In which Jill stands up for the niche players.
Have you noticed lately that when it comes to software vendors everybody does everything? ERP vendors are selling data quality tools. Disk storage vendors offer data warehousing software. Big mainframe vendors have everything, including big mainframes. It’s a truism in IT that many companies end miles and miles away from where they begin.
I’m biased because I work for one of the little guys. My company has stayed relatively small, and that’s by design. We never wanted to be a big firm with a Big Firm Zeitgeist. We’ll never have a skyscraper with our name on it. We actually only have one physical office now since our consultants spend their time at client sites. Our clients use us because we’ve delivered what they need to other companies like them.
The large enterprise application vendors now offer consulting services. Periodically we compete with big vendors who will give services away for free when they get the whiff of a large deal. They’ll come in and do an assessment, which usually results in the recommendation of—wait for it—their product. It’s good to be king.
This might sound like sour grapes, but it’s really just a wistful yearning for the days before the mega-vendor M&A swirl, when companies identified new requirements, researched a range of alternatives, including specialists in the niche, and chose a vendor based on how closely the solution met the need. In those days procurement managers didn’t insist on a copy of your financials before countersigning the MSA. A few of our newer consultants, former independents, tell of epic struggles with corporate contracts managers. “I was spending most of my time either having my lawyer review the contract or trying to collect on my invoice,” laments one.
As they gobble up smaller firms, big vendors spout the well-worn “too big to fail” and “one throat to choke” adages so comforting to beleaguered CIOs looking to streamline their contracts and purge unused software licenses. But it can also be the lazy way out. Who needs to vet software solutions against business requirements and standards when the incumbent vendor has a cubicle down the hallway? Why do a vendor bake-off when you can get your vendor’s product for free?
Enterprise app vendors with their buzzing sales forces and overflowing product lists are here to stay. But I’m watching some of the smaller niche players cut through the noise with targeted and differentiated offerings that solve business problems. I like Lyzasoft for collaborative BI; Cloud 9 Analytics for sales performance analysis in the cloud; Predixion Software for advanced analytics in the cloud; Talend for open source data integration; and Wherescape for nimble data warehouse deployment. Check these little guys out. But hurry, before they become the big guys.
Excellent post, Jill.
Historically, many of the most powerful new trends in technology originated from small entrepreneurial ventures. Small technology vendors tend to be specialists with a narrow focus that can provide a great source of rapid innovation.
This is an almost stark contrast to the traditional approach taken by large technology vendors, who tend to innovate via acquisition in order to offer consolidated enterprise application development platforms with seamlessly integrated components allowing them to offer end-to-end solutions and the convenience of one-vendor information technology shopping.
The key phrase from your post that resonates with me is that “the smaller niche players cut through the noise with targeted and differentiated offerings that solve business problems.”
Best Regards,
Jim
Jill, thanks for reminding me of Job #1: solve business problems. It’s easy to get distracted with partnerships and technologies and trends and a whole bunch of “good” things that can distract us from the “best” thing: helping someone specific do something specific 10x better than before.
We do Collaborative Intelligence. If we do it right, that will be enough. If we do it wrong, no amount of other stuff will be enough.
I think Jim nailed it. Innovation comes from the focused and nimble – something very tough for large vendors to do. Fortunately, there will always be more niche vendors popping up with new, innovative ideas. Unfortunately, the temptation to sell out will always be there.
Scott – Keep up the good work at Lyza. Looking forward to watching your company continue to evolve.
Jill
I love this post. Love.
This reminded me of the book Small Giants that I read. The timing of this post is fortuitous because I’m doing my third book on small companies. I just think that it’s better to be small.
As a really small company of one, I know that I’ll never get on big firms’ preferred vendor lists and it’s really unlikely that I’ll speak at major conferences.
And I’m realizing one thing: I’m strangely comfortable with that. I’d rather not put up with the big company nonsense and run my own business the way that I want.
Jill, you cut to the heart of the issue. But specificity can be a blessing and a curse. As you and Jim both noted, the big guys absorb the innovative new things and bind them into a bigger portfolio. That’s also useful, when (or maybe if) the integration with other parts of a value chain has value too and creates synergy. One example: event processing as standalone technology is way cool; it will be even cooler when it does some tasks it’s uniquely suited for with a stream as it flows into a data warehouse that does other things it’s uniquely able to do.
Creation at the edge, integration at the center: it’s a perpetual generative process. Let a thousand flowers bloom, and you get a larger garden.
I enjoyed this post and I can relate to all of it. ALL of it. This is what needs to be said.
I have several times come in behind a large company recommendation to a client in which they recommended a big stack solution for which the firm has resources or where business is done together between the firms otherwise. There’s a place for those solutions, but I suggest a selection process has the breadth necessary to find the best price-performance for you and therefore includes some emerging vendor offerings – both tool and consulting.
How many will enjoy choking that “one throat” anyway? Seems to me if it’s come to choking, there are some problems. Avoid problems. Sometimes less is more – more vendor and consultant motivation for your business and your success.
Great post Jill. There are talented and innovative people at both small and large companies. One of differences is that with a smaller company you are much closer to them. You may hear a mega vendor’s real talent talking at a conference, with a smaller organization you get to work with them.
I have an interesting tale to add to this based on a recent discussion with one of our members, it should act as a lesson for certain vendors who mnay be getting too comfortable in their over-sized shoes…
One of our members issued an RFP. Several vendors pitched in. Out of the biggest, one in particular, who shall remain nameless, assumed they “had it in the bag” because said vendor already had a big presence in the client company.
They proceeded to try and cruise across the finishing line, doing minimal work to convince the would-be client of their value. Where the client wanted advice on their solution, they got back a load of brochures, a disjointed value prop and somewhat disjointed product set.
Several of the big boys did put in the hard yard but the product vendors that shone were the small guys.
They innovated in real-time, created new functions that didn’t even exist, just to satisfy the RFP. They put their best people on the pilot and pulled out all the stops to convince their prospect they could deliver.
In the end, it was the smaller guys who took the top positions in the bake-off.
I don’t want to tar all the big guys with the same brush as we all know it can often come down to a lazy account manager, they might need big enterprise sales to make their quarterly targets so the small accounts suffer. As a result of this, there should be a big fat column on your RFP evaluation spreadsheet titled PASSION.
The smaller guys need the world to know they can deliver, as a prospect you can use that to your advantage but don’t abuse them, this is a partnership your building.
The hardest part of any new relationship is the first few years so personally I’d be looking for the vendor that can get you into bed with passion and commitment, not a bragging list of their past conquests.
I’ve been trying to champion smaller vendors in the solutions layer for a long time. Oftentimes the whole discussion is big analyst firms talking about big vendors who sell their solutions to big end users (in our case tier 1 communications service providers). There’s a real cosy little club going on.
I’ve been hearing a lot that best-of-breed is dead so I wrote a post about it on our blog Microsperience http://www.microsperience.com/?p=1692
My view is that small and perfectly formed is a natural state of affairs. I get frustrated when firms tell me they selected a vendor not because they had the best tech, the best delivery record etc but because they do good golf days and “you don’t get fired for buying IBM” (or the IBM of whatever solutions market you’re talking about). I get sick of hearing “we won the bake off and lost the contract” from smaller vendors. Then often the end user doesn’t get what they need so they have to plug in yet more solutions to fix the problem.
In telecoms software we’re seeing the resurgence of the smaller firm as innovative folk move out of big firms and set up on their own. Were they smart when they worked for a tier 1 vendor and dumb when they set up their own start up…? The logic just doesn’t make sense does it?
Instead what we should be asking is what added value does a big firm give for its bigger price tags other than overhead? You end up paying for that freebie golf day in the end.
We’re not like manufacturing where size gives economies of scale – all too often what size tries to enforce is a homogenous approach which results in you losing the value from your unique business processes – a topic we covered in Horizontalism is the New IT Cult http://www.microsperience.com/?p=853.
Really enjoyed reading this Jill. Thanks.
Wow, we struck a chord with some heavy-hitters on this blog post! It’s easy enough to fire off salvos at enterprise app vendors, which deflect them like buckshot. For each of the start-up vendors I mentioned there are dozens more that deserve a shot at greatness. The ability to compete with the 500-pound gorillas is a testimonial to to the innovation of these companies. Plus their people are hella smart.
After I wrote this post I found the following article in the July 26, 2010 issue of Fortune. It’s called “David vs. Goliath” and shows how three little guys that set themselves apart:
http://features.blogs.fortune.cnn.com/2010/07/16/david-vs-goliath/
To the big guys, per Merv: keep innovating at the edges. And thanks to everyone for weighing in!
Jill