Vendors like to back standards – as long is it is in their interests!

I was reading Danny Goodall’s post on his strategic marketing blog about standards-based marketing…

….and it brilliantly illustrated a point that I think is often experienced in the software marketplace – some vendors rush to back standards and push them, but only to the point that they fit with their own goals.

The example Danny discusses is Sonic Software, part of software vendor Progress. Sonic is well known as the first software vendor to use the ESB acronym (Enterprise Service Bus), and did indeed peddle the standards message hard asDanny, the marketing guru behind Sonic’s early success, remembers:

All the while I was creating marketing programs that stressed Sonic’s commitment to standards and, by implication, I was de-positioning other vendors’ technologies as being the Devil’s spawn due to their reliance on proprietary features. “How,” we asked “would organisations ensure interoperability between their, and their trading partners’ infrastructures if they didn’t conform to the emerging standards?

Of course the standards message is very attractive to users. Buyers are keen to be able to ensure that not only can components interoperate without a lot of extra work, but also that vendor lock-in is weakened through the ability to substitute components from different suppliers, bringing prices down and reducing risk. Therefore, vendors that preach standards may come across initially as ‘good guys’. However, it pays to look more closely to find out how serious the vendor REALLY is about standards. In the Sonic case, while it talked a great story, the mystery was that its own ESB product was unable to run over any standard JMS-based messaging pipe for years. Instead, it used a proprietary interface that ensured Sonic ESB would only work over SonicMQ, the Sonic messaging pipe. This was a real problem for many prospects, because IBM’s WebSphereMQowns around 80% of the messaging pipe business and therefore prospects interested in an ESB were frequently looking to run it over their existing software. This restriction was arguably one of the key reasons Sonic lost its leadership position in the ESB market.

So why did Sonic take this line? Obviously, only Sonic knows, but a cynic would argue that it consistently refused to support the JMS standard in the early years to ensure that it could force the sale of its own messaging pipe. No matter that this meant the user often had to buy another one on top of the incumbent solution.

I am not picking on Sonic here – this is only one of many examples where vendors claim to be standards-based while not shrinking from proprietary solutions when in their own interests. And of course, it is entirely understandable – after all, software vendors are businesses too. To me, the important thing is that users keep away from the rose-colored spectacles. Standards are valuable, and vendors do provide important support, but there will always be compromises.


What software buyers are looking for in 2009

With the global downturn in full swing, there are a lot of concerns over how software markets will perfom.

However, one trend is emerging as a vital ingredient if software companies are to succeed, and those companies that have recognized it are already benefiting.

Software buyers in 2009 are finding an industry vertical specialization to be essential to support any investment justification. The problem for many users is that although the technologies and products available offer the same sorts of benefits as before, in order to get any purchase through the system it has become critical to have a strong business backing all the way. Nothing will move if a business sponsor is not pushing for it. Of course, investments have always had to be justified, and a business alignment is a key part of this process, but in the economic downturn this focus has moved from being part of the justification to being the overriding element. A business sponsor has to be brought on board right at the beginning if the particular project has any chance of success.

As a result, companies that do more than pay lip-service to describing business benefits are prospering. The software vendors that offer truly vertical solutions, tuned for particular industry needs and taken to market by field teams with the relevant industry domain knowledge, are the ones that are succeeding. One proof point is Pegasystems, who I blogged about a few days ago. Onereason that Pegasystems has maintained such strong growth in 2008 with its BPM offerings is a strong industry vertical sensitivity. 

Another excellent example is IBM and in particular its Information Management division. Information Management software is regarded as unsexy – although still important, it has tended to be neglected in the rush towards application-oriented strategies and initiatives. Enter a new IBM management team that has restructured the go-to-market approach for Information Management software to an industry-vertical one, generating models of particular industry challenges and processes, looking at the specific needs of these industries and carrying the industry-vertical business messages to prospective buyers. Whether serendipitous or the result of impressiveexecutive insight, this approach has almost exactly dovetailed with the software buyers’ needs for a more relevant, industry-related message in order to secure investment. The result is that IBM is claiming significant sales and successes in its information management software business segment, even in the current environment. 

Other software companies would do well to take note. If you want to sell software this year, you have to help your prospective buyers by going to market with clearly aligned business vertical offerings and messages.


Recession pushes SMEs to top of mind for software vendors

One interesting effect of the current economic turmoil is that SMEs have never had so much attention from software vendors desperate to find alternative revenue sources to replace depressed corporate markets.

A common effect of recession is to cause larger companies working off a bigcost base to become cautious, opening the way for smaller, more nimble companies to slip in and grab a bigger piece of the pie. As a result, SMEs are often more inclined to look at a new investment in a recession, making them attractive targets for software vendors.

Take the announcement made last week by software infrastructure vendor Axway, recently merged with Tumbleweed and the now headquartered inScottsdale, Arizona. Axway has released B2Bi Express, a B2B solution targeted specifically at SMEs. Mindful of the needs of this market segment, Axway offers B2Bi Express not only as licensed software but also as a SaaS (Software as a Service) solution.

Most major software vendors now include products designed for SMEs, although in many cases the larger vendors such as IBM rely on partners to fill out their solution sets. I expect to see a lot more focus on SMEs over the coming months – the one warning, however, is SMEs should watch for vendors offering ‘big user’ products with simply a few marketing slides around them to make them look like SME products. SME needs are quite different (eg a SaaS option such as included by Axway in the above release) and need special handling in both product and presentation.