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by Peter Thorne
Vendors of enterprise applications such as PLM have prospered on waves of change. But as the wave turns to a flood, there is a risk that unexpected competitors will outflank incumbents in the race to liberate R&D budgets.
For sales and marketing professionals, change is a Good Thing. It is a big part of the reason that your customers are willing to find budget for your technology – they are driving change, or responding to change, or probably both. All you have to do is to understand the changes they care about, then get started! Define and communicate a relevant and attractive vision of the future. Explain a roadmap that involves your technology and will allow step-by-step progress towards this vision. Offer products and services that solve problems. Provide a business case with immediate return on investment to get budget allocated. Beat the competition, and enable or deliver some element of the roadmap. Easier to say than do, but this is the shape of many successful strategies to access customer budgets.
But it won’t always work.
There’s a hidden limitation in this recipe for success. It is only effective within categories of technology that you and your customer agree about. The categories can be quite broad (e.g. “ERP” or “PLM”) or quite focused (e.g. “multi-domain modelling” or “high speed machining”). Top players can always map the categories to business objectives that themselves may be broad (“lower costs”) or specific (“2% improvement in perfect order metric”). Connecting the categories (“integration”) is also a category in itself. The budget for these business initiatives exists and is held by the executives you already know and who know you.
But sometimes the scale of change in the external market makes the recipe above ineffective. Large scale changes create space for your competitors to engage and influence your customers, space that the recipe does not address.
The problem on the horizon is that the categories are going to change. Technology has been nibbling at the walls that separate key applications for years. Pick any pair from ERP, PLM, SCM, CRM and shop-floor systems. The natural drive to extend the footprint of each application has gathered strength from technologies such as service oriented architectures, the business trends in which supplier-customer relationships are being converted into industry networks, and the wildcard influences of ubiquitous networks and always-on mobile connectivity.
And as the walls come crashing down, as they surely will, you and your customers will no longer use these categories as reference points. If your carefully crafted vision and road-map is built within a category, your offer will become vulnerable to a competitor who will engage senior managers in your customer base with a story something like “There’s a bigger picture here. You need new tools that will allow your business to take advantage of the new opportunities out there.” And then go on to outline some set of capabilities, most of which will have been seen before, but not in this combination. They will have differentiated by redrawing the boundaries.
One example is the impact of embedded software. The growth in the market for embedded software tools (see Cambashi Research Reveals Opportunistic Market - Embedded Software Development Tools) is tangible evidence confirming the significance of what we all see every day – more intelligence in products of every sort. The intelligence comes from electronics, networks and embedded software. A ‘traditional’ marketing strategy for an embedded software provider selling to industrial machinery manufacturers might follow the recipe above. It will point out the inevitable growth in the volume and value of software inside the customer’s machines, and how the provider’s technology will allow the customer to manage the changing balance in their engineering team, and the growing complexity of the embedded software. Quite true and this will help generate a revenue stream.
But is it enough to protect the account from new competitors? Imagine the competitor who can see how to breach some old boundaries. They might put together an offer that integrates embedded software development tools with new ways to configure and connect to external services, such as asset management. Their message to the industrial machinery manufacturer is something like, “There’s a bigger picture here. Now that your machines are controlled by embedded software, you’ve opened up competition for service contracts. Our approach means you can automatically deliver machines which will integrate with your customers’ asset management systems. And if you are ready to let your customers closer to the configuration process, you can let them to do all the work. You’ll change the playing field for service contracts.”
The lesson is one we’ve all heard before – be able to see your offer through the customer’s eyes. And while ever-improving delivery of a fixed scope of capability might earn you a loyal following of dedicated customers, it will be in a commodity-like pool of ever lower margins. So look up (and look out!). Be ready for a market which not only wants new stuff, but wants it in new combinations.
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