Unless you are one of a very small minority of people in business today the answer is probably ‘not a lot’. We’ve seen this for a long time outside the IT industry, which is well-known for being one of change’s greatest proponents, but increasingly that apathetic approach to the future is beginning to invade the way that companies within the industry look at the future.
The drivers behind this change can be summed up in two letters – IP.
Not Intellectual Property, but Internet Protocol, and specifically the way that companies like Microsoft and Google are leading us all headlong away from the world we know, where your computer has all its applications and data resident upon it, and into the brave new world of ‘The Cloud’.
While the potential benefits of this are many and varied, a lot of Tier 2 software vendors, ISVs, PBX manufacturers and VARS, are facing fundamental changes in their business models, which have the potential to dramatically change their incomes, perhaps to the point of obliteration.
As an example, we have just finished an extensive consultancy project with a US-based ISV that makes some very cool systems. These, in a true ‘Single View of the Truth’ approach, all hook together to deliver very powerful functionality to their users, but as with any company-wide system bring the need for training, integration and a fair bit of hand-holding while staff get their head around them.
Once installed the benefits are huge – most of their customers report at least a 25% productivity boost, but right now no-one is buying big applications, so their pipeline is minimal, and when they do go to market they are getting significant pushback from customers, not because they don’t see the benefits,but because they don’t want to commit to anything and would rather try and get along with what they already have.
Quite correctly the client realised that this was a one-way street to closure, so asked us to build them a new marketing model.
Given the state, and direction, of the software market we looked at SaaS, and the techies enthused about how easily they could split the software elephant down into lots of micro-applications, each delivered by SaaS, so that customers don’t end up with a big outlay. It would need R&D, but not a huge amount, and they could realistically start launching micro-applications into the market by Q1 2010.
It has all the elements of a great plan – the company is well-known and has great media presence, so lots of opportunities for news interest to keep the website and PR buzzy; It would be delivering a pipeline of very useful and user-friendly tools that would have very wide applications across a number of verticals that would be continually hitting the market, and the potential to rebuild revenue over a 12 month period.
Sadly, the bottom line is that while everyone else in the company agreed individually with the plan, no-one on the board wanted to leave the liferaft of what they knew and commit to change.
While we advisers, with a truckful of marketing and business experience from CEO downwards, could see the writing on the wall, the client’s board just didn’t want to accept that their current business model has been thrown into the wilderness by the recession, and ain’t going to come back in the foreseeable future, if at all.
Net result? They’ve decided to redouble their sales efforts to their existing, and pretty saturated market, which they’ve already done twice in the last year with no success, even though every sale they’ve tried to close in the last 12 months has failed because the companies don’t want to commit to either a large CapEx or ongoing OpeX to the same net level under a lease deal.
One of our team summed it up very well “The board haven’t been on the front line for a few years. Instead they are reliant on reports and feedback, so its easy to blame the staff below them. The reality is that they are more afraid of implementing change, because to do so is a tacit admission that they aren’t getting it right. They’d almost rather have the company go tits up, and blame it on the market.”
Which raises an interesting thought to ponder over the weekend – How easily do we fall into the trap of blaming everything on the market, when being truly open to change could make the difference between growth and stagnation?