Highly Competitive - software industry insights

B2B WEM/WCM Software Vendors Targeting Mid-Market customers: stay where you are!

 

Here’s a piece of advice that very few B2B software vendors of any sort ever follow: 

Vendors: If you have been targeting Mid-Market customers – then stay where you are!

Ignore the siren song of the high-end Enterprise.

 

This advice is especially meaningful for B2B vendors for Web Content Management (WCM) and Web Engagement Management (WEM).

 

From my experience, many of the WCM / WEM / CMS vendors seem to do very little market intelligence research and analysis to understand what exactly they are selling and to which customers/markets. Most WCM/WEM/CMS vendors seem to be milling around with no clear indication of how each vendor aligns to clearly defined solution, customer and market segments within a go-to-market matrix.  The main focus of most of these vendors is on feature sets, and not on delivering authentic solutions for specific industry scenarios and business problems.  When any sort of Mid-Market B2B software vendor persists with very horizontal solutions, it is in danger of “disappearing”.

 

The mid to upper tiers of the Mid-Market provide a fertile market for B2B vendors who are themselves SMB or Mid-Market companies. For the mid to upper tiers of the Mid-Market, annual revenue runs from $250M to just under $1B. Vendors will do better if they segregate this range into two segments ($250M-$499M and $500M-$999M respectively).  Within those two segments, vendors should then select and learn a lot about specific customers and various solution scenarios that matter to those customers.

 

I’m specifically calling out Mid-Market customers for WEM (rather than “classic SMB”), due to the higher cost of implementing digital marketing solutions based on WEM platforms, which are likely out of reach for classic SMB companies. Once a vendor is committed to targeting Mid-Market companies, the next phase is to very specifically target segments of customers for mid-market offerings. 

 

 

Drifting into the High-End Enterprise Usually Ends Badly for Smaller Vendors

I’ve seen too many SMB / Mid-Market software vendors lured by potential big money and big deals in the high-end enterprise; after taking the plunge, very few of these vendors do well or even survive. It is near-to-impossible for smaller software vendors to compete against large vendors when providing high-end solutions. When trying to compete with the “big boys”, sales engagements frequently deteriorate into pricing wars that can destroy the well-being and income of the smaller vendor. After crossing over, the smaller vendor spends all the time on “me too” development for what the high-end vendors are already doing. The smaller vendor becomes snarled up in feature bloat that leads to the bastardization of its original offering. And worse, the smaller vendor ends up alienating its original target markets of mid-market companies and loses their business.

 

The high-end enterprise is a very tough place for smaller software vendors: there is a much smaller field of potential customers, fierce competition for those customers, plus larger software vendors already have established extensive relationships in these enterprises. Large enterprise customers are also harder to please, bring on longer sales cycles that include more chances to fail. Even when a smaller vendor wins an initial deal with a large enterprise company, it is usually displaced by a larger vendor very quickly.

 

Conversely, when targeting the Mid-Market, very few high-end vendors go very deep into this overall segment (and rarely into SMB). For the most part, large enterprise software vendors still don’t really know how to win Mid-Market business or provide the right-fit solutions. And it’s not just about price but about understanding how Mid-Market buys software solutions . On the other hand, a Mid-Market vendor already has decent affinity for some of the concerns of its potential Mid-Market customers, simply by reflecting on what matters to the vendor’s own success.

 

 

Vendor-performed Segmentation Is Essential to Build WEM/WCM Solutions for Mid-Market

Mid-Market (and SMB) customers are overwhelmed by the large number of CMS offerings of all kinds and are not well prepared to figure out which ones are appropriate for WEM or even just WCM. WEM vendors targeting the Mid-Market have to do a much better job of marketing and engaging specific segments.

 

Vendors must take action to properly position themselves in segmentation to differentiate their solutions form the mass of WCM/WEM offerings. They must put focused thought and time into identifying and understanding specific customer segments in the Mid-Market. Then vendors must undertake further understanding of what the vendor solutions need to provide the best support for target customers. Vendors need to be clear on what the solutions are not, to avoid “market sprawl”. It will make a huge difference if vendors put good time into a conscious and rigorous go-to-market strategy that is continually fine-tuned. 

 

Take time to properly segment target customers and markets for solutions:

· Know the target customer size – usually based on revenue ranges

· Identify who should use your solution and why – what problem(s) does it address (be very specific) – stay far away from the massive horizontal pack of “CMS” offerings

· Research and select one or two industries you’d like to work with; then select a segment in the industry that is a good bet for WCM/WEM solutions

· Analyze and build out specific industry scenario solutions that really work – again focus on real target customers and real customer problems/needs

· Keep in touch with the customers who are using the scenario solutions: fine-tune, improve, evolve into other focused solutions

· Assess the success of the above to make decisions about new go-to-market strategies that will add growth to the company

· Truly support customers throughout the lifecycle of the customer experience

 

 

No Illusions – Price is #1 Criterion for Selling to Mid-Market

I’m just calling this out plain and simple:  for most Mid-Market customers, price is the first requirement to be met by prospective vendors. Most Mid-Market companies have very clear parameters for what they are willing to spend on software. But the Mid-Market also wants value for price. When I say price, I mean the total cost of the end-to-end solution that will be up and running and working properly – so price includes money, time and people.

 

Many Mid-Market companies have small IT groups, so the following capabilities are essential: ease of implementation, low maintenance, ease of use for non-techies, good to great performance, delivery on vendor promises. When selling to Mid-Market companies, publish honest prices on your corporate website. Revealing pricing is a part of marketing to and engaging the customer-as-buyer when dealing with the mid-market. Remember: Mid-market companies have no time or patience for long sales cycles and complicated pricing schemes.

 

 

Strategy for Providing and Selling WEM to Mid-Market Companies: keep it simple

Vendors must take the time to research, analyze and understand what comprises a WEM solution for target mid-market companies. They have to take a look at the overall WEM capabilities of their solutions, and then reconcile which capabilities matter to their Mid-Market target segments. CMSWire has had a recent series on WEM solutions that is a good starting point to help vendors with mapping a solution to the needs and requirements of desired customers.

 

Where WEM is heading for the Mid-Market:

· Product/solution capabilities that meet Mid-Market requirements

· Capabilities that support marketing strategies of most Mid-Market companies

· Inclusion of social media capabilities and/or integrations with social media and Social CRM apps

· Monitoring trends related to desires/needs of target markets and specific industry scenarios (identifying what Mid-Market segments need, not what big enterprise companies need)

· But continue to monitor Enterprise trends to watch for trickle-down effects – this is where vendor smarts and market intelligence must come into play

 

 

Innovate With Real Solutions for Real Markets

Smaller vendors for Mid-Market WEM solutions are frequently more agile (carrying less legacy and expensive baggage) when it comes to pursuing innovation that will benefit target customers. These vendors are better positioned to move quickly to embrace future trends that define where solution markets are heading.

 

Vendor success comes from continuous innovation that makes sense for its Mid-Market customers:

· Engage in continuous market intelligence processes to monitor target markets / customers, and what they want for future success – many sources for this information

· Innovate specifically for Mid-Market target customers – perform excellent research/analysis to understand which are the best markets/customers/solution scenarios

· Conduct continuous conversations with current customers, and with companies wanted as new customers – embrace Social CRM practices for better conversations, listening

· Keep an eye on what the marketing teams of Mid-Market companies’ will need from WEM solutions

· Monitor enterprise-level trends for WEM to determine if the trends are meaningful for Mid-Market companies; also follow WEM trends for consumer marketing for new ideas – but choose wisely for real market strengths

· Don’t follow in the footsteps of big WEM solutions just to land where they are now

o    Jump ahead to new trends that make sense for target Mid-Market segments

o    Pick innovation that is right for target customers and for the vendor: real differentiation will result

 

 

Jeremiah Owyang on Future of the Corporate Website

Recently at the Gilbane Conference 2010 in San Francisco, and on his blog, Jeremiah Owyang has set out some compelling predictions for the evolution of company websites and the potential new world of distributed web presence. He sees social sites driving far more customer connections and brand awareness than the traditional corporate website of past years.  This is the sort of innovative thinking that vendors for Mid-Market WEM/WCM solutions should be monitoring. 

 

 

A couple of Jeremiah’s slides from Gilbane Conference 2010 San Francisco:

 

http://www.web-strategist.com/blog/2010/05/19/slides-roadmap-for-integration-of-social-into-your-corporate-website/

 

 

 

 

 

 

 

 

 

 

Related Posts:

Goodbye Corporate Website – Hello Web Presence Management Framework?

 

SMB / Mid-Market B2B Software vendors - Findability + web presence + social: attracting the “customer as buyer”

 

B2B Social CRM for Software Vendors and the Lifecycle of Customer Experience

 

Moving beyond WCM - Web Experience Management software solutions and markets

 

Selling Software Solutions to SMB Markets – Who and How To Target

 

 

 

 

About the author: Julie Hunt is an accomplished market intelligence analyst, providing strategic market and competitive insights for the software industry. Her 20+ years as a software professional range from the very technical side  to customer-centric work in solutions consulting, sales and marketing.  Julie shares her takes on the software industry via her blog Highly Competitive and on Twitter: @juliebhunt   For more information: Julie Hunt Consulting – Market & Competitive Intelligence Services

 

 

Disclosure:  From time to time, I contribute articles to CMSWire.

 

 

Custom Code or Data Integration software tools: Strategic Use of Technology for Company Competitiveness

 

 

Data Integration software solutions have been in the spotlight these past few years as the explosion of BI and data-driven businesses processes push through companies of all sorts.  It has become clearer how essential trustworthy and timely data is to business, and how important it is for Business users as well as IT teams to participate in decisions regarding data-driven processes, data access, data integration, and overall data quality. Equally important is the collaboration between IT and Business teams as part of the process to select the right data integration software solutions. Business users of applications, and the underlying data, understand the business context and utilization for that data in different systems, and can help decide advantageous ways to manage access and integration strategies.

 

Until very recently, data integration activities belonged almost exclusively to the IT domain. And for some time, data integration has become much more than moving data between disparate systems. While there are many DI software offerings for many different kinds of projects, IT groups have frequently used custom code instead of purchasing DI tools.

 

When focusing on DI software offerings versus custom code, a deeper, important issue for many enterprises comes forward: the need to align IT and Business teams to work on data initiatives from strategic business perspectives, not just from technology infrastructure perspectives. Many line-of-business (LOB) managers are taking on more responsibility for IT projects, setting goals, outlining requirements, providing insight from the business POV, and providing cost justification for projects. These recent changes add momentum to using technology more strategically -- but must involve IT as the key partner in running business processes. Data integration projects can benefit greatly from this sort of dynamic shared ownership.

 

Strategic collaborations between Business and IT for DI initiatives tie directly to the 80/20 IT spend “paradigm”: companies continue to report a problematic metric where 80% of annual IT spend/resources are dedicated to the maintenance of the status quo, while only 20% has been ponied up to drive tech innovations that would likely benefit the competitiveness of the business. With the fast pace of business change and disruption, agility and efficiency in tech utilization are key to building long term success and sustainability. 

 

Transitioning data integration projects from custom code to implementing more DI software tools that provide the majority of the solution - with much less coding – lends significant momentum to help swing IT resource allocation towards innovation rather than maintenance. The reusability aspects and other value points of DI tools add weight to this shift.

 

IT Culture of Custom Code for DI Projects – Tactical status quo?

In a 2008 interview with Philip Russom, TDWI, Lorraine Lawson for IT Business Edge, Russom indicated that at least 50% of DI projects are still hand coded, even though IT managers understand the clear, and frequently significant, savings that usually result from implementing DI software solutions:

“Whenever he explains his case, people tell him: Wow, I get the economics. Wow, thank you for enlightening me. BUT we still have this culture of hand-coding.”

 

Lorraine Lawson followed with additional posts in 2009 – here summarizing the comments generated by the discussion of custom code for data integration projects:

“Last week, I wrote a post on Why Companies Still Hand Code, But Don't Have To, despite the numerous data-integration tools of all price ranges available on the market. In the piece, I summed up the reasons cited by Rick Sherman, founder of Athena IT Solutions, which included ignorance of market costs, a lack of resources and a misplaced adherence to corporate standards.

“Several readers commented on the post, adding that Sherman overlooked one critical reason why so many data-integration projects are hand coded: The human factor.

“When it comes to data integration, the missing human factor is simply that developers like to code. They're comfortable with the tools and, in that moment, it's easier to hand code than evaluate, choose, buy, install, learn and use a new tool – even if that tool might shave months off projects on down the line.”

 

The seeming preference for custom code does point to a weakness in the differentiation of certain DI software offerings:  these tools are still designed to be used as “developer tools”, and indeed involve an amount (sometimes a lot) of coding themselves. Why would developers adopt a DI solution platform that on the surface looks quite a bit like something else that they are already using? Obviously most DI software tools offer a lot more than a “code platform” -- but to have clear differentiation, DI software vendors need to offer more focused solutions that solve specific business problems for specific customer scenarios.  DI tools need to become faster to learn, easier to use, with ready-to-go components, instead of providing general platforms. For better adoption, DI software offerings should be tools that any team will want to use over and over. 

 

The very important functions of data profiling and data quality are significant components of data integration software solutions that cannot be emulated very well by custom code.  DP and DQ processes help derive more value from data and to help render data more trustworthy and usable. Data profiling tools in particular provide a platform for both Business and IT usage and collaboration. DP and DQ capabilities have become important differentiators for DI software offerings, provided they are cost-effective and lean towards ease-of-use.

 

Vendors: Market DI software offerings to be “more findable”

There are DI software tools aplenty for any sort of company initiative – and any sort of company.  They can be on-premise licensed, SaaS subscription, cloud-based metering, open source.  They may manifest as platforms, appliances, mashups, dashboards, APIs, templates, pre-packaged industry-specific solutions, and so on.

 

Since major analyst publications primarily cover only a select group of high-end DI / ETL tools, the notion that companies and their IT and Business teams are not aware of the many options available has validity. However this is really an opportunity for DI software vendors to do more to make their solutions much more “findable” for their target markets and customers. With the upsurge of interactive marketing and social media for B2B selling, “findability” provides software vendors methods to improve the ability of the right customers to connect with the vendor.

 

Competitive advantage can be gained for vendors who do a better job of marketing and connecting what the tools offer to customer business problems. So it’s not just a matter of being findable as a “brand” or category of DI software, but findable as the right fit for a specific DI / business problem, and for a specific customer segment (a segment that could be Business and/or IT). DI software vendors also own the ability to do a better job of providing good solutions that are ready-to-go, to handle specific industry scenarios. No more one-size fits all type of DI platforms – instead, differentiate from developer code platforms by offering focused tools that solve pre-defined problems, solutions that target specific markets/industries/scenarios.

 

When DI software vendors have done a good job of revealing solutions that matter to their markets while showing that these solutions truly solve important problems, the intrinsic value of those DI software offerings should be a “slap in the face” for targeted Business and IT users. The value should be so apparent that IT will rarely want to hand code DI projects again – at least not the important ones.

 

Clear strategic purpose, distinct solution context, and a customer-centric orientation can take DI software further into helping IT change the usual 80% allocation for the tactical-for-status-quo – on to achieving the goal of a larger chunk of resources dedicated to competitive innovation. For DI projects, connecting IT to Business users of company data empowers everyone to work smarter. Savvy companies want to get more from their IT investments and want to rely on their data assets for competitive advantage. Through collaboration the company benefits: Business users know what they need from data and understand the context for data; IT provides the know-how to implement the DI processes to make it all happen. 

 

 

 

Flipping the 80/20 IT spend paradigm – understanding the TCO of custom code for DI

  

Talend Open Source DI Looks at ROI of Custom Code

Whether you agree with all of the Talend conclusions, this study introduces concrete parameters and data about the real cost of custom-coded DI projects.  One valuable takeaway is that this study shows the need to evaluate custom code on the same basis as any software offerings – and why. I find the Talend data believable, since most IT groups overlook lots of hidden costs related to custom coded projects when conducting comparisons to acquiring DI software tools.  Talend is at least opening the door on points that should be considered when selecting the right DI solution. 

 

Further details can be found in the complete report, The Return on Investment of Open Source Data Integration, 2008.

 

Talend ROI Project Category:  Large project: real-time enterprise data integration

· The "Large" project is a complete (large) enterprise data integration project.

· Twelve different databases, two packaged applications (one ERP and one SCM), an application from a partner (accessed through Web Services), a LDAP directory, and a Software-as-a-service CRM all need to be kept synchronized in real-time.

· This project involves 200 complex data flows.

  

Cost to complete this project using custom code:

 

 

Summary of 3 approaches to completing the “large DI project”

 

 

And finally:

 

 

 

About the author: Julie Hunt is an accomplished market intelligence analyst, providing strategic market and competitive insights for the software industry. Her 20+ years as a software professional range from the very technical side  to customer-centric work in solutions consulting, sales and marketing.  Julie shares her takes on the software industry via her blog Highly Competitive and on Twitter: @juliebhunt   For more information: Julie Hunt Consulting – Market & Competitive Intelligence Services  

 

Moving beyond WCM - Web Experience Management software solutions and markets

When it comes to how to select the best-fit Web Content Management (WCM) software, a great deal of confusion continues to haunt vendors and customers alike.  Industry analysts have done little to make this any easier by perpetuating these mistakes:

· Frequently lumping together disparate offerings that target clearly separate customer segments and customer needs

· Failing to segment WCM offerings into solution categories, such as Web Experience Management (WEM) for Enterprise, basic web publishing for internal business processes/intranet, mid-market solutions for e-commerce, and so on

· Persisting with the pointless notion that WCM is a functional subset of Enterprise Content Management (ECM), especially in light of the speciousness of the ECM platform; such a notion is even more off-target when considering WEM solutions

· While understanding that WEM solutions are directly tied to interactive/digital marketing initiatives, analyst reports and benchmarks fail to use this understanding as an essential tenet of such reports

 

Analysts, writers, and bloggers have continued to produce a large body of work on various aspects of the “ECM platform”, as well as covering the questionable meaning of the term ECM and the many limitations of trying to shove a lot of capabilities into an “ECM container”.  There are a fair number of industry writers who agree that there is no such thing as a comprehensive single ECM platform. Within the debate of what belongs to ECM, WCM has been clumsily tacked on as a sub-component of ECM, with very little credible basis for doing so, especially in light of the evolution of WCM offerings in recent years.

 

Meanwhile it has been mainly customers who have helped to propel the WCM industry into providing the sorts of capabilities that are really needed for external-facing websites that are central to strategic business objectives.  So a significant segment of the overall WCM market has evolved into Web Experience Management (WEM), for which a much larger solution ecosystem has come together.  Most Web Experience Management platforms have little to do with basic content management or basic web publishing (à la WordPress and TypePad), and even less to do with the so-called ECM platform.  Understanding how to provide a platform for excellent web marketing initiatives has very little in common with understanding how to set up internal business processes for audit and governance requirements.  Metrics for successful web marketing initiatives have no meaning for ECM initiatives but are essential for determining best approaches to engaging and converting visitors into customers.

 

Social media / Web 2.0 have become important partners for WEM websites, for the purposes of drawing, engaging and re-calling customers. Inbound marketing is highly dependent on quality and interesting content that is provided through a variety of social media that lead back to a particular website.

A more complete WEM solution description includes:

· Understanding of solutions for B2B, B2C web/marketing initiatives

· Sophisticated digital / interactive marketing strategies

· External-facing web presence

· Website essential to corporate business strategy

· Ecosystem of ancillary tools to complete end-to-end solution for customer objectives

· Savvy use of social media, well-integrated into website and marketing plans

· Alignment with interactive/digital agencies

 

WEM Solution Ecosystem and Market Sizing

Another problem that has arisen is the seeming inability of major industry analysts to properly size the WCM, or WEM, market.  There is little evidence of analysts attempting to size the WEM ecosystem market potential in any tangible manner. To be able to compare and assess WEM vendors, it is essential to define the ecosystem with its corresponding market size composite.  Better market definition will result in better vendor benchmarks, instead of assessing a jumble of disparate vendors leading to disjointed “comparisons”.  More and more single vendors are offering most, if not all, of the components of the WEM ecosystem as the end-to-end solution.  Again, this solution segment has gone well beyond “web content management”.

 

So a Web Experience Management solution is really a composite of several “markets”: 

· WCM solution suite, with usability both for business users and IT personnel (includes behind-the-scenes “content management”, workflow, design tools, and so on)

· Enterprise-quality portal / presentation management

· Recommendations-like technology for social search and personalization

· Web analytics / testing / content monetizing tools

· Rich media and video content management (monetizing components as appropriate)

· Social collaboration / social marketing capabilities

· Extensive integration / interoperability capabilities at several levels of the enterprise infrastructure

 

When we consider WEM as a composite of the overall solution ecosystem, then we could arrive at a better understanding of the overall market size by tallying up the market forecasts for all or most of the components listed above to derive the comprehensive market potential. It’s not unreasonable to look at the overall ecosystem market size, since many WEM vendors supply most of the solution components, and have active partnerships with vendors that supply the remaining components.  The overall solution ecosystem becomes compellingly relevant when taking the customer’s point-of-view for the desired end-to-end solution.

 

Other approaches could be from the point of view of Interactive Marketing spend, or from looking at web site spend budgeted by companies with Global web presences: we could estimate the slice that the WEM ecosystem can command from these markets. For instance, Forrester data on web site spend for 2009 shows some very substantial budget forecasts for large companies with global web presences.

 

Interactive Marketing Spend

WCM seen as online marketing (WEM): by 2012, Forrester expects the US interactive market to grow to $59 billion with a recession, or $61 billion if there is no recession. 

Forrester, “US Interactive Marketing Forecast, 2007 To 2012”

 

Website spend

Of the overall budget for website spend in 2009:

· U.S. Large companies – domestic-only website average spend $2.2M  

· Global companies average $3.5M for international sites

Forrester, “2009 Web Site Spending Trends”, Feb. 2009

 

Passing Glances at WEM market recognition by Industry Analysts

Two industry analysts expressed clearer views of the transformation of WCM to WEM for external-facing websites:  Kathleen Reidy of 451 Group, and Mick MacComascaigh of Gartner.  Oddly, neither analyst has followed through on these better definitions in subsequent reports or benchmarks, and generally continue to perpetuate the misleading usage of WCM as a subset of ECM.

 

Kathleen Reidy, January 2009: ECM deconstructs to TCM, IG and WCM?

 “I think the “ECM” moniker may be nearing the end of its usefulness now (if it was ever apt or useful in the first place). 

“WCM has already splintered off as it became clear that web content is really not just another type of content to be managed by a central repository.  Today WCM is more about online marketing ….

 

Gartner’s Mick MacComascaigh, Marketscope for “Web Content Management 2008”:

The WCM market commands revenue of approximately $750 million (for 2007/2008).

But with analytics, social community and interactivity, personalization, media and digital asset management (DAM), and in some cases e-forms and localization, to be counted as part of the new "marketing machines," the worldwide WCM market is poised to grow substantially as customer engagement becomes an even greater priority.

 

Viewing WEM (WCM) as subset of ECM Market produces questionable benchmark reports

Gartner views WCM as a subset of the ECM market. In one of its most non-focused Magic Quadrants, the Magic Quadrant for Web Content Management 2009, the over-large team of analysts involved with creating this “benchmark” chose not to recognize that WCM is now mostly Web Experience Management as it relates to real world customer needs and use.  Instead the Gartner team chose to continue an agenda for maintaining ECM as the over-arching parent for WCM, relegating WCM to a minor role, while totally ignoring the WCM morph into WEM.

 

In terms of market size, Gartner persists in looking at a very limited definition of WCM to perform the calculation:

The WCM market commands revenue of approximately $750 million. With an estimated compound annual growth rate (CAGR) of 15% between 2007 and 2012, it is growing faster than the overall ECM market. As a result, worldwide expenditure on WCM accounted for over a quarter of the ECM market in 2007 (it represented just over a fifth in 2004).

 

The Gartner Magic Quadrant for 2009 comes up with the dubious positioning of Oracle as the Leader of web content management – a company that does little in support of external-facing customer-oriented business websites, digital/interactive marketing, customer-facing social capabilities, and the conversion of visitors to customers.  If WEM had been used as the proper market segment, a more realistic and useful benchmark would have been produced (of which Oracle would not have been the Leader).

 

Comparing the Gartner WCM benchmark to the Forrester Wave of 2009, an even greater confusion arises:  Gartner’s Oracle Leader-designate is 6^th in line to the “throne” in the Forrester benchmark.  To make things even muddier, the top 3 leaders in the Gartner Magic Quadrant are big traditional ECM players, and are not leaders for WCM, and especially not for WEM.

 

 The Forrester Wave for WCM for External Websites 2009 gets top props for coming the closest to characterizing WCM as Web Experience Management for “online marketing”. Forrester’s better understanding of the WCM / WEM market undoubtedly derives from its practices for interactive/digital marketing and customer experience.  Forrester does not try to take a heavy-weight ECM vendor who is actually weak in WCM and fob off that vendor as a Leader in WCM/WEM. 

 

In general, IDC market reports (non-commissioned) stay very high level when considering web content management.  For instance, IDC produces an annual “content management” market report with sizing, vendor shares, and market forecasts, but it is a big container of “everything content management”. However, IDC is beginning to understand the importance of interactive marketing to corporate web presences, with added coverage of social media and digital marketing, although separate from coverage of content management and rich media management.

 

 

CMS Watch (Web CMS Report 2010) is at least segmenting WCM solutions relative to potential customer needs:

· Complex Enterprise Platforms

· Upper-Range Platforms

· Mid-Range Platforms

· Mid-Range Products

· Simpler Products

But even this segmentation can present ambiguities and overlaps, relative to the capabilities and requirements under consideration in the report.

  

The whole point is to take a real world approach to what is actually going on with WEM solutions to better help customers make purchase decisions and to better understand the total revenue potential for vendors with WEM offerings via an ecosystem perspective.  Most analysts have failed, to date, to do a better job for WEM definitions, market sizing, and more importantly, to produce meaningful benchmark reports with useful “apples to apples” comparisons, instead of the current comparisons of apples, oranges, walnuts, and elephants.  It is well past due for analysts to take WEM out of the “ECM platform” and recognize WEM as a separate and very different solution set that has little to do with the constructs of ECM.

 

Final Comment

Another questionable parameter of Gartner and Forrester in their respective benchmark reports is using a vendor’s overall market presence for all of the products that it sells (not just its market presence as related to the WCM segment) as a weighting factor.  This skews results against pure play vendors and inflates the actual success of larger corporate vendors regarding the specific market covered by the benchmark report.  None of the large vendors like Oracle or Microsoft sell tons of focused WCM/WEM solutions as suggested by the market presence shown by the Gartner and Forrester WCM benchmarks.  As such, the current offerings of Microsoft, Oracle, IBM, Open Text (pre-acquisition of Vignette) are not the stuff of Leader-quality solutions for WCM / WEM.

 

 

 

About the author: Julie Hunt is an accomplished market intelligence analyst, providing strategic market and competitive insights for the software industry. Her 20+ years as a software professional range from the very technical side  to customer-centric work in solutions consulting, sales and marketing.  Julie shares her takes on the software industry via her blog Highly Competitive and on Twitter: @juliebhunt   For more information: Julie Hunt Consulting – Market & Competitive Intelligence Services  

  

Selling Software Solutions to SMB Markets – Who and How To Target

A recent article summarizing a report published by AMI-Partners predicted that software /services markets for small and mid-sized businesses in North America would grow to $35B by 2013.  What then caught my eye was the AMI-Partners definition for the SMB markets:  small businesses have fewer than 100 employees; mid-sized companies have between 100 and 999 employees.

Back to the continual conundrum:  what the heck is “SMB”? 

When talking about target markets for software offerings, the great divide seems to be “enterprise” and “SMB”.  Enterprise registers consistently as any company with revenue of $1B or greater.  For all of the other “non-enterprise” companies (estimated anywhere from tens of millions to 200-300 million globally), people toss around the terms “SMB” / “SME”, with no idea what they mean in relation to actual companies and target markets. Some explanations say that SMB was the North American term, and SME was the EMEA term; others say that SMB is the low-end and the SME is the upper tier of the mid-market.  But these high level explanations still do not clearly define, or usefully segment, the true composition of companies in the vast sea of SMB  (except that revenue will be less than $1B….)

 

Enterprise software vendors don’t know who they are aiming at or how to hit the target

In the past 5 years, more and more large enterprise software vendors claim interest in so-called SMB markets; with the current recession, the noise from these vendors has increased. But most of these vendors really don’t seem to understand how to connect with the actual companies that comprise the vast SMB landscape.  These vendors expound the “right” marketing words, including claims for providing niche and industry-specific solutions for “SMB” companies, but most of these same vendors continue to miss the mark widely.

 

In reality, enterprise software vendors tend to treat the SMB as one market, failing to create in-depth segmentation that will then provide better definition of their offerings and sales approach. The constituents of the SMB landscape have clear differentiation in company size, industry/geographic focus, strategic goals, business needs – really a disparate array of sub-markets. If a vendor pursues this market as a single entity, fragmentation will smack the vendor in the face, resulting in little success and very little learned from the experience.

 

When most large enterprise vendors say “SMB” they really mean “M” – the Mid-Market – and then they usually mean the upper tiers of the mid-market, companies with revenues of $200M - $999M.  And most times the real target group falls in the $500M - $999M revenue range. It is rare for these large vendors to ever reach down to the “S” of SMB.  Even Microsoft frequently misses opportunities with truly small businesses, other than for selling seats for Office or Windows, through its over-complicated licensing and partner relationships.

 

And it’s not just software vendors who can’t seem to get it right. Most software industry writers and analysts wear the same blinders when it comes to discussing SMB market – these writers and analysts usually look at SMB with the bias of “enterprise eyes”, and in doing so, miss salient points frequently.

 

  

Who is the SMB / Mid-Market Company? Understanding more through meaningful segmentation

The biggest mistake many software companies make is to generalize the needs of SMB or Mid-Market companies as one entity, instead of realizing that performing the segmentation and then the analysis of each segment will yield very diverse profiles. These diverse profiles are the keys to software vendors more correctly understanding each segment and then building better solution and sales approaches customized for each segment. Vendors must understand the particular needs of each segment and their sophistication levels, when it comes to software applications. It is also essential to understand that there is even further diversity within each segment of the SMB / Mid-Market. Broad generalizations at any level of the SMB landscape will simply lead to trouble, and limited sales, for the vendor.

 

 

 

What the SMB / Mid-Market Want in Software

SMB / Mid-Market companies use technology to stay competitive and achieve economic success. These companies are not interested in “technology for technology’s sake”.

 

The Upper Tier of the Mid-Market is similar to larger enterprise companies, but there are also differences.

· Software solutions as part of corporate strategy and to drive growth

· Technology as means for achieving core business goals

· Fewer IT resources for implementation, support, maintenance

· Prefer packaged software/services offerings; and offerings from VARs who provide services and support

· Upper Tier contributes most of SMB/Mid-Market spend for software

 

The Mid and Lower tiers have definite challenges when taking on new software solutions:

· Very limited, sometimes no IT resources

· See value of new solutions to optimize productivity but lack resources needed to deploy 

· Opt for less costly options or point solutions; SaaS offerings are growing here

· Prefer out-of-the-box solution sell

· Look to VAR’s, SI’s, solution providers to make sales in these tiers

· Mid-tiers: also purchase from regional or national retail chains

· Lower tier:  more likely to purchase from regional or national retail chains

 

Finding the Right Targets – Segmentation by Revenue

Target market segmentation is frequently handled either using revenue or employee head count, to help determine the size of a company.  In most cases, revenue is the better gauge to determine whether a particular company is a fit (or not) for a particular software offering.  Obviously, revenue indicates a factor of the fiscal health of a company.

 

An important advantage of using revenue for segmentation is that good estimates of available spend for technology purchases can be calculated.  In North America, the SMB / Mid-Market IT average spend is 2-4% of annual revenue (in non-recessionary times). Potential spend will be very helpful in determining which SMB segments are the right ones for a software offering.  Then marketing and sales groups can further refine knowledge of select segments to better connect with software offerings and marketing/sales approaches.

 

The “Microsoft mentality” of focusing on number of seats (head count) as a means of segmenting target markets (rather than revenue) can cost software vendors good customers, especially for business applications.  The ability to pay for more expensive and more complex applications (whether used by a few or many people) is an important qualification for any vendor.  There are many SMB / Mid-Market companies with lower head counts, but substantial capital for purchasing software, and who gain competitive advantage by implementing the right software solutions.

 

A “reconciled” matrix of how to segment “SMB” / Mid-Market companies – based on analysis of multiple sources (industry analysts, software vendors, industry writers -- segmentation definitions from analysts, writers and software vendors are all over the place and do not align cleanly with each other)

 

 

 

 

Target Refinement: Existing software solution ecosystems for each segment

Another definitive method to further understand a particular SMB / Mid-Market segment, and target prospect, is to do an inventory of the software applications currently used by a prospective customer.  A quick analysis of the ecosystem of applications for accounting/ERP, CRM/SFA, databases/servers, network management, will reveal additional factors that will help align software offerings and marketing/sales approaches for target companies.

Discussion with mid-market customers on preferred solution delivery options will reveal strategic direction and will further refine what software offerings to pitch.  More SMB / Mid-Market customers are taking on SaaS-based solutions and are interested in the savings from cloud-based applications.  However, these same companies will still have interest in applications with on-premise licensing.  Differentiating the kinds of software solutions with the preferred delivery options is a necessary exercise to sell into different segments.

 

 

About the author: Julie Hunt is an accomplished market intelligence analyst, providing strategic market and competitive insights for the software industry. Her 20+ years as a software professional range from the very technical side  to customer-centric work in solutions consulting, sales and marketing.  Julie shares her takes on the software industry via her blog Highly Competitive and on Twitter: @juliebhunt   For more information: Julie Hunt Consulting – Market & Competitive Intelligence Services