I was recently reading an excellent blog post from Josh Greenbaum, where he had a great take on Larry Ellison undermining Oracle’s Cloud strategy (and execution) with his outlandish statements.  Although not explicitly the point Josh was making, it did make me think that the marketing of enterprise software may have gone too far to ever come back.

Up front, at times I may have been guilty of over stating the value of software in the past … although I am confident that those cases were few and far between and certainly not intentional!

Joking aside, I think a lot of the hyperbole in enterprise software marketing is unintentional.  To be a little more cynical, maybe it is more accurate to call it “ignorant.”  Let’s face it, the people marketing the software rarely, if ever, use it at all and even more rarely have used it as intended in production.  This is also not anyone’s fault.  The majority of enterprise software is intended to solve problems and enable processes that are not relevant to the company producing the software.

Another interesting phenomenon is that so many prospects expect the software vendor they are evaluating to provide competitive intelligence on the other vendors.  Interesting in that the request is aimed at the least unbiased source on the planet, and also interesting because virtually every ethics (and legal) code would state that the software company should not even have been looking at a competitor’s product in the first place.

Another of the main drivers of the hyperbole in enterprise software marketing comes through the RFI/RFP/RFQ process and product bake-offs where features are being requested by IT that will never be used by the business users in production.  So many companies still issue RFPs and product bake-offs (e.g. POCs, customer demos, etc.) for software.  Everyone on both sides of this equation knows that the answers will likely not be a big driver in the decision (and often may not get read – sometimes the questions themselves aren’t read before issuing!), but that every vendor is expected to offer at least a “conditional yes” to each and every answer, leading to massive stretching of the truth.

Last of the drivers, at least for the sake of getting through this blog, is that big enterprise software companies keep buying so many smaller software companies that the task of messaging what each piece does on its own and as part of a greater “solution” is more complicated than creating a cold fusion reactor.

This all leads to the question posed in the title, “Has hyperbole in enterprise software marketing gone beyond the point of no return?” 

I expect it will surprise no one that I have a strong opinion on this, after all, why would I have bothered with the blog in the first place.  The answer is a … drum roll please … YES.  But like every one-word answer to a complex question, there is a “but” or in this case, an “unless.”  The “unless” is “unless businesses completely change the way they purchase enterprise business software.” 

Companies need to remember the reason they are buying enterprise business software in the first place.  The only reason they are – or at least should be – buying software in this category is some combination of:

a) enabling a business process that they could not do previously,
b) making an existing process better or
c) tackling new business problems in a manner that was previously impossible. 

With this in mind, why would I not be buying a complete solution to the problem?  Some recent surveys that I have seen are already showing a big shift in anticipated buying behavior from the still prevalent buying “on-premises” software and skipping the logical next step of buying “on-demand” software and going all the way to outsourcing the process completely.

Let’s also be clear that I am not talking about “solution marketing” here.  This could get me on a rant that could go on for days.  The move from “product marketing” to “solution marketing” has turned out to serve no purpose other than wasting millions of hours in unnecessary meetings to end up with ….non-differentiated messaging…. software being purchased in exactly the same manner as before…. and software delivery that is identical as before this “transformation.” 

The revolution that has to come in the enterprise software space is that companies have to start buying services with software embedded in them vs. buying, installing and deploying software in the hopes that it will make process better.  This change will not only shorten sales cycles and reduce time-to-value, but it will force software companies to innovate to drive better business and not to best answer the next RFP.  Innovations aimed at making business more effective vs. making IT departments happy.

What I am pointing out is more than buying software-as-a-service.  The trend that Salesforce.com capitalized on was a step in the right direction, but all the cute logos of software with a line through it does not change the fact that their customers are still buying software, albeit without the headaches of installing, deploying and administering an “on-premises” nightmare, with apologies to everyone still running Siebel.  The “Salesforce.com” that I am talking about would be selling “outsourced sales force automation” and maybe even “outsourced customer relationship management” where they become responsible for automating the whole process and not just the software that supports the process.

Where do we have examples of this working today?  An example in the consumer space is Facebook.  Yes, Facebook.  Although you probably have not thought of them this way, if you are a Facebook user, you have effectively “outsourced” the management of your personal relationships for those relationships that you are unable to have face-to-face.  (If you have also outsourced your personal relationships that you can have face-to-face, please stop.  For all the couples who communicate wall-to-wall, please trust me when I say no one wants to see that.  Your friends just are too nice to tell you.)

I realize that Facebook might be a dangerous metaphor here as the users do not pay for the service nor does Facebook take any responsibility for how well you manage your personal relationships.  However, we are starting to see this “outsourced service including software” get a foothold in the business space too.  As an example, a number of companies are popping up in the space of marketing automation, capitalizing on selling click-through type services without the need for redirects and capture forms.  These companies are not positioning themselves as selling software.   They are selling a service that is powered by software.  They take all notion of the headaches of software out of the equation.

An example of this, and there are many more, is Rocket Fuel.  They certainly still talk about products and capabilities, but they are much better positioned to deliver on real business outcomes through their model.  Customers are buying a solution, not buying software with the hope that it will provide the solution.  This model just makes so much more sense for all parties.  Customers benefit through the software company owning much more of the end-to-end problem.  The software company benefits from owning their own destiny on results, and thus customer satisfaction.

Am I saying that the current model of “on-premises” software never works?  Of course not.  It is just antiquated and ridiculously inefficient.  Thinking about it from an outsourcing perspective, in the traditional enterprise software model, the software company is effectively outsourcing its chance of success or failure to the buyer’s IT department – the same IT department that is already overwhelmed, understaffed and completely untrained in the actual business process more often than not.  The purchasing department is in the unenviable situation of paying up front for software that might not show benefits for 24-36 months or more.  If ever.  No wonder software companies are guilty of “drive by selling” and no wonder procurement departments beat up software companies for massive discounts.  The only way this model works is when the software company continues to have upside in the account after the first sale, and when the company takes the time and makes the investment in IT in terms of adequate funding and, more importantly, training on the actual business problems that will be addressed by the software.

I am suggesting that it’s time that we all  go much further – that (almost) all processes that can be automated can be outsourced as a service where the software is transparent to the process.  This is not cloud computing.  It is more than cloud, but would not be possible without cloud.

I mean big processes, like those that currently fall under ERP, CRM, SCM, HRM and so forth.  This does not suggest that it is a “one size fits all” either.  The new – or transformed – companies that provide these services should be able to tailor the services to match the specific strategies that their customers want to automate.  This is about driving innovation not locking it down.

A great metaphor of this type of transformation is how we fly today.  Human nature makes it easy to think about how much worse the experience is with security post-9/11, but think about how much easier it is to fly that when we had to get paper tickets.  You would have to go to a travel agent to pick up your ticket, or get to the airport ticket counter early.  The alternative was having the foresight to be able to have the lead time to get it mailed.   The entire process of moving from paper-only tickets to electronic-only tickets took just over 10 years.  In the big picture, these transformations can happen very quickly.  There are many more examples. Many of us have now completely outsourced our music listening needs to Apple.  “Dad, what is a record store?”

So back to the question.  Marketing of enterprise software has gone beyond the point of no return in terms of rhetoric and hyperbole, but it is OK.  Enterprise software needs to be thought of and executed in a completely new manner anyway.

Oh … and one last thing … Kinaxis has customers in 390 countries.

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