Getting to the Tech Promised Land: Selling Tomorrow’s Message to Yesterday’s Crowd

It’s a given that the marketing messages vendors are pushing today are focused on clouds and new, innovative business processes. Private, public, hybrid, vendor-specific, sovereign, and third party clouds, business networks, process innovation, IoT, and new economy business models: The messaging is pretty consistent whether it’s Microsoft Dynamics talking to its customers at its annual Convergence user conference last month, Infor talking to the analysts at its recent analyst summit, SAP talking S4/HANA pretty much 24/7, and its Ariba subsidiary talking to customers at this week’s AribaLive conference. Clouds, new business models, loads of net new, highly valuable, user-friendly business process: the future is here and is a wonder to behold.

But that’s the marketing story, and as I find myself saying more and more, all the great ideas in marketing go to the field to die. In truth, what vendors are pitching and what customers want and are willing to pay for has never been more divergent.

The examples are everywhere: the Ariba customer who looked over at me during a presentation on the networked economy and said “we’re mostly just printing checks” with Ariba. Or the reality of Infor’s customer base, of which less than 3,000 out of 70,000 have moved to the cloud despite a well-articulated strategy and a decent ROI case for doing so. Or the Microsoft Dynamics partner who told me that his company still can’t figure out how to sell “One Microsoft”, despite the well-articulated strategy delivered by CEO Satya Nadella and Dynamics boss Kirill Tatarinov at their first “business focused” Convergence. Or the incessant questions from SAP customers about how to cost-justify the move to S4/HANA in the face of a relatively sparse set of applications.

In every case there is no shortage of great product and great strategy – sometimes, admittedly, more aspirational than actual – that together articulate a brilliant future for all these vendors’ customers, and, frankly, the global economy as whole. I’m really not kidding when I say that each of these vendors has pretty much nailed their version of the right strategy, and is on the way to putting the right products in place. All are positioned to make a profound impact on customers’ day to day operations, as well as their strategic futures.

If only the customers were ready.

Leading one’s flock to the promised land has always been a complicated task, and the temptation of flocks to regress and worship the idols of the past has been a metaphor that has long since transcended its origins in the story of the Exodus from Egypt. (Moses, you will recall, was saddled with a “stiff-necked people” he had to drag through the desert long enough for the generation that knew slavery to die off and be replaced by a new generation unburdened by the past. More than a few CEOs and CIOs I know can relate to that.)

This stiff-necked idol-worship is exactly what these on-premise vendors are facing as they bring to market an impressive set of new offerings. Whether it’s Infor’s new Cloudsuite and Upgrade X initiatives, Microsoft’s forthcoming Dynamics AX 7 and its pioneering Azure-based Lifecycle Services offering, SAP’s S/4HANA and HANA Cloud Platform, and Ariba’s networked economy, and everyone’s vision for IoT – cajoling customers to make the shift isn’t either as obvious nor as simple as the marketing messages would have everyone believe.

It’s important to note that this isn’t a failure of any vendors’ marketing efforts vis-à-vis its customers or influencers – any thoughts of shooting the messenger will just result in needless bloodshed. The messages and messengers are largely doing a great job: getting out in front of the flow and taking a few hits on the way is one of the prices to pay for leadership . Previous massive market shifts – GUI-based desktop computing, client/server computing, the relational database, modern ERP systems, the Internet economy – all had their teething problems, and every one of the pioneers who eventually prospered got a few arrows in their ass in the process. Those that couldn’t take the heat and stayed out of the kitchen paid the ultimate price for their lack of pioneering spirit.

So, in a way, hit and miss is the only way to progress, and it’s inevitable that you’re going to miss more than you hit in the beginning. The vendor conferences I’ve attended recently are perhaps the most stark examples of how hard it is for these messages to reach the right audience. If you’re a typical Dynamics customer, you’ve gone to Convergence for years looking for the latest features for your particular brand – NAV, GP, and AX. So when Satya and Kirill start talking about how to use everything from the Surface to Office 365, SQL Server, CRM, and AX, all the way up to Azure – chances are it’s a little hard for many in the audience to swallow.

Similarly, Ariba’s conference this week was full of procurement professionals, for whom the nuanced and complex stories of customers like insurance giant AIG and Cirque de Soleil were both fascinating and foreign. We learned in the keynote that AIG has placed accounts payable and procurement under the same executive, Jim Gillespie. Jim made an eloquent case for why it’s a good idea, but when he asked the audience how many organizations also did so, it was hard from where I sat to see a single hand in the air. So much for a critical mass of companies moving from siloed processes to complex integrated processes.

I saw a similar disconnect at a SucessFactors conference last year: selling an integrated HRMS and SAP backoffice story to a conference full of HR professionals with neither the authority, nor for the most part the vision, to act on the integrated business process message that is SuccessFactor’s best bet at beating Workday. Meanwhile, Infor’s renewal numbers speak for themselves: a 90 percent maintenance renewal rate for some of the most legacy on-premise software still in use highlights the premium most Infor customers place on next generation innovation —  not enough. (Infor’s value engineering group makes a nice case for why it’s a cost-effective move – and still not enough customers are biting.) Even the net new customers Infor is pulling in – 3100 in the previous three quarters –are by and large eschewing their vendor’s innovative ION middleware and the cloud.

The problem in many cases boils down to who is in the room when the sales pitch is actually taking place. As I ‘ve said before, every one of these vendors’ vision of the future runs into two unfortunate realities in the field: there’s no single decision-maker who can make the buy decision – these new offerings cross too many boundaries in the enterprise for any single decision-maker, even in many cases the CEO, to make the call. And reality number two is that, on the vendor side, it’s hard to find someone who can articulate the vision in its entirely, unless their name is Bill, Charles, and Satya, or one of their direct reports. The average, and even above average, field sales exec isn’t really equipped to sell a vision this complex at the level it requires.

This is very different from what the cloud-only, Silicon Valley cloud keirsetsu has to deal with. Salesforce.com, Workday, Netsuite, and other keiretsu members, as well as their fellow travelers, the financial analysts who think forward P/E ratios that aren’t stratospheric aren’t worth a hill of beans, all live in world which, until recently, was devoid of these kinds of challenges. When you’re selling CRM, or HRMS, you need to talk to a single buyer, a vp of sales or HR, who is largely looking for a way to do what he or she is already doing, only faster, better, and cheaper. The exec in the room knows the problem, can grok the solution, and is largely able to sign the contract as well. Your average rep doesn’t need to articulate a vision about new economic realities, complex, integrated business processes, or net new platforms. Just sign on the dotted line.

It puts the on-premise vendors, except for Infor, in an unfortunate position. The financial markets think SAP and Microsoft should be more like Salesforce.com and Workday, as in dumbing down their go-to-market strategies to make them as virally easy-to-sell as an all-cloud point solution, while giving Salesforce.com and Workday a pass on being more like SAP and Microsoft, as in profitable. I find that reasoning short-sighted, but that’s what the big money funding the cloud keiretsu is known for. (Infor, as a private equity play, doesn’t have to face the public market’s quarterly wrath. I’m not saying private equity is necessarily easier to deal with, but there’s an implicit long-term view that these investors take that is fundamentally different than the quarterly cadence of the public markets.)

In the end, it may take the equivalent of 40 tech years of wandering in the desert before the on-prem vendors’ customers cross over to the promised land. The trick is to keep trying and realize that sometimes market education simply takes time. The market may try to move in condensed, highly compressed tech years, but CEO, CIOs, and business execs are only human, and we humans are sometimes harder to change than everyone from vendors to G-d Almighty would like. After all, we have been a stiff-necked people for a very long time.

 

2 thoughts on “Getting to the Tech Promised Land: Selling Tomorrow’s Message to Yesterday’s Crowd

  1. Josh, excellent post and thanks for coming out to Vegas for Ariba Live. I agree that pioneers like AIG are needed to take advantage of the ability that today’s technologies provide. I also like that you picked up on the question you asked me on the stakeholders and go-to-market. At Ariba, the discussions on the future of commerce are no longer only about the procurement professional. CFOs, head of sales, and others need to join. I totally agree. I also think the tech industry can actually bring different stakeholders to the same table. And maybe it is all about a much larger trend that enterprise technology really has to be on the CEO agenda, and that all functional areas need to digitize not in silos but with a business model change in mind. Hope to continue this conversation with you in Orlando and get your thoughts and advice.

  2. Pingback: SAP and the Magic of Success – Laying the Groundwork for the Inevitable Future of Business | EAConsult

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