If you look at the customer landscape from the perspective of a cloud-native enterprise software vendor – say a Workday or a Salesforce.com – it’s a vastly heterogeneous world. Whatever you’re peddling, be it leading-edge CRM or HRMS systems, warehouse management, logistics, or even online storage, you’re going to be selling into a prospect base that will require your software to interact with other vendors’ software, including some vendors that are also your competitors. Your vision of the customer’s architecture has your products at the center, but around the edges are all the other companies’ products that your customers use in the real world. You may talk about your “customers” as though you own them, but it’s just a pretense, whether you admit it or not. In reality you’re just one of many vendors in the mix.
However, if you’re an on-prem vendor, particularly one with a broad portfolio of products, there’s a temptation to take that idea of “my customer” to the point where you actually believe you own that customer and the entirety of its tech stack. In that fantasy, whatever your marketecture looks like, it’s largely dictated by requiring – or strong armingly advising – your customers to buy everything you have to sell them. It’s sort of a modern-day tech version of droit de seigneur. Your vision of the future is all about your myriad products and how, bundled together, they can solve all your customers’ problems. The result is that your go-to-market strategies are designed to force feed that reality into a large existing customer base that is, for the most part, not as locked in as you would like to believe.
What this means is that too many times the large on-prem apps vendors – Infor, Oracle and SAP, to pick on the largest amongst them – talk about innovation in terms that posit an all-or-nothing scenario, turning a blind eye to the fallaciousness of account control. Those messages, coming down on high from the marketing machines of each of these companies, become edicts that are then “enforced” by field sales force worst practices and compensation plans that favor selling “more” over selling what the customer really needs or wants.
This mentality, and the practices it engenders in marketing and in field sales, is now starting to backfire on individual vendors and the entire industry – while at the same time making customers’ strategic planning a losing battle between the internal silos defined by the different incumbent vendors.
By not embracing the heterogeneity of the customers, the on-prem companies that are trying to move their customers exclusively to their cloud products are making a big mistake. The failure of these vendors to recognize the heterogeneous reality of their customers is setting up an internal confrontation inside these customers between advocates of the different, competing incumbent vendors. It’s a lose/lose/lose scenario: vendors can actually lose strategic influence, their internal advocates often look short-sighted and unrealistic, and the overall strategic plan for the customer gets caught in the mine field that these internecine battles create.
So, listen up vendors. It’s time to stop pretending that the best scenario for your customers is to adopt one of everything you sell. Indeed, the more vendors push the all-in scenarios and line-in-the-sand de-support deadlines, particularly in their legacy customer bases, the more they’re opening up a can of worms that could result in losing their incumbency advantage and the high-value maintenance revenues that come with incumbency.
How so? For too many legacy customers, what they had hoped would be a brownfield upgrade starts looking like a greenfield upgrade, with little justification beyond the vendor’s de-support deadline or an AE’s threat of a punitive audit. In those scenarios, any CEO or CFO worth her salt is going to ask for competitive bids, adding more potential turmoil to the customers’ decision-making process while putting the vendor’s cozy, high-margin legacy software maintenance revenue at risk, not to mention future revenues if the incumbent vendor loses their incumbency. I’m seeing more and more of these RFPs, both in my practice as well as in casual conversations with customers.
This is most unfortunate, because every customer can tell some amazing stories about how they innovate despite – or because of – the vast heterogeneity of their IT infrastructures. An exec from Georgia Pacific, a unit of Infor’s owner (and biggest customer) Koch Industries, stood up at a recent Infor analyst event and talked about his company’s strategic enterprise asset management initiative, which was of course based on Infor’s EAM products but also included SAP’ Ariba procurement software. An exec from Microsoft customer Rexel spoke at a Microsoft analyst event about how his company depends on Dynamics Finance and Operations for its core strategic initiatives, while also talking about how the company uses SAP’s hybris and Salesforce.com. At an analyst event at SAP’s recent SuccessFactors customer event, SuccessConnect, one of the company’s execs confirmed that there are customers that run Workday for core HR while tapping SuccessFactors for talent and recruiting solutions, because, well, that’s how they want to innovate those processes. And Oracle CTO Larry Ellison’s Fusion apps keynote at the recent Oracle Open World included two Fusion customer logo slides with a baker’s dozen of names you could also find on Microsoft, SAP, and Salesforce customer logo slides (and probably Infor too.)
Meanwhile, cloud natives like Salesforce.com and Workday don’t really bother pretending they can cover all their customers’ bases, though both dabble in apps outside their particular core domains (relatively unsuccessfully, I will add.) So you’ll easily find slides from these vendors with their brand at the center, surrounded by a solar system of competitors and third party providers connected to the Salesforce.com or Workday mother ship. The only time you see that in SAPland is from Ariba, and sometimes Concur and now Qualtrics, all of which came to the SAP party with more non-SAP customers than SAP customers.
Microsoft PowerBI and Azure are clearly all about supporting heterogeneity as well. Microsoft’s Scott Guthrie even had a cameo on stage at SAP’s TechEd last week in Las Vegas touting the interoperability between SAP’s cloud and Azure. (BTW it was clear the TechEd crowd largely had no idea who Scott is or how senior a role he plays at Microsoft. Maybe Guthrie needs to get out of the Microsoft bubble a little more and expand his own brand.)
Ironically, hyperscalers are more like the on-prem vendors than the cloud-native vendors: none of them seem to actively acknowledge the heterogeneity in their customer bases either, despite the myriad apps run in their clouds by individual customers or the myriad other hyperscalers in these customers’ portfolios. Go ask your hyperscaler to provide a single pane of glass to manage the heterogeneous portfolio you’re running in their cloud, and after they blink a few times, they’ll most likely shrug. Ask them to help manage integrated workloads running on other hyperscalers and they’ll scoff as well. Sigh
This lack of focus on heterogeneity demonstrates a remarkable lack of empathy on the part of all of these vendors, and provides further evidence that an ethically bankrupt sales culture that favors making quota over genuine customer success has been driven so deep into the enterprise software market that it’s almost taken for granted that this is how the vendors roll.
That needs to stop: taking your eyes off the long term value in order to meet sales goals for the quarter is simply the wrong way to run a customer-centric business, even a publicly-traded one that is unfortunately whipsawed by the stock market on a quarterly basis. Instead, vendors with broad enterprise software portfolios need to embrace a sales and marketing effort that shows concisely and in plain and simple terms how their individual products can interact with existing legacy apps from another vendor/competitors. Cajoling, price-cutting, and strong-arming your way to a misconceived notion of account control isn’t just bad for customers, it’s bad for vendors in the long run as well.
The real world inhabited by your customers is a complex, heterogeneous, multi-vendor world, and the more you help your customers succeed by embracing that reality the better for everyone. So what are you waiting for?
[…] Greenbaum wrote recently about heterogeneity (hard word to spell) and this resonated with […]