutover to its suite, it won’t win. Check out this solid piece in BusinessWeek.

What Microsoft knows is that corporations like to share documents with other corporations, with their workers at home, with sub-contractors, etc. The current Microsoft Office suite, warts and all, operates relatively effectively as a communication tool for all of these disconnected parties. Companies don’t want people reformatting documents that get mangled from one word processor, spreadsheet or presentation technology to another. Interoperability is the key value driver that Google and others must offer to win over customers. To do so, Microsoft competitors must offer something different and value-adding while providing interoperability with Microsoft Office. Microsoft will likely continue to make small interoperability problems for its competitors and the competitors will need to double down on their innovation-added capabilities. This is a see-saw exercise that will take time to sort out. Momentum is great but it must overcome a mountain of inertia.

Interoperability is always the other guy’s problem when your firm offers the (standardized) solution everyone is using currently. Interoperability must address the de facto market standard.

Zoho is different animal all together. They’re interested in building dozens and dozens of applications that play together and play with Microsoft’s products. Their model may actually continue to prosper. Why? Zoho can do what Google Docs do: cloud based inexpensive desktop apps but Zoho can also make their apps run on customer specific servers. Their desktop may now be much broader than Google’s and growing. Zoho is trying to be a software firm with a very wide product offering. A top executive at Zoho described his firm as “‘trying to be the IT department for SMB’s (small to medium sized businesses)”.

Zoho’s market success and longevity suggest that they may be onto something.

Let’s get back to Google though…

Google is also saber rattling about developing a desktop operating system. Android has doubtlessly emboldened them. Personally, I believe this initiative has a better chance of short-term success than its Office-killer apps. An operating system requires a few key hardware vendor sales and some application software compatibility. That means, for their device to gain market share, it must come equipped to run all of Google’s tools and applications and a large number of the zillions of software products that also run on Mac and Microsoft Windows platforms. That is a big requirement and an expensive one for Google and every software vendor that is betting that Google’s desktop OS will be a winner.

For us, the mere mortals, the consumers of technology, the arms race breaking out in desktop software will likely present several likely outcomes. The following will likely transpire:

- many new products will emerge
- many of the new products will contain some amazing breakthrough innovations that will entice some of us to switch
- some of the new products will be lacking in needed features and/or disappoint us with substandard performance
- low pricing will persist for some time so that new competitors will acquire much needed market share, sales momentum and street cred
- all users will likely experience some frustration as files we share with others will doubtlessly experience compatibility issues
- Microsoft is definitely going to feel some competition for its Office Apps and Google will likely see Microsoft stiffen its resolve to get more of the search engine business

July 7th, 2009

It’s official: SaaS is now mainstream

Posted by Brian Sommer @ 6:45 am

Categories: Current Affairs, Selling & Marketing Software, Selling Professional Services, Service Providers, The Applications Market, Think About IT, software

Tags: Software-as-a-service, CIO, Unisys Corp., Software As A Service (SaaS), Managed Hosting, Cloud Computing, Emerging Technologies, Brian Sommer

It must be mainstream if Unisys and IBM are blessing it

Lately, I’ve done a couple of briefings with some large, serious, mainstream firms who have whispered their SaaS (software as a service) plans to me.

Let’s start with Unisys. Unisys is a very large systems integrator and hardware provider. Last week, they announced a number of new offerings to help clients make more of their application portfolio SaaS and cloud enabled. Unisys placed these offerings in an umbrella service offering called ‘secured cloud computing’.

In short, they’ll help a CIO transform more of their application portfolio to the cloud. Whose cloud? Unisys can make it their cloud or put a CIO’s offerings on other clouds like Amazon’s. Why is this important now? Unisys is betting that lots of CIOs would like to transition more demand volatility, server (size, quantity and demand) volatility, capital hardware costs, etc. to a cloud provider. CIOs can have their staff focus on develop strategic apps instead of keeping all their apps functioning on a lot of company owned hardware.

Unisys is also addressing a number of security concerns CIOs have about cloud computing. In particular, they have technologies to hide and encrypt data in-flight between web browsers and the cloud environment. Data on cloud servers is also encrypted to further secure it. To mitigate the performance drain that encryption can cause, much of this encrypt/decrypt activity is done in-core memory. These technologies can be deployed as software agents or appliances.

Beyond their technical abilities, the Unisys announcements also contained a number of consulting service offerings. Offerings such as:
- cloud advisory services
- security advisory services
- secure cloud value assessment services
- cloud application assessment services
- etc.

IBM has also crafted a group of consulting and outsourcing services to also help CIOs move into the cloud world.

So, let’s examine where the SaaS world has moved now. Originally, we had pioneers create the initial products and demand. That was ten years ago when Salesforce.com hit the scene. In subsequent years, we’ve seen highly innovative firms, like Amazon, make their cloud services available to clients.

Now, the conservatives in the industry are really embracing SaaS. When these behemoths get on board with a new technology, they do so with one goal: the rapid uptake of this technology into their client base. Unisys and IBM are doing that now.

Soon, every CIO from a mid-size firm and bigger will get multiple sales calls from numerous purveyors of cloud and SaaS solutions. Sure, they’ve gotten pitches from other firms in the past but now they’ll face a tsunami of sales calls from the large firms (services and hardware) who want to ‘help’ them make these moves into the cloud.

When the market stalwarts move into a new space, they do so only when they are convinced that it’s real and it’s here to stay. So, thank you Unisys and IBM for bringing the legitimacy to the SaaS and cloud space.

July 5th, 2009

Bleak Xmas Ahead: Where's the innovation I need to fill the stockings?

Posted by Brian Sommer @ 6:16 pm

Categories: Current Affairs, Financial Software, Fun With Tech, Future of Application Software, SaaS and Beyond, Selling & Marketing Software, Software Development, Software Vendors, The Applications Market, Think About IT, Vendor Management, Web/Tech, software

Tags: Innovation, Incrementalism, Recipe, Herewith, Leadership, Strategy, Management, Brian Sommer

I know this is the July Fourth holiday and I’m half a year away from gift giving. But, when I looked through the Sunday supplements in today’s newspaper, I couldn’t find anything to buy. Nothing. Nada. Zip. Zilch. Squat.

Yes, I scanned the Best Buy, Office Depot and TigerDirect supplements and I couldn’t find anything I needed. I don’t need any new LCD monitors on my desk. I don’t need a digital camera, printer or hard drive. I don’t even need any of the software out for sale these days.

If you were my kids or a CIO, you should be worried this holiday season. I think the technology vendors out there are going to leave us with the highly innovative, LUMP O’ COAL version 4.6.2a this holiday season. I can hear the TV announcer right now. He’s saying:

WHAT’S IN THE NEW LUMP O’COAL THIS YEAR??!! WELL, WE’VE ADDED TONS OF NEW FUNCTIONS AND FEATURES THAT YOU’LL NEVER NEED OR GET A CHANCE TO IMPLEMENT. IN FACT, WE’VE EVEN CREATED SOME VERY SPECIAL AND HIGHLY EXPENSIVE UPGRADE OPTIONS THAT MAKE THE TCO OF THIS PRODUCT MORE PRICEY AND WORTHLESS THAN EVER.

WE’VE TAKEN THE SAME FUNCTIONS AND FEATURES YOU’VE GROWN ACCUSTOMED TO THE LAST THREE DECADES AND ADDED THINGS LIKE GRC AND SOA. MAYBE, IF WE CAN STILL FIND SOMEONE WHO KNOWS HOW THIS SOFTWARE WORKS, WE CAN EVEN MAKE IT MULTI-TENANT.

No matter how much someone is screaming how innovative they are, I’ll be the judge of what’s really innovative.

I feel like I’m in the bottom of an innovation chasm. I’ve got all of the cool gadgets from the last decade or two and I can’t see anything new coming out. Even if I wanted to do my part to help the economy recover, I can’t. There’s nothing new to buy.

What’s passing for new these days is merely incrementalism. Incremental innovation has replaced real breakthroughs.

Incrementalism is rampant in the ERP space. The recipe is so familiar that it’s shopworn: take one really old package from the 1980s, re-platform it to SOA and then acquire a few complementary add-on products and, presto, you’re suddenly market relevant again. Bull.

I need proof that innovation is really occurring out there. Instead, we see headlines like these:

- ERP vendors raising $ billions in debt to pay for their acquisitions and to build up cash reserves for new acquisitions
- cell phone/PDA makers releasing new products that can’t or won’t work on carriers’ networks or can’t enable a number of the new capabilities within it

Geoffrey Moore’s last book, Dealing With Darwin, is a great read. He stipulates that there are certain kinds of innovations and some, like incremental innovations, are appropriate at specific points in a product’s life cycle. Well, in that case, someone needs to send a few dozen copies of that book to all of the ERP vendors out there. Almost to a one, these firms are all piling on the incremental innovation space. Certainly there’s some room for something all new, amazing and ground-breaking.

I’ll take Geoff’s work and create my own addendum. Herewith are my laws of technology innovation:

First: Acquisitions aren’t the same as innovation. If they were, we’d see a different definition in the dictionary for innovation.

Second: If you innovate and no one can/will use it, it may not really be innovation.

Third: Vision is not the same as innovation. We’re not suggesting everyone on your team has to have 20/20 vision. No, we think you need people who are empathetic, well-read, cosmopolitan, imaginative and inspiring. You need people who can both imagine the future and can build the team, projects, etc. to make the future happen.

Fourth: Talking about innovation is not the same as innovation. If that were the case, the PowerPoint decks everyone emails me would be worth billions.

Fifth: Innovation takes daring, imagination, a sense of urgency and skill. If your firm’s glorious leader is long on financial deal making, financial engineering, sales quota enforcement or managing his personal stock option package, he/she may not be the best example of an innovation leader.

Sixth: Great firms are masters of innovation and exploitation. Some firms are brilliant at lifting other firm’s ideas. These fast followers can ramp up and exploit other firm’s innovations to great market success. Innovators can design brilliant solutions to real problems. But, the truly great excel at both.

Seventh: Being committed to innovation is not (I repeat, not) the same as being innovative. Oh, the misdirection this causes the average technology buyer. How many times have buyers postponed a major technology purchase because their favorite tech vendor has promised to some day, maybe, possibly (but not commit this to a written contract) deliver the new technology, application, vertical extension or functionality.