The Recessionary Opportunity: Getting Vendors and Customers To Play Well Together

I don’t usually plug my own work, but I just wrote a piece for Datamation.com on what enterprise software vendors should say to their customers as the current recession/depression swallows up the global economy. Basically, the gist of the column is that this is the moment to inaugurate a shift in how vendors interact with their customers, and it starts with some key points — some symbolic, others more firmly practical — that I believe might actually change the market for the better, and help vendors and their customers emerge from the current economic disaster stronger and more profitable. Some of this is more utopian than practical, but I stand by the spirit of the gestures I’m asking both vendors and customers to make on behalf of each other.

My main suggestions are:
1) Vendors should offer their customers an immediate 6% give-back on their maintenance fees, provided the customers take the savings and invest them in new, innovative software from the vendor.
2) Vendors should develop an ROI case for every product they sell, and thus arm their customers to make a strong case to their decision-makers based on facts, not wishful thinking. Customers in turn need to be active participants in this ROI process, and start collecting and managing ROI data from within their enterprises.
3) Vendors should take more responsibility for implementation success, and thereby police their big SI partners more closely. Customers in turn need to be more proactively engaged with a vendor to solve SI partner problems before they get out of hand and end up on the front page of the business section.
4) Vendors should engage more honestly and forthrightly in the contracting process, and eliminate “gotchas” and other traps intended to trip up their customers. Customers in turn need to be better prepared for the contracting process, and if that means engaging third party help, so much the better.
5) Finally, vendors should provide real guarantees for the ROI of their products, and put some SLAs in front of those guarantees. In return, customers should promise to shorten the buying cycle significantly, freeing up a huge cost drain for vendors.

Could this actually happen? I think it would be more than a little interesting to see someone adopt at least suggestion #1, if not the others. But whether or not any of this ever sees the light of day, my real point is this: Now is NOT the time for business as usual, particularly of the adversarial kind. Vendors and customers need each other more than ever, and it’s long time past for a little love to replace the perception of pure opportunism that permeates too much of the vendor/customer relationship.

Before it’s too late. Way too late.

3 thoughts on “The Recessionary Opportunity: Getting Vendors and Customers To Play Well Together

  1. Hi Josh,

    Great post as usual! Trust in many of the vendor client relationships have been broken. Vendors who continue to break client trust must hurry and patch things soon before recessionary pressures create a tipping point. We continue to see customers hitting a boiling point.

    http://blog.softwareinsider.org/2008/10/12/mondays-musings-5-steps-to-restoring-trust-in-the-vendor-customer-relationship/

    R “Ray” Wang
    Vice-President
    Forrester Research

  2. Congratulations on the new blog – great stuff.

    I was struck by point 3, vendors taking more responsibility for implementation success. This is a serious issue, in my view.

    The economic relationships between software vendors and system integrators are often closer than between vendor and the end customer. As a result, the vendor is most loyal to the SI, even thought the customer pays the bill.

    I call these interlocking and conflicting relationships the Devil’s Triangle. Customers, technology providers, and SIs are the three legs of that triangle.

    It would be overly simplistic to point the finger solely at any one point of the triangle. Often as not, for example, the customer has a significant role to play in creating failure situations.

    The very structure of enterprise software sales, service, and implementation economics militates against the Devil’s Triangle being transformed into the angel’s triumvirate.

    Even so, we need posts like yours to remind us where we should be headed.

  3. Josh, to echo your sentiments, we’re hearing from ISV and enterprise customers that the old models are fraying. While I agree on your take on business ROI , at an even more fundamental level it’s challenging for most ISVs and their customers to even know what the customer has the right to use (its typically complex language buried in multiple scanned contracts) against how much they are using. This lack of facts impairs the relationship, and leads to lost revenue for the ISV and overspending and compliance risks for their customers. At the other end of this continuum, at our recent conference one enterprise described how they share detailed usage information to their strategic software vendors, to help them align product, product feature and support investments. While not as in depth as what Ray is doing, this topic and others were surfaced in our annual survey of key issues and trends on the minds of both software vendor and enterprise IT executives and managers.

    The complete survey is available at http://mktg.acresso.com/mk/get/SS08SurveyResults?mc=PR (requires registration, but worth the effort!)

    Roger Bottum
    SVP Marketing
    Acresso

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