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.

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.

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 27th, 2009

Your Analyst Firm Pitch

Posted by Brian Sommer @ 9:15 am

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

Tags: Analyst, Firm, Leadership, Strategy, Management, Brian Sommer

(Question: Do you have anything new and interesting to say?)

One of my old Marketing clients recently rang me up. They were prepping for a briefing call with an IT analyst firm. The lead Marketing exec wanted to run by me his thoughts for a presentation deck they wanted to use. He knew I’ve been on the receiving end of scores of these.

In general, I offered him this counsel:

1) Build an issue-based deck and create a separate company backgrounder document. If your deck is a narcissistic piece all about:

- our glorious leader
- our undifferentiated vision statement
- a world map with all of your offices
- a list of your solutions
- etc.

then you’re going to frustrate the analyst mightily. This is background stuff. If, and this is a big if, the analyst ever does write something about your firm, they’ll refer to this stuff later. First, you need to focus on the kinds of things that an analyst wants or needs to know.

2) The issue-based deck should define the:

- business challenges that solutions like yours solve
- recent research your firm has completed in this space
- unique insights your executives or your firm has on its solution space
- future concerns your firm is studying/watching

3) The issue-based deck should:

- confirm, challenge or refute some market assumptions the analyst may already have.

- include some non-obvious, ah-ha moments. Analysts aren’t stupid. They track your market and talk to all of your competitors. They know the score. Give them an excuse to write about something new or different. If they do, many analysts will credit your firm as the inspiration for this. And, isn’t that what you want anyway? Don’t you want your firm to be perceived as a leader in its space?

- be about 8-10 slides maximum. If you need more real estate than that, you don’t realize that your call may be only 20 minutes long and the analyst will speak for half of that. Make the material so powerful that the analyst wants to schedule a follow-up call.

- focused on original, new, novel content that few know. Showcase new market insights, new customer market needs, changing customer attributes, etc. Tie these insights to adjustments your firm is making to its products and solutions.

4) The background material should contain this:

- 1 slide – key dates/facts (e.g., year founded, equity structure, number of employees, revenues)

- 1 slide – a picture of your key offerings with a tiny note under each that explains why your approach or offering is so gosh-darned unique and competitively differentiated

- 1 slide – what your firm stands for – Are you the lowest cost SAP implementer in the world (i.e., low cost leader or process excellent)? Are you customer intimate (Think McKinsey the F500 CEOs they serve)? Are you a major innovator (e.g., Apple)? Are you a fast follower (e.g., most systems integrators don’t create anything but they install everyone else’s innovations)? If you’re a fast follower, know that an analyst will want to know what future innovations you expect to be hot and how you’ll ramp up for them. Service firms really struggle with this slide as they lack any real differentiation. Have you ever heard a service firm executive ever say they didn’t hire the best talent?

- 1 slide – key executives, their bios and their contact info

- 1 slide – proof of the value your firm has delivered to three clients. Don’t waste the analyst’s time telling me what your product is (i.e., “We make a SaaS-based general ledger that supports IFRS accounting in 13 countries). Instead, tell me that your solution has already saved a firm over $1billion by a patented process you created

When you get a chance to brief an analyst, remember that this isn’t an opportunity to drone on and on about yourself. You need to cultivate the image that you and your firm are special, thoughtful and strategic. The analyst needs to learn something from this exchange. If the only thing they learn is the names of your executives and the solutions you sell, I’ll guarantee that the analyst won’t write a report about you or, worse, will write a negative one.

Analysts write about things that impress them. Give them something to write about!

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 14th, 2009

Why the best get better in sourcing

Posted by Brian Sommer @ 7:40 am

Categories: Contracting, Current Affairs, Selling & Marketing Software, The Application Software Buyer, The Applications Market, negotiations, software. applications

Tags: Supply Chain, Sourcing, Aravo, Purchasing & Procurement, Supply Chain Management (SCM), Strategy, Business Operations, Enterprise Software, Software, Management

Late last week, I took a call with Tim Albinson, CEO of Aravo. Aravo manages, supplements and enhances supplier information.

Tim and I discussed the types of firms that adopt better supply chain practices and technologies. While we spoke, I sketched out several 2X2 matrices that illustrated some of the points we made. One of these looked at the different types of spending organizations and how they buy.

We discussed:

- Why do the best sourcing & supply chain organizations use the best technologies, best practices and get the best business returns while so many firms have difficulty getting even the basics of sourcing right?
- Why so many firms struggle with picking the right suppliers at the right time?
- Why decentralized firms are so political and inefficient when it comes to sourcing?
- Which industries are doing well in today’s economy particularly when it comes to sourcing?

The brief answers to some of these issues are:

- The best firms are the best because they make the pursuit of improvements a mission/competence of the firm. Sadly, too many firms are too complacent with innovation, risk taking and becoming an industry leader to do much to advance their sourcing and supply chain activities.

- Supplier decisions are often default decisions at firms and these decisions are rarely changed/challenged unless some significant external event forces the issue (e.g., bankruptcy of a supplier).

- Decentralized firms can have efficient supply chains and sourcing activities while still coordinating some buying between business units. The reason inefficiencies occur has more to do with politics, power and other human factors. If more buyers were logical, rational entities, we’d see far less inefficiency in the supply chain. People, not technology, are often the problem in getting better practices and technologies deployed in sourcing and supply chain matters.

- Traditional sourcing and supply chain technologies work best in industry sectors that are experiencing typical changes. When atypical change occurs (e.g., bankruptcy of two large auto companies in the U.S.), some technologies will be of absolute importance or necessity while others are not needed at all (e.g., do you need a sourcing solution when a particular commodity is extremely scarce?).

May 17th, 2009

Sage and the Economy – Two things that should turn around

Posted by Brian Sommer @ 7:06 pm

Categories: Current Affairs, ERP, Financial Software, Future of Application Software, Marketing, Selling & Marketing Software, Selling & Marketing Software, Software Development, Software Marketing, Software Vendors, Vendor Management, software

Tags: Brand, Channel Partner, North America, Sage, Sue, Public Relations, Sales Strategy, Branding, Sales Force Management, Marketing

Sage is a large, albeit understated, software provider that sells a multitude of applications that a significant number of people and firms use. Through acquisitions, the company has amassed a large portfolio of products that include brands such as AccPac, ACT, Timberline, MAS, Abra and many more.

Sage has recently embarked on a media blitz to position the Sage brand as an overreaching brand that covers all of the component products and their individual brands. While it’s a bit late in doing so, Sage needed to do this as few understand who Sage is, what the company stands for, etc. I’d speculate that few technology people could rattle off more than a couple of Sage’s product line names.

But branding is not the only remedy Sage needs. Several members of the media got a chance to meet with Sue Swenson, CEO of Sage North America, at the Sage Summit event this week. Sue has been in this role for about a year and she shared with us what she has been focused on and where the company must go. She indicated that:

- Sue had a lot of operational issues that needed correcting immediately. In particular, product development was not optimal. Each product line/brand was doing its own thing with little co-ordination between the numerous, diverse development groups. Doug Meyer, another Sage executive, chimed in and added that sales compensation methods weren’t necessarily incenting the right deals and behaviors either.

- Sue believes that Sage may have overpromised and under-delivered to its channel partners in recent years. She underscored how many of Sage’s current initiatives are to restore a measure of credibility to its channel network. Increased accountability of personnel is occurring via frequent, objectives-led performance evaluations that appear to be occurring at all levels of the organization. The message to workers is clear: non-performance is not acceptable.

- Sue has bolstered several key executive positions in the organization. The company now has its first CTO. He is expected to:

o Delight end-customers of existing products
o Develop product capabilities that make sales (i.e., channel partner sales) easier via introduction of higher value-added capabilities
o Create greater synergies between development groups and promote greater re-use of developed capabilities
o Carve out some of the product line specific budgets and use this to create new products/product lines

- Some future innovation may still come from acquisitions. This might include ‘surround-sound’ application plays that complement existing applications as well as deals that bring in entirely new product lines or offerings (e.g., SaaS solutions).

The overall tempo at this event appeared to me to be: cautiously optimistic. My sampling of Sage partners indicates that they want the company to:

- deliver
- innovate
- catch up and surpass competitors
- get its internal act together

In a discussion I had separately with Sue, we discussed, at length, how turnarounds occur and where she’s at with hers at Sage. At the conclusion of that discussion, I believe:

- Sue correctly assessed a number of existing operational issues within the organization and has moved fast to correct them

- Sue is implementing a program of accountability to restore morale internally and to improve customer and channel partner satisfaction

- Sue knows what new products and innovations will be forthcoming but is not disclosing these for now as she wants to restore partner confidence. She will do so by under-promising today and over-delivering new products in the near future.

Beyond Sue’s efforts, Sage does have some Marketing and brand challenges within North America. I know the company is addressing this matter currently but I’d like to offer these points for Sage to consider:

- Selling software in North America is very different from selling software in England (Sage’s home base). Marketing and PR in the North American software market are not genteel, demure or understated. They cannot be as there is just too much noise in the channel. To be heard here, you need to act like Richard Branson, Larry Ellison, Marc Benioff, etc. In North America, any PR is good PR.

- I personally believe that NetSuite does a superior job promoting itself and yet it is a form factor smaller than Sage. Should that be the case? Is there something Sage could learn from this?

- Look at the energy generated by Salesforce at their Force.com, DreamForce.com, etc. shows. These events have an energy, enthusiasm, etc. that infects attendees with one clear observation: this firm and its products are going somewhere. Can Sage do something likewise?

May 8th, 2009

Where Platform-as-a-Service (PaaS) must go next

Posted by Brian Sommer @ 8:35 am

Categories: ERP, Future of Application Software, Implementing Technology, Selling & Marketing Software, Software Development, The Applications Market, Web/Tech, software. applications

Tags: Software Company, PaaS, Cloud, Cloud Computing, Brian Sommer

More Robust Apps Needed NOW!

Platform-as-a-Service is hot these days. Vendors like NetSuite and salesforce.com have their clouds as to players like Amazon and Google. Cloud providers like to promote their capabilities to application developers and, in doing so, create an ecosystem full of low-cost applications for users to choose from.

That’s a great concept for end-user, personal applications but the best clouds, long-term, may well be those that cultivate and convince larger application software vendors to move their offerings to their clouds. Coda and salesforce.com did such a deal last year and we should be hearing more on this before long as Coda, I believe, was going to put more applications on this environment (this product line is marketed as Coda 2Go). The Coda/Salesforce teaming is really good as it pairs a well-established CRM product line with a very solid financial accounting system.

When you want to win over the hearts and minds of back office buyers, vendors (including cloud providers) must address the concerns of people like CFOs, Controllers and Finance Directors. None of these individuals ever want to be on the cover of the Wall Street Journal explaining why their firm’s books won’t balance or close. To sell cloud capabilities up-market to mid-and large enterprises, the applications need:
- Solid provenance - does the developer/vendor really understand this functional space?
- Proof - Show prospects that this solution absolutely, positively works. Just because someone can click on an icon to enable a SaaS app, doesn’t mean it actually works.
- Relevancy - Are the applications relevant for this size of business and its complexities? A financial system today needs work in hundreds of countries globally not just the one where the developer lives.

For PaaS to really take off in the enterprise, cloud providers must cultivate relationships with major software vendors. We need to see vendors like Infor, Sage and others being wooed into the arms of a major cloud provider. When those apps start showing up in the cloud, we’ll start seeing some real cloud and platform adoption then.

Several large software vendors though will not respond to these entreaties though. They’ve spent millions cobbling together their own marketechtures or proprietary platforms. Unfortunately, their platforms are best designed for those firms who still want on-premise solutions. Having a development platform is not the same as a cloud based platform. This distinction is critical as the cloud based platforms take all the lower stack items (e.g., hardware and middleware) off the table. If you use the platforms of old-school vendors, you’re on the hook for a lot of hardware and software. How expensive can that be? A recent deal I negotiated had the DBMS costing more than the application software.

PaaS vendors: move up-market now. Ally with larger application software vendors and provide mid-market and enterprise software buyers better application software choices and better system economics.

May 7th, 2009

Could your software CEO be a TV pitchman? Benioff might...

Posted by Brian Sommer @ 8:29 am

Categories: CRM, Current Affairs, Humor, Marketing, Selling & Marketing Software, Selling & Marketing Software, Software Marketing

Tags: Software, Salesforce.com Inc., PaaS, TV, Force.com, Marc, Sales Force Management, Cloud Computing, Sales, Brian Sommer

Salesforce’s CEO & Billy Mays - the ultimate pitch team!

(satire)

I (and 600 others) attended the recent Salesforce.com event here in Chicago. Salesforce was promoting its platform-as-a-service (PaaS), Force.com. At these events, the different talks have their own highlights but, for me, I always like the talks CEO Marc Benioff gives. I’ve seen him speak many times and in several different forums (e.g., Merrill Lynch investor conference).

Marc’s one of those IT leaders that can’t help but sell product. Great software firms usually have a televangelist type at the helm (think Steve Jobs). These leaders can walk on stage and convert the unwashed masses into a throbbing sea of believers. They succeed because they can communicate the ‘afterlife’ story better than competitors. They clearly and enthusiastically describe what life will be like for their users once they get version 99 of the product installed. When a tech company has a televangelist on top, they don’t need salespeople – just order takers.

So, here I am watching Marc again and I’m wondering what he or Salesforce could do to juice things up further. That’s when it hits me that they need to put Marc on late-night television pitching Force.com. Wait! Let’s super-size that idea and team Marc with television pitchman extraordinaire, Billy Mays. You know Billy - he’s pitched KaBoom, OxiClean, OrangeGlo and other products.

Let’s listen in to how that program might go.

Billy: “Hi! Billy Mays here for Force.com – the amazing platform as a service that’s revolutionizing the way applications are being built today. And with me today is Marc Benioff, CEO of Salesforce.com, the makers of Force.com and other fine software products.”

Marc: “Thanks Billy- You know, people around the world are simply fascinated at the power of cloud computing and we think your audience is going to be astounded by the power of Force.com”

Billy: “Well Marc – Let’s get to it and show everyone how it works! What do you say audience?”

Audience: “YEAH!”

Marc: “Alright then, suppose you’re an application developer and you’d like to build an app fast BUT you can’t because your application requires a server, a database, development languages and all sorts of other expensive, hard-to-use technologies. What will you do?”

Billy: “IS THERE SOMETHING DEVELOPERS CAN DO?”

Marc: “You bet there is – Just open a can of Force.com and ‘KABLOOEY’ – problems go away!”

Billy: “JUST LIKE THAT? PROBLEMS GO AWAY JUST LIKE THAT??”

Marc: “Yep, just like that – problems are gone”

Billy: “WOW – I bet something like Force.com must cost a fortune if it can do all this!”

Marc: “Actually – Force.com is quite affordable whether you’re one developer or have an entire IT shop. In fact, if you act right now, Salesforce.com is offering extra cloud computing capabilities to every new user of the Force.com platform.”

Billy: “WOW – extra cloud computing capabilities! That’s fantastic! What do you think of that audience?”

Audience: (hysterical applause ensues)

Billy: “Marc, it sounds like you’re going to sell a lot of Force.com capabilities right now!”

Marc: “NO, we’re even going to sell more as we’ll also be throwing in a set of Ginsu knifes, a bamboo wok steamer, a pocket fishing tool and 38 other complimentary tools that will enhance your programming experience!”

Billy: “Marc, that’s truly incredible. But how can Salesforce.com be so generous?”

Marc: “That’s the beauty of the Force.com cloud – We’ve spread our development efforts over the last 10 years to create a cloud environment that’s extremely low cost for us to offer and customers to use. But what’s even better is that we’ve broken up the cost of Force.com into small monthly payments.”

Billy: “Small monthly payments - that’s FANTASTIC!”

Billy: “BAM!!!”

Marc: “And… What’s even more amazing is that cloud computing even lets you make julienne fries in the privacy of your own home!

Billy: “BAM – BAM - BAM!”

Man, I gotta quit daydreaming in these conferences. I guess I’ve heard one too many software pitches lately.

More legitimate news on Salesforce in my next post…