2012 Looks to be a Tough Year for Innovative Technology Product Sales to Global Business

Oracle Corporation reported earnings after the close of markets on December 20, 2011. You can register and then listen to the Oracle Second Quarter, 2012 Webcast. Your time will be well spent if you opt to listen to this presentation. Within literally the first few minutes of the 37 minute presentation, Safra A. Catz, President and CFO noted that with regard to Oracle’s sales of applications to global business and public sector customers that “. . . in the last few weeks, really for the first time in a while, in some regions we saw an increase in last minute additional approvals required for previously expected deals. As a result, we are putting in place better deal management so that we have the time and the approvals necessary to take this into account [for future deals].”

Kash Rangin, an Analyst from Merrell Lynch picked up on Ms. Catz’s early assertion. He noted that “[t]he only thing that we are scratching our heads about is the applications number . . . [i]s it Financial Services, Public Sector or the [industry] vertical [markets] that are talked about?” Ms. Catz noted that the weakness she had described was in the industry vertical markets. Translate that into global private businesses. Subsequent to further questioning from other analysts on the webcast, she provided this telling indicator: “What we did see was folks where all of a sudden the CEO had to approve [the purchase], or something like that, before it was all set. . . in some cases things literally closed the next day or a few days later once the approval came in. But those [deals], when we do run them right to the end you just run out of time . . .”

Keep in mind that Oracle is one of a handful of top tier purveyors of complex solutions to global business. Further, Oracle has a record of delivering satisfactory value to its customers. Therefore, if a business like Oracle has to note delays in closing sales (deals) and, further, has to note that final approval for these purchases has been escalated up as high as to the CEO of global businesses, then the coming year, or more, of selling enterprise technology solutions to global business has taken on a rather cold tone. I see this vignette as a very clear indicator that delivering measurable, quantifiable value through each and every sale of innovative technology solutions to global business in the coming year, if not longer, must be absolute status quo for any successful selling organization.

Of course, value is a specific quality that must be delivered to specific customers based upon their prescribed understanding of the benefits they seek through solutions. Therefore, substantial effort must be expended to understand the value specific customers are after. As well, successful sales teams will participate with theses customers in the creation of the prescribed solution. I will be happy to elaborate on these points upon request. You may reach me at 631-673-2929.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved


VCs that Know Nothing

On Friday, December 9, 2011, Ms. Maha Ibrahim of Canaan Partners was interviewed by Ms. Emily Chang on Bloomberg West. Bloomberg West is a television show that is broadcast Monday through Friday of each week. The topic of conversation was Zynga’s IPO. Zynga is in the business of manufacturing online games. Online games are far removed from the type of complex product that I have focused on in this blog. Further, online games are not the typical product of interest to enterprise business customers. Nevertheless, this pair went on to posit absurd claims about the enterprise market for software, seemingly out of nowhere.

Ms. Chang opened the gate when she asked Ms. Ibrahmi to speak to “what does [SAP’s acquisition of Success Factors] say about traditional software’s business model?” When Ms Ibrahim jokingly mentioned that there was “no reason to have client server software anymore” and, further, that there was no longer any need for enterprise business to bring in “large Ernst & Young or large integration firms for years to help you to implement your software for your employee base” as the result of the supposed revolutionary nature of “cloud” computing, I needed to put type to page on this one. The fact is that Ms. Ibrahim is, in fact, dead wrong.

As I’ve written elsewhere in this blog, “cloud computing” is nothing new. Just reflect back on computer timesharing which was a business with some heft to it back in the mid 70s and 80s. Yes, mid size companies opted for the economies of scale represented by buying time on systems that were otherwise out of reach. Further, large businesses leveraged IBM mainframe computing systems via 3270 terminal emulation to deliver the features of mainframe computing to desktop PCs distributed across the enterprise. But in neither case did these early instances of cloud computing displace on premises computing systems. In fact, with the advent of the Graphical User Interface (GUI) and powerful PCs, timesharing went the way of the dinosaur.

“Own your own” has always been the preference and always will be the preference for those businesses with the financial capability to do things the right way. Cloud computing for enterprise business is simply a side track to be taken while ISVs take necessary steps to improve their ability to deliver bonafide value to customers. The real “meat” to this “motion” for under the radar innovators is still to be found in the enterprise sale of precisely the multi year engagement that Ms. Ibrahim claims is now gone for ever.

Not so, says Mr. Marin Petry, CIO of Hilti Corporation. Mr. Petri participated in a panel discussion of the definition of Cloud computing hosted by the Tuck School at Dartmouth in October of this year: Risk and Rewards in Cloud Computing. Mr. Petry clearly states ” . . . I do not understand cloud computing as I basically turn the key on my data center and said ‘that was it’ and everything else that I’m doing from that point onward is coming out of the cloud. We do actually at Hilti do quite a bit with cloud computing but that is peripheral additional applications that I do not have to run in my data center. I still have my data centers. I still run SAP in my data centers. I still run Microsoft Office in my data centers. That will not change in the next few months. That might change over the next 10 to 15 years, very likely, in different steps, but that’s not reality today. I do not believe that the larger industries today can close the data centers because everything is coming out of the cloud.”

Another participant in this panel discussion, Mr. Olivier Gouin, Group CIO of Nestlé speaks of a private cloud that is specific to a larger enterprise business as opposed to a public cloud that is “more appropriate” for smaller businesses. He cautions against a “wrong perception” that cloud computing is antithetical to the typical method of implementing software (meaning via data centers) for larger businesses. Rather, the sole utility cloud computing represents for the enterprise is specifically within an entirely private “cloud” that, Mr. Gouin makes clear, ought to be separated from external facing websites. Finally, Mr. Gouin voices his opinion that the public Internet is still not ready for “prime time” as the result of the insecurity of data communication. Perhaps in a “few years” that may improve, but not the case at present.

I know that Ms Ibrahim is entirely off the mark. I would be happy to elaborate. Call me at 631-673-2929 to learn more.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved


More Software for Nurturing the Right Leads — Alinean XcelLive v.3

Tom Pisello, CEO of Alinean has written extensively on the “new buyer” for technology products and services. I discussed a short piece that Tom Pisello prepared for Sandhill, Recovery Makes Selling IT Much Easier into 2012 Fahgettaboudit back in November, 2011: How to Win The Complex Sale of Technology Products & Services in 2012.

Alinean has launched a SaaS offering, Alinean® xcelLive which purports to be the first Saas sales and marketing offering that is accessible without a programmer. Cut through the marketing speak and you come up with a very handy online program that creates personalized (remembering Peppers & Rogers and Marketing 1:1, online marketing ought to speak directly to each web site visitor if it is to be effective) white papers, charts, and more. Best of all, Alinean customers can feed their specific information into the SaaS system from Excel spreadsheets, Word and PowerPoint documents. It’s safe to say, on paper, that ease of use is quite high with this product.

What’s the objective? No less than to empower customers of Alinean’s SaaS to respond to the new IT buyers of 2012 and beyond right away, even as they visit web sites sifting through Pisello’s “noise” for the information they require to make an informed decision about whether or not the product at hand is a product worth a second look and, perhaps, a call to a sales person. Note: sales people in the soon to be at hand new world of 2012 are called in after a decision is already in progress, not before.

While I am not completely sold that I want my sales team to be called in after the fact, I have to acknowledge that the premise is quite plausible and borne out by my own extensive experience. The fact that IT budgets are very tight as the result of the fact that, pervasively, IT implementations have failed to deliver full dollar value on their promise. Further, information overload is the rule. Buyers do not need sales people to add more information, they need sales people to provide the business case rationale (as Pisello frames it, in clear, palpable estimated cost savings) why product A is superior to product B or C. Therefore, where prospects have a clear sense of what they’re after, I think that this SaaS offering is quite compelling.

For the record, I want my sales people working prospects in very early stages, typically prior to the formulation of clear buying decisions. If sales is ensconced within a prospect at a very early stage of a buying decision, then the opportunity exists to influence the prospect and ensure that the solution of choice becomes something unique to my sales team and my products. Of course, development of my type of opportunity requires lots of time and a lengthy sales cycle. Certainly contact me directly at 631-673-2929 if you care to hear further about my approach.

Nevertheless, a safe bet would be to utilize Pisello’s SaaS on the web, with my kind of sales team back at the office.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved


Good Luck Selling Unclear Products

Technology innovators with products in flux should have minimal to no expectation of sales.

What are products in flux? Products in flux are conceived by marketers who opt for the “ready, fire aim” approach to product development rather than a more conservative “ready, aim, fire” approach. I am using “in flux” as a synonym for “in play”. Changing either products, or the method of distribution for products, subsequent to market introduction confuses buyers. Confused buyers generally are in no position to buy anything, especially if a confusing product presentation alights atop a heap of additional internal confusion within the business. Therefore, be especially careful not to opt for this product development technique for products that require a commplex selling strategy.

If you’ve already gone and polluted your market space with this lack of product clarity, then the best way to deal with your soon to be sales-less situation is to drop any/all pretense of selling and revert to listening and surveying customer prospects to garner their best thoughts of markets that you intend, ultimately, to serve with your ever evolving product. How to catch an early indication that your product might need retooling? Consider your market pricing, and preliminary estimate of the length of a typical sales cycle for your product. If realities are way off of your assumptions, then you need to reconfigure your product.

Real life example: a client of mine has built a product for a market serviced by channel partners, meaning resellers who add value to manufacturers by configuring products for end customer implementation and supporting these same products after implementation. My client opted to offer products directly to end users, without availing of channel partners. Our attempts at direct sales were characterized by very lengthy sales cycles, and a rather low level of buying interest. When we landed orders, the orders were landed at low prices. General consensus, we would not be able to achieve revenue “escape velocity” via our direct to the end customer approach for our market.

We decided to reconfigure our distribution plan. We approached channel partners with an interest in discussing their expectations for products like ours in their market, etc. We also reassembled his product to better conform to channel offerings. All of this work transpired during his initial “go to market” effort. Revenues lagged, but we had taken a promising turn that bodes well for the future of his product.

If your product is unclear, better strive for clarity before expecting much of sales. Your time will not be wasted. Once you’ve repositioned your product you may be able to hasten revenue beyond the timing you assumed in your product plan.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved


Rely on Customers and Prospects to Identify Needs, Test Solutions and Conceptualize Products

Roughly speaking, Independent Software Vendors (ISVs), systems integration firms, and technology consultants can go one of two ways as they proceed down the path of new product design:

  1. Build the product and then find out if anyone needs it, or
  2. Communicate with customers, prospects, competitors and representative groups within a market to discuss areas of need that can be addressed by products and/or services within the range of company skills and production capabilities

In my estimation, option 1 is practiced far more often than option 2, usually as the result of an assumption on the part of an entrepeneur that option 1 represents the easier and faster approach. In my experience, however, products produced by the option 1 method generally fail. The fact is that it is next to impossible to extrapolate from an individual notion to an accurate estimation of a pervasive market need.

Rather, strict application of the option 2 method, which starts with zero assumptions, whatsoever, about solutions, market needs, etc, is a much more reliable and ultimately less costly approach to product development. After all, walking away (before any product development costs have been incurred) from an assumed marketplace that is found to be non existent, is certainly the right course of action.

Option 2 is easy to implement through a teleprospecting function. Prospects and customers will be much more willing to participate in telephone conversations that are not encumbered with sales offers and product presentations. In fact, some contacts who are involved with marketplace topics will be eager to share information with a skillful teleprospector.

The teleprospecting program should be crafted to not only gauge product needs, but also, and of most importance, the level of clarity with which prospects and customers perceive these same needs. It is especially important to make some estimate of marketplace clarity in order to accurately forecast the length of any sales cycle as well as the actual timing for product development. After all, it makes no sense to develop products for an immature or “broken” market. Better to work closely with prospects and customers to clarify needs. Once needs are clear, then products and services can be recommended as solutions for needs.

Presently in the winter of 2011, many technology marketplace needs lack clarity. Compounded failures to deliver value, false promises of amorphous value, together with underestimation of what it takes to deliver Business Process Re engineering (BPR) have rendered many a technical marketplace into a “no man’s land” which ought to be avoided.

Better take surveys than dream up products for enterprise business 2012.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved