Spreading the Word - Through Another Channel
Several of the Enterprise Irregulars blog on ZDNet (e.g., Dennis Howlett and Michael Krigsman to name a few). Their experiences finally moved me to take the plunge, too. You can find my new blog, Software and Services Safari here.
All of my other blogs will continue to get updated but please add : http://blogs.zdnet.com/sommer/ to your RSS feeds and blog roll.
Thanks
What if VCs, SAP, Your Marketing Team, etc. Designed the Stop Sign
I took a call last week from a friend of a friend who is trying to fight off a patent troll who happens to have a really obvious patent on a process that never should have been granted patent status. As ridiculous as that patent is, it did cause me to wonder how some teams have ever gotten anything developed or patented with all of the management stupidity, lawyers, etc. getting in the way.
Today, I ran across this video that asks the question "What if Marketing Designed the Stop Sign?". You could substitute Marketing for your VCs, your favorite software vendor or any other team when you watch this but once you do, you'll see how the group dynamic can ruin a perfectly good idea. This makes you seriously question the wisdom of some crowds.
Enjoy
http://view.break.com/542649 - Watch more free videos
After I saw this, I realized why scope creep sinks so many good software projects/products.
Software Licensing Handbook – A Million Dollars Worth of Value
Book Review
Jeffrey Gordon has published the Software Licensing Handbook that is sure to save software buyers lots of money and cost vendors a lot more. It could also impact my colleague Vinnie’s Deal Architect practice, too, if a lot of folks read this.
What Jeff has done is dismantle a standard software contract. He has dissected its component parts into easy to understand sections that explain what a vendor wants, what a customer should ask for and what each party should be willing to agree to if they want to reach a fair decision.
I would call this book: King Solomon’s Guide to Splitting the Software Contract Baby. Vendors are surely going to hate this publication and that should mean it is must-read material for software buyers. I’d strongly recommend that selection team members, not just the in-house counsel, read this as it lays the groundwork for negotiations.
I’d also echo a suggestion in the book where buyers are encouraged to negotiate the terms and conditions first before haggling over the contract price as vendors show much less flexibility after the price (and hence, the decision of which vendor to go with) has already been determined.
While Jeff’s book is not meant to replace legal counsel, the fact that he laid it out in the sequence and headings of standard software contracts makes it easier for buyers and sellers of software to involve counsel and buyers simultaneously in contract negotiations. This is actually quite useful as too many software buyers evaluate product capabilities separately from price negotiations which are negotiated separately from terms and conditions. When deals are negotiated in pieces, the right hand often agrees to a deal the left hand would have never accepted. This structure helps eliminate this outcome.
The book is approximately 200 pages in length. It’s well written, complete and current. As someone who has negotiated deals recently, I could only think of a few areas where I would have added more depth.
I highly recommend this publication. The price will not break the project team’s budget and the value payoff vs. book cost ratio is excellent.
How Does Your Software Firm Compare to ORCL?
Start-ups through mid-sized software firms have a tough time competing with large firms for mindshare, editorial coverage, advertising placement, brand awareness and press coverage. These smaller firms have considerably fewer internal resources and may lack the reach, capital, market presence or buying power to help them win the hearts and minds of software buyers everywhere.
Let’s look at Oracle (ORCL) for a moment. Oracle is one of the largest software firms in the world. ORCL has recently reported revenues of approximately $22.43 billion (source: Yahoo Finance). Their marketing budget is reportedly 1.7% of total revenues (for an outstanding assessment of Oracle’s Marketing budget, see “Oracle CMO Opens the Books on Marketing Spending, ROI” in B to B magazine, www.btobonline.com, 7/14/2008). This equates to approximately $381 million available to Marketing. This sum alone dwarfs the total revenue figure for all but their largest competitors.
The B to B article also noted that Oracle:
- produced 6,623 marketing events last year
- 347,000 attendees were at these events
- 56% of Oracle deal closures could be linked to one of these events
That article also indicated that Oracle spends approximately $4.6 million/year on public relations (PR). That figure works out to approximately $383,000/month on PR. With many press releases costing approximately $400/release to place on a newswire, Oracle is certainly getting a lot of press releases out and/or keeping a lot of PR agency types well paid. Many software firms couldn’t even afford an annual PR budget of $383,000 let alone a figure like Oracle’s.
This piece isn’t a criticism of Oracle as they have actually reduced Marketing spend as a percent of total revenue over the last decade. My colleague, Vinnie at Deal Architect, is always watching the SG&A costs of software firms and he would likely applaud Oracle’s cost reduction efforts here. Total marketing spend as a percent of revenue has declined from 5% to 1.7% today.
In fact, we should look at what Oracle is doing right:
- reducing total Marketing spend as a percent of sales
- scaling back print advertising and focusing more on online ads
- measuring effectiveness of events and tying event activities to deal closures
- moving away from traditional press releases and embracing more social media (e.g., blogs)
For smaller software firms, there are tough calls one must make when competing with an Oracle-sized firm. Does your firm:
- Create compelling events, newsletters, copy, etc. or are they relatively similar to those of competitors?
- Maximize its PR potential? Are the items generating buzz? Do they reinforce the brand you want to create in the market?
- Speak to its prospects or does it serve up self-congratulatory messages/pieces? How narcissistic is your copy?
- Get the value it should from its PR firm? Tele-sales group? Etc.
Want to know how to get more for less? Here are some tips:
- Get really focused on your message and what your brand is supposed to be about. It if doesn’t fit handily on a bumper sticker, it needs work. When I engage with many tech firms, they confuse their brand with:
o product line names
o sector names
o mission statements
o their life story
your brand should be a phrase or descriptor that anyone instantly recalls about your firm.
- Tie every press release, event, webinar, collateral piece, white paper, etc. to this brand. Accenture never lets you forget that they help create “high performance companies”. What is your firm doing for (not to) customers?
- Create unique collateral and events that also ties back to your brand. Don’t send out signed baseballs to prospects if your product has nothing to do with baseball. If you stumble across a ‘neat’ give-away for a promotion in a catalog full of these ideas, chances are your competitors have also. Find something else. Anyone can do the easy stuff and it isn’t memorable. Be the first and be unique – you’ll be memorable and you’ll get people to return calls.
- Make your collateral, events and messaging highly relevant to your prospects. Generic Marketing materials rarely attract much interest. Get verticalized! Speak the language of subsets of your target market and watch how much more engaged they’ll become.
- Speak to customer problems and concerns first. Quit trying to tell us about your firm, your products, your development team, your…. No one likes to listen to a egoist. Technologists love to talk about their creations and toys. Customers want to hear about your knowledge of their business. Make your Marketing customer focused – it’s hard to do but massively effective.
- Segment, Segment, Segment. Your firm can’t be all things to all buyers so quit trying to be the universal answer to all of our prayers. Be content to get half the market or less for now. Next, figure out which segments, verticals, micro-markets, etc. are most inclined to want your solution, have the crushing business need and can afford it. Look for niches where buyer demographics and psychographics converge with your firm’s strengths. Look for spots competitors under serve.
If you need more tips or help getting more value from your Marketing group, drop me a line. I know a few great folks who can quickly push you to the next level. Maybe, we’ll be writing your effective Marketing spend here soon.
Careful Before You Threaten Litigation
Hell Hath No Fury Like....
Tanya Andersen is the feature player in a great article in the 5/5/2008 issue of BusinessWeek (see "Does She Look Like a Music Pirate?"). The gist of the story is that a number of recording industry players put a ton of pressure on a woman to settle for supposedly downloading recorded music illegally. Apparently, the industry had the wrong person and all because someone spoofed this woman's IP address.
The errant IP address triggered a cascade of arm-twisting, legal threats, attempts to collect a financial settlement and, eventually, a lawsuit from the recording industry. When Ms. Andersen got a good lawyer and some insight into who spoofed her IP address, things changed. The industry lawsuit was ruled in her favor and now she's suing back.
While I commiserate with the industry and its loss of revenues to illegal file sharing, I cannot abide strong-armed, inflexible techniques that lack appropriate discovery and due process protections. From what was written in this article, the industry used a blame first, collect second and thoroughly investigate third as its process. I think they got a few steps out of order.
There are currently a number of technology lawsuits pending these days that are relying on the identification of persons via IP addresses. Defense counsels will no doubt want to look at this case and see if similar mistakes were made in their situations.
The Loss of Relevance/Innocence
Blogging has had its ups and downs. There have been millions of bloggers who ran out of things to say after a few months. There were bloggers who couldn't keep on topic. They wrote about the most banal things and, thankfully, most of those have disappeared into irrelevance. And then, there were blogs dreamed up by corporate marketing types. Some of those blogs masked their real intent or ownership and some were such blatant touts that they, too, disappeared from relevance.
The blogs that prevailed were blogs of substance, volume and focus. That could be changing.
To date, most efforts by mainstream media firms, PR firms and businesses re: blogs have been slapdash, immature or poorly thought out. As these companies finally get their arms around blogs, they will no doubt change the nature of blogs and not necessarily for the better.
If you don't believe me, read this 06/23/2008 BusinessWeek piece: Inside The War Against China's Blogs. Three firms are featured that charge clients $500-25,000/month to:
Marketing organizations can really ruin a great technology. They'll ruin it through overuse and inappropriate usage. That may be about to happen to blogs. It's already impacted newsletters (that turned into news-less pitch pieces), emails (which begat SPAM), webinars (which went from informative knowledge transfer mediums to shameless infomercials), etc. When a great technology gets misused, it gets less valuable.
I really don't want that to happen to blogs but the article paints a disturbing story. Consider these data points: bloggers are being paid to send at least 50 posts per day for only $0.015 per post. I don't about you but my cost per blog is considerably higher.
If my posts are getting shoved aside by these puff-piece generators, then I'll need to rethink why I'm blogging. Many bloggers write as it gives them a way to have influence. If marketers find methods to negate or obliterate that influence, then blogging ceases to work. It would for me.
Before long, we'll need a mechanism to identify this type of paid, commercial blog content as readers will likely want a way to bypass it. We do this with television (think TIVO or DVR), we do this with radio (think SIRIUS or your iPod) and people will want this with blogs. But, like with newsletters, email and other media, some media cannot be easily managed to discard the superfluous, self-serving hype. If blog content gets so polluted with this self-aggrandizing tripe, then it could usher in a dark ages era for blogging.
Thoughts?
Too Much Time on HR's Hands
Sometimes, people get a bit too zealous in the performance of their jobs. In a recent Computerworld article ("Avatar Dress codes and Other Rules", Computerworld, 6/23/2008), businesses are being advised to adopt dress code policies for the computer avatars their employees select as they negotiate virtual worlds.
Let's let this soak in for a moment.
Companies should mandate how you look and dress in both the real and virtual worlds? If your avatar wants to look like a minotaur with 200 body piercings, what's the big deal?
These are virtual worlds populated with graphical symbols. No one, and I mean no one, expects that anybody will look exactly like their real world self. These are rendered graphics that operate, look and behave worse than some bad 1960s offshore cartoon figures. Real people are fully 3-D. They can't change material aspects of their appearance. Bald men can suddenly sport a mohawk haircut. They can't fly or hover a virtual or real world. They exist and we must accept them.
Virtual characters can change genders, age, hair, appearance, clothes, etc. at a whim. They are make believe icons in a make believe world. The concept that an HR person must dictate a dress code for these images seems like a real reach or an abuse of power.
What makes this more amazing is the attention being paid to an alternate universe of business/personal interaction that still hasn't really taken off. Sure, a number of big firms have sunk sizable funds into these interactive, psuedo-worlds but they still haven't caught on in a big way yet. Maybe, just maybe, these HR policies are a bit premature.
Think I'm being tough on HR? Have you ever looked at a teenager's or college kid's avatars? They don't look anything like the person they really are. In fact, that's the point. Some people choose avatars that are:
The fact that firms want to control an avatar's look seems like an infringement of free speech or self-expression. Personally, I find it to be much ado about nothing.
Careful When You Challenge a Software Salesperson's Expense Report
I saw this on YouTube and it certainly reminded me of a few conversations I had with my sales pros and why they thought their outrageous spending was justified: http://www.youtube.com/watch?v=0OTgb3KO7QM.
I clearly remember a sales pro taking an unqualified prospect to a 5-star dinner with wine in New York City. The two of them spent $1800+ on that meal. Of course, the restaurant choice and dinner idea were the prospect's idea. My sales 'pro' fell for this hook, line and sinker. Guess what. We didn't get the business. (Although, I sure gave this sales moron 'the business' for being so naive and so gullible.
Enjoy the video
Market Silence: The Absence of IPO Hype
VentureSource, a part of Dow Jones, Inc., reported that IPO activity is way off this year. There were only six tech IPOs in the first quarter of this year and none to date in the second. That's off from 37 for the same period last year. 21 firms have withdrawn their planned IPOs including a local Chicago favorite, Initiate Systems.
Merger and acquisition activity is also down from 293 deals the first two quarters of last year to 142 this year.
Needless to say, venture capitalists are not happy. Instead of exiting out of their investments (hopefully, at a huge profit), these VCs will likely have to pour in more capital to keep their investments liquid and growing. Firms like NetSuite should be thankful that they completed their IPO last year as the market has turned decidedly bearish since then.
From an analyst view, it's been a really quiet last six months. The hype leading up to an IPO tends to create an overabundance of press, blog chatter and other noise that drowns out the more interesting developments other firms are announcing during the same time frame. Personally, I like the more peaceful time.
$1 Billion Damages? Moving into Commercial Banking? What Else?
Reuters reported that Oracle (ORCL) will seek approximately $1 billion USD in damages against SAP AG. This estimate is related to the TomorrowNow litigation that ORCL has brought against SAP. This sound bite from the article is particularly interesting:
"Oracle speculates wildly about the amount of its damages 'claim' in this discovery report, even though more than a year after this case was filed, Oracle still refuses to identify with any precision the nature or amount of its alleged harm or even to provide the theory on which its damage claim is based."
Damage claims must be proved for a court to award them. ORCL will need to show how it was harmed by the transfer of its intellectual property to TomorrowNow. To that end, I'm a little skeptical of claims in the hundreds of millions of dollars or more. Granted, ORCL may ask for punitive damages in addition to actual damages and that could cause the total to really escalate. But, from what I've seen (and that is very limited so far), a large claim could be tough to defend.
In a different matter, Bank Technology News reported that SAP is readying its products for a major push on North American banks. In this story, a major Canadian bank company is dropping a cool $100 million to have SAP replace its core banking applications. This has been a vertical SAP has had success with globally with the very noticeable exception being North America. This will be interesting to watch as US banks have different reporting and regulatory environments/needs than banks in other countries. We should also watch a significant number of competing vertical solutions that may include (and my memory is probably a bit dated here): Fiserv, Hogan, i-Bank, Systematics, Metavante and others. Plus, Indian outsourcers, IBM and EDS have big stakes in this area and I doubt they will just cede it to SAP without a fight.
