While competition between software vendors for IT budget is fierce, this struggle is seldom a deadly cagematch among well-established heavyweights.
To me, these battles seem a little more like pro wrestling (or, ‘Lucha Libre’), where the game has certain rules and conventions in place to avoid serious injury to the combatants while preserving the spectacle.
The ticket-paying audience (buyers) can choose to root for the incumbent champion, or pick the wrestler with the coolest moves, or mask, or name they resonate with. The drama plays out in the ring. Winners are decided, and everyone can go home until the next budget battle royale.
Duking it out over cost & capability
Working on the software vendor side for most of my years (usually as a marketing or sales enabler, and sometimes as a buyer), I tended to see customer’s technology decisions as an evaluation of cost per capability.
Through peer discussions, web articles and vendor marketing, as well as insightful commentary from analysts like Intellyx, IT buyers become aware of new capabilities they want to add to their stack to remain competitive. These capabilities may be broad functional divisions like “hybrid IT orchestration” or “observability” or “data ops,” or they may be very specific, ala “Feature flagging” or “SAP migration.”
At this point, the prospective customer may invite one or more vendors of the same division into the arena. Sales and presales leads play tag team, attempting to drop the hammer on competitors as costs and capabilities are compared. Hopefully the customer is serious about making a purchase and these vendors aren’t just putting on a free exhibition match for the audience.
In the end, the product that delivers the highest quality capability, at the right price point, should end up on top. But wait… just when you think one of the vendors is down for the count, the loser’s manager comes up and smacks the presumed winner with a chair!
It’s never been a fair fight
Betamax vs. VHS. WordPerfect vs. Word. Netscape Navigator vs. Internet Explorer. FreeHand vs. Illustrator (fight me on that one). And remember Novell?
There are plenty of examples of more usable, feature-rich or sometimes even better-priced products that still couldn’t overcome bigger competitors. The outcomes don’t match the check marks on the cost/capability matrix.
Incumbent vendors always have the advantage in these selection processes. It seems counterintuitive that the best products don’t make the best bets, but for every nimble startup that manages to break through, there are hundreds of others that can’t last a round against an 800-pound gorilla.
Bigger vendors don’t need to cheat to win either. The customer expects the juggernaut to offer a much broader array of solutions, while acquiring several more innovative vendors along the way to keep beefing up its team and capabilities.
They should also expect a large vendor to have cost advantages over smaller competitors due to economies of scale: better global reach and awareness, perhaps larger deal sizes at lower sales cost, low cost of capital to weather any storm, or cheaper datacenter or cloud infrastructure. Now, the profit from such savings may not be returned to the customer directly, but they do represent a formidable barrier to entry for other vendors.
One the leader is established at a customer, the switching cost to a new vendor is too high, especially for any critical business functions that can’t afford disruption. Thus, odds favor the incumbent champion.
Unless, that’s not called for in the script.
Claims vs. Proof: the final round
These days, since I don’t have a particular stake in the outcome, I’m in the predictions game. [I’d suggest my colleague Jason Bloomberg’s recent Cortexes such as ‘IT Leaders: Where to place your chips today’ for current market odds in these unprecedented times.]
With so many product alternatives beyond COTS, to SaaS offerings, to freemium and open source tools ready to replace almost any given software capability worth owning, I tend to evaluate evaluate vendor claims versus proof.
Especially with the highest growth product categories of cloud-based offerings, new features or tools can be added to a suite in weeks or days, not years. Subscribing customers should always get the latest fixes and upgrades, leveraging the latest componentized open source modules, or third-party plug-ins, and leverage updated APIs and services for data and intelligent processing.
To meet that claim of currency, vendors must remain on par or better than alternatives — while showing customer proof. Unseating a rival requires the challenger to be 2X, 5X, 10X faster, better or cheaper at doing what the incumbent does, or switching is not likely.
Proof points for success are becoming less subjective, with better end-to-end instrumentation of every aspect of software, AI (applied intelligence) to interpret data flows and events, and excellent visibility tools to augment human awareness, and assign value streams to software.
Here’s where the table gets turned on bigger vendors, as they are beset on all sides by nimbler competitors. Truly agile delivery of service-based and cloud-native style software that leverages best-of-breed capabilities lets smaller competitors demonstrate proof of value faster, and punch far above their own weight.
The Intellyx Take
When I talk to end customers, while they may occasionally put up some piece of the IT puzzle for review, they are seldom looking forward to breaking out their scorecards for the next vendor competition of capability vs. cost, or claims vs. proof.
In tough economic times, and in booming ones, the customer’s most critical needs really boil down to support — and I’m not just talking about more responsive service resolutions and bug patches.
The customer’s ultimate decision on any strategic value commitment is really about alignment of vision. This alignment is fed by customer feedback, which occurs at on-site customer visits for key accounts, or in-person customer roundtables at neutral locations, or around a company summit (all of which, for now, are on the ropes). So that feedback loop still happens through digital means.
Vendors gain and retain customers by demonstrating that their vision for their own software suite aligns with the customer’s strategy of where they want to take their business, even if market conditions change. They may still call for a competitive review or bake-off, even if they have already called the match for the vendor they feel most aligned with.
In the end, trust wins. And so does tossing competitors against the turnbuckle, of course.
© 2020, Intellyx, LLC. Intellyx publishes the weekly Cortex and Brain Candy newsletters, and advises business leaders and technology vendors on their digital transformation strategies. Intellyx retains editorial control over the content of this document. At the time of writing, no parties mentioned in this story are Intellyx customers. Image source: bluefug (collage), Lazlo Lozia, Lucha Libre! (ring), Jonathan McIntosh, Lucha libre máscaras, WikiCommons open source.
