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Thursday, January 25, 2007

Software Ecosystem & Buyer Choices

Some quick ramblings before I take the early morning flight. As I am close to finishing the week, working with several teams working on finalizing responses to various opportunities - these cover at least half-a dozen spaces outside of the routine enterprise application arena, I mean these are of the specialized kinds which business plan to have after getting their basic systems in place. Many ask me – colleagues, partners , prospects and customers to help them choose their solutions. I msut say that the choices for the customers are increasing when they consider specialised solutions and not diminishing as generally observed. While every one has specific needs and every situation demands specific methods to determine right fit- I shared some broad outlines of methods to look at a viable technology solution. This assumes that all other parts of the evaluation cycle(presence, pricing, technological fit/elegance etc..) are seen to be equal. I see that every product that I come across claims to score big on its ability to combine new features, enhanced integration capabilities and scaling up to provide improved performance. I see that every one is making efforts to improve on multiple parameters – that includes sales & marketing!! Hidden inside these are a few sizzling winners of tomorrow.

Lets look at the ways the enterprise software companies evolve – they start with basic software – generally a point solution that is aimed at solving a known problem. A well run company with good management , vision and execution capabilities chart out their evolution path. It is fascinating to watch the way these companies evolve – from point solutions they progress towards becoming a platform. With platform status, these companies boast of a related set of capabilities, supplementary and complementary to the core besides leveraging standard architectural and technological standards. Their next point in the evolution cycle –for some stagnation and fading out and for some – evolution into becoming a part of ecosystem, sometimes revolving around other products or alternatively allowing some solutions to evolve and integrate around the product itself. This is where well defined/ semi defined standard software components are leveraged to co-exist with standardized products. There comes the professional service providers – sometimes they succeed in massaging, extending & integrating these into a solidified solution. The foundation of the ecosystem determines its ability from that point to scale up –vertically and horizontally. User conferences, patents, case studies, online presence for support that could facilitate multiple parties to come together all begin to happen at this point of time. Analysts and experts begin to notice the product and come with their own set of assessments. Then management gets the chance to look for buyouts or opt to get bought out. Financial engineering begins to take considerable focus from this point onwards.

From building an effective solution, that can even be a product category winner, upon good reference qualifies to get into the next stage of becoming a platform. The broader it is , all the more better goes the wisdom at this stage. The stage for other players in the enterprise space to notice the product is set here. If the companies manage to survive and grow at this stage –they stumble into the next set of challenge. For them to take on larger players they have to play the game and work towards building an ecosystem Companies like Microsoft and to an extent IBM have set gold standards in terms of how to build a vibrant ecosystem. Going beyond products they envision and invest in building beyond products, focusing on building entire communities of customers, solutions, consultants and services providers. The expectation at this stage is to that they would use their technologies to address business problems with their customers. Companies then focus on enriching this ecosystem making it more wide and deep, then strengthen the product lines further – technical upgrades and functional enhancements. Plan a major release every 18 months. Companies that have thought through and executed well upto this stage usually manage to live long – it is very difficult for them to disappear overnight.

Potential customers seeing such a company/product happily shortlist them (all other things being equal) for their buying considerations. Customers then see an array of players supporting the product and not just a single company. No wonder almost half of the enterprise solutions(barring the ones from the top three) tend to get sold as influenced sales (influenced by their partners). These companies should navigate through a maze of options in every stage of their growth including managing to catch on disruptive innovations. That’s where good management vision counts.

For customers looking at buying new solutions – watch for the evolution of such players and their current standing amongst the ecosystem partners. There are a lot kreo factors to consider - am only mapping one part of the whole equation viz. the evolution of stable and viable vendors. Go beyond the bells and whistles comparison – CIO’s need to have jobs beyond tomorrow- they look for companies and solutions that would continue to support business needs continually.

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"All views expressed are my personal views are not related in any way to my employer"