Glue Products Have An Advantage When Customers Determine Value for a Solution

“Glue products” connect sections of software solutions for customers. At the application layer examples include Tibco, IBM’s MQ Series and more. At the functional level, examples include software systems for training, networking, data collection, and many more. This post will discuss functional glue products.

A brief word on how these products tie together sections of functional solutions may be helpful:
I have current experience working with Microsoft’s SharePoint server product and related training solutions. So I will present what follows specifically on training as a glue product and how I think sales teams should address value with their customers.

SharePoint customers, on-premises, have objectives like “collaboration”, “compliance reporting”, internal communications (intranet), communications with partners (extranet), etc. Without training, personnel may not be able to successfully deliver on any of these objectives. So does the value proposition for the training component depend simply on the training itself, or should the calculation of value be based on how the system chosen for the training requirement optimizes the overall value of the SharePoint solution? Sales teams should help customers understand the most accurate value calculation will be based on the value of the overall SharePoint solution with the training component included as the optimum choice for the job. This tactic enables a favorable pricing discussion for the training component for the sales team while, at the same time, promising the best chance the customer will have to extract the highest possible value from investment in the overall solution.

If sales teams don’t do the work (in other words come up with a description of the solution the customer expects to build with SharePoint, and the expected role for training or one of the other glue solutions I mention above), then the value proposition will likely come down to an “apple vs orange” comparison where one training option is compared to another without any attention to the overall solution. The sales team will likely find itself haggling over price, while the customer struggles to get to the highest possible return on investment in the overall system.

Convincing customers to participate in a value calculation as I have just described depends on trust. So sales teams should also implement supporting tactics capable of elevating the relationship with the customer.

I am often surprised to see how few early stage ISVs marketing functional glue products demonstrate understanding of these tactics. Successful efforts to sell to enterprise software customers almost always include this type of value discussion, calculation and proposition.


What is the Value of Big Data to the Healthcare Industry in the United States in 2013?

The Bloomberg Big Data Conference panel discussion, “Rethinking Risks and Opportunities in Big Data: Healthcare” left us wondering whether the no SQL databases and related tools of big data can deliver high value to the healthcare industry in the United States in 2013. Ed Park, EVP and COO of athenahealth cautioned against simply implementing big data for implementation sake: “Pouring more money into the system hasn’t helped a lot for the last 20 years, and pouring more and more money in over the next twenty years is not necessarily going to help either”. We agree with his point. If IT systems fail to deliver meaningful value, then users cannot be expected to either keep using them, or look to add to them.

We got the familiar sense of a technology with questionable value from the healthcare panel discussion on big data. Opportunities to capture real descriptions of high value from the narratives presented by each of the panelists eluded us. If the best we can do is point to 23andme when citing an example of a business with a high value offer for the public, in our opinion something is missing.

On the other hand, we had a conversation with a colleague from the healthcare industry a year ago with something more meaningful to say on the topic. This individual held a technical management position in the Center for Disease Control (CDC) of the United States Federal Government in Atlanta, GA. The narrative he presented, for us, was much more compelling as he recounted how the Hollywood film “Contagion” actually depicted some of the systems in place at US CDC. The potential for massive repositories of data producing meaningful indicators of where threatening viruses are likely to spread next is a much more obvious demonstration of value than either purchasing one’s personal DNA profile, or crafting a highly persuasive “gentle” reminder to schedule a colonoscopy for someone turning 50.

The predictive capabilities of the US CDC big data systems are also an excellent example of a Cassandra whose warning is never ignored.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


The Comparative Insecurity of Cloud Computing, Together with Limited Reliability, Contributes to a Lower Value Proposition for Enterprise IT

When highly publicized security vulnerabilities are factored together with a sober new conclusion, post Hurricane Sandy, that the Internet is not a reliable data communications option, the effect on the value proposition for cloud computing for Fortune 1000 businesses here in the United States and comparably sized organizations in the public and non profit sectors is very negative. Claims like those of Marc Benioff, founder of Salesforce dot com, that cloud computing has created a computing environment where “Windows is irrelevant” (quote reprinted from the International Business Times web site, in an article authored by Yannick Lejacq, “Salesforce CEO Mark Benioff: Windows 8 Release Is ‘The End Of Windows'” and posted on October 19, 2012) have been rendered, appropriately, ridiculous and completely untenable. After all, how can an organization rely on a computing method like the cloud, that quickly vanished, in entirety as an option for millions of users over scantly more than 60 minutes on Tuesday afternoon, October 30, 2012, as Hurricane Sandy slammed into the very densely populated Northeast/Mid Atlantic area of the United States.

But what about these highly publicized security vulnerabilities? We think that most of the public has failed to understand the real impact of the emergence of subversive, malicious use of the Internet by nation states. The public has managed to maintain a position far removed from the Internet security issue. In fact, financial institutions have taken the brunt of these problems. But what if the public can no longer be safely insulated from these aberrations? What if financial institutions can no longer entirely assume the losses resulting from successful intrusion by malicious parties into presumably secure web sites? We think most anyone will be able to recognize the near instantaneous public outcry that will, inevitably, arise should private parties have to assume the burden of these losses.

As the magnitude of losses arising from compromised web sites mount, we think it is inevitable that financial institutions will have to pass through losses to end customers. No one has the financial strength to absorb high magnitude losses, least of all banks that are very hard pressed to maintain reserves in the face of ever increasing regulatory requirements.

Certainly the US Department of Defense (USDOD) has recently stated, publicly, that they plan on protecting the public from subversive attempts, ostensibly initiated by state backed operatives, to undermine web sites. Nevertheless, we need to question the amount of time it will take the USDOD to roll out a reliable, production version of its strategy. There may, in fact, be room for further successful attacks to transpire before this system is operational.

In sum, for larger organizations, the effects of a natural disaster like Hurricane Sandy, together with lots of publicized security issues, results in a comparatively low value proposition for cloud computing for enterprise IT customers. If our assumptions are correct, then there is a substantial gap between the intention of Enterprise IT ISVs to push more adoption of cloud computing and market place sentiment. We think that this gap will, inevitably, translate into poorer earnings for publicly traded Enterprise IT ISVs.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved


Pick Market Niches with Great Care — Ready Fire Aim Won’t Work for Market Niche Decisions

Building markets on monies spent, but for solutions that are under utilized, is a problematic endeavor. Consider that 1) the big purchases have already been made and 2) that the solution purchased has not proved to be popular.

Consider the enterprise business market for social collaboration software. This market includes products like Microsoft® SharePoint® and IBM® Lotus Notes. Traditionally purchases of SharePoint and Notes have been plagued by low levels of user adoption within the enterprise. Answering “why” adoption rates are low has proven to be a risky endeavor as research power houses like Forrester Research are at a loss to explain clearly a pervasive reason for low adoption rates. Rather, Forrester and others contend that low adoption rates are the result of a combination of factors, including low levels of “user friendliness” in the features of SharePoint and Notes as well as a tendency to push users into re-engineering daily business processes.

Business Process Re-engineering (BPR) is neither a trivial thing to achieve, nor an area where most consulting firms ought to venture to find new business. Sales cycles are very long. As well, the typical BPR solution requires the buy-in of multiple silos from within the enterprise; for example, for banking and finance, Audit, Compliance and MIS/IT may all have to endorse the same solution before an order will be placed. Building consensus among these three powerful organizations can literally be a multi year effort that will prove expensive, not only with regards to the amount of time required to pull off the deal, but, perhaps, in terms of additional parties who may have to be added to the sales team (for example, an ex CEO or other key influencer who can persuade all three groups to endorse the solution) at a costly price.

If major BPR is required to resuscitate the fortunes of Notes, or SharePoint within a business, then why go there? Rather, as I see it, a better case for building a niche upon a purchase already made is to demonstrate how SharePoint or Notes can be applied to an additional need, one that is compelling, but not addressed properly within the enterprise. Once again, turning to banking and finance, the need for constant compliance reporting across this highly regulated industry will provide a greater driver for an attractive market niche with a substantially attractive value proposition. Just compare the cost of using something already purchased, for example SharePoint, for compliance reporting vs the cost of licensing IBM OpenPages. No brainer?

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


Use Teleprospecting to survey customers

Sell what they buy.

Building a product marketing strategy that pulls 20% of efforts from technical innovation (internally generated) and 80% of efforts from listening, analyzing, and summarizing what customers within a market segment need and look for from products and services (externally generated) makes sense. In my experience there is a significant opportunity for success for products crafted to match what customers are buying. Further, accomplished marketers like Peppers & Rogers Group, and George S. Day emphasize the importance of surveying customers to determine what:

  1. value means
  2. solutions they are purchasing to deliver value
  3. and, finally over time, whether they got the value they were after when they purchased and implemented solutions

Teleprospecting provides an effective means of collecting information from customers and prospects. Put the information you capture from teleprospecting interviews or surveys into a picture of a market from the perspective of customers and prospects. Of course, with regards to determining a useful answer to objective (1), above, keep in mind that the question is very broad; therefore, the answers received will be useful as you assemble a broad value proposition for the market, but not especially useful on a case by case basis. Nevertheless, simply putting together an broad, but accurate, value statement for a market segment will be a very worthwhile endeavor. Further, by obtaining answers to objective (3), above, whether or not solutions, once implemented, deliver the value that they promised, you will have another gold nugget to enrichen the products that you, subsequently, decide to build or, perhaps renovate.

It’s best if the teleprospecting effort can be made by independent parties, but for a business operating under the radar with few sales, and limited means, the slate is still clean enough to permit internal staff to undertake the teleprospecting effort. Anyways, if your best prospect is larger business, then engaging in lead generation from a teleprospecting effort makes the most sense. After all, larger businesses pose longer sales cycles complete with complex systems for making buying decisions.

One last point on value: As I’ve written in earlier posts, if your product or service is complex, then you must dig as deep as possible through sales qualification steps (that you have carefully designed for a specific prospect opportunity) to determine the specific value that the prospect at hand is after. I emphasize that this value statement must be framed in terms of cost savings if it is to be truly persuasive and convincing. Further, the greatest reward (in terms of the magnitude of revenue to be received from an order) will be greatest where the prospect understands that by purchasing your solution she/he will save the most money with regards to ongoing operations.

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


Build Highly Successful Products to Deliver Palpable, Clear Cost Savings and Win Big

Jeff Thull, in his book “Mastering the Complex Sale” makes a strong case for delivering tangible, observable cost savings to customers as the foundation for successful complex selling to enterprise business customers. I agree completely with Mr. Thull’s point. In fact, I see clearly how products targeted to markets that require complex selling efforts should be designed entirely around cost savings. If you cannot deliver tangible cost savings to a customer with a conceptual product, then don’t waste your time.

Using this rule of thumb, that products must deliver tangible cost savings to justify a purchase at some planned price (I’ve italicized the word “some” to convey the importance of flexibly approaching the task of pricing products in a ratio to cost that delivers persuasive savings to customers to successfully build a market) or else move on to a better idea, it is easy to see why solutions like online website development have disintegrated into low price/low value offerings. After all, isn’t the market message for online website development some version of “everyone else has a website, why not you”? Where is the value proposition in this rationale? Where is the presentation of clear, measured cost savings for the customer? How different and how much more persuasive would be a market message that details the cost savings packed into an online store versus the expense represented by a brick and mortar store! Sadly, this type of cost savings centric market message is generally absent from the online website development marketplace.

Designing products to deliver measurable cost savings ensures maximum return on investment from selling efforts. After all, sales of these products should deliver long term relationships with satisfied customers, just the type of business that most business ought to crave. If you opt to follow this approach, then be fully prepared to truly deliver savings via your early customer engagements or else relegate your market message to the trash can. Therefore, delivery and after sales support must be completely aligned with marketing & sales to deliver success. Complete alignment means understanding the cost savings for the customer and taking whatever steps are necessary to deliver those savings in each and every engagement.

In the world of the complex sale, there are no purchases made without saving capturing some substantial saving against costs that would otherwise have to be incurred by the business. This is especially true for businesses in highly regulated industries where costs can result from improper policies and procedures. It is remarkable how open prospects with “external drivers” (meaning unfavorable regulatory reviews) are to discuss these drivers and to communicate the costs that they need to save. Successful marketers to highly regulated industries learn quickly to collect as much detail about these “external drivers” as they can to construct their custom, individualized presentation of tangible value to prospects. Don’t fail to do the same.

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