Three years ago, I wrote a report on a then-forthcoming SMB market phenomenon, characterized as the “SMB phoenix.” Gleaned from interviews with new (at the time) small business founders, our research indicated that these new businesses “rising from the ashes” of the 2008-09 recession were poised to mark a significant departure from the SMB market of yore. Headed by a new breed of entrepreneurs, these SMBs were characterized by their optimistic growth projections, their bigger investment in and broader utilization of technology, their marketing prowess, and their relative self-sufficiency. In many ways, they act more like an enterprise business than a classical SMB.
In addition to our extensive Forrsights data on customers’ technology adoption trends, issues, and opportunities, we are engaged on a regular basis by tech companies to research various aspects of the SMB market. One of these recent projects, commissioned by Symantec, involved a deep dive on the SMB phoenix market to determine if it had evolved according to our projections (N.B. Symantec refers to the SMB phoenix as “accidental entrepreneur”).
I expected the original SMB phoenix premises to be borne out, but not to the extent that the research concluded. The differences between SMB phoenixes and their predecessors are astounding! Faster growth? Almost four times as many phoenixes project that their employee headcount will double in the next two years. Technology? Phoenixes have a broader (by about 25%) software deployment footprint, which is characterized by much greater propensity to go cloud. Self-sufficiency? Phoenixes’ technology decision-informing skews heavily toward their founders’ prior enterprise experience, their employees’ input, and online resources; their predecessors’ toward VARs and traditional media like print and radio.
This year (next month) Forrester’s Technology Sales Enablement Forum will sport a new channels track. With a theme of “Bridging the Strategy-to-Execution Gap,” we will drill into the issues vexing channel professionals on why “perfect” strategies, involving partner recruitment, partner enablement, and partner loyalty, often fall flat with channel partners.
I’m particularly excited by being joined on stage, not just by my colleagues Dane Anderson and Michael Speyer, but by [yes, real live] channel execs Jon Roskill of Microsoft and Wendy Bahr of Cisco. Jon and Wendy are going to share their insights and their most effective techniques around channel enablement – i.e., how their companies’ channel teams empower their channel partners to effect maximum productivity. Attendees will have plenty of opportunity to grill Jon and Wendy with their particular issues.
Moreover, Dane, Michael, and I are going to bring “the voice of the channel partner” directly into our explorations of partner management execution. I’m sure you’re going to take away some valuable, actionable ideas for boosting your own channel strategy-to-execution map. Check it out:
Forrester’s Technology Sales Enablement Forum 2012
Lurking in the tech channel shadows are the various manifestations of the newly emerging e-channel: online application stores, online communities, group buying sites, and e-purchasing services. For example, the number of small to medium-size businesses (SMBs) that sourced software products from online application stores increased almost 40% from 2009 to 2010. (I’ll publish the 2011 channel numbers next quarter.)
Joining the application store ranks of Intuit Marktplace, NetSuite SuiteApp.com, and salesforce.com AppExchange this year have been Adobe Marketplace, Cisco AppHQ, Constant Contact Marketplace, Microsoft Dynamics Marketplace, and Microsoft Office 365 Marketplace. Online communities OfficeArrow, OpenForum, and Spiceworks now offer software products. You could imagine e-purchasing services, like Rearden Commerce and Concur, expanding their travel services domain to other B2B products and services (like software). And this is just the tip of the iceberg – believe me, there are a lot more tech vendors and communities that will launch e-channels in the next six months.
All this e-channel activity, from both the provider and customer sides, has got to toll a warning bell for traditional channel companies – and their vendor partners, who have to keep them appeased. Perhaps most vulnerable are the DMRs (direct market resellers) (although the DMR gorilla, CDW, is taking strategic steps to expand its services portfolio in becoming more of a solutions provider).
I’ll be researching the impact of this emerging e-channel further, so if you have ideas or perspective to help guide my research, please share.
Tech marketers often fret over their marketing mix, but it’s usually couched in terms of “how” – e.g., “How do customers get information about us?” or, “Do we have the right mix of web content, events, blogs and [now, of course] social media conversations?”
We know that all those “how” things are not equal. Customers utilize web content more than events, and events more than blogs. But every bit as important (if not more), and sometimes not taken into consideration, is the “who” of the “how.” In general, customers highly value tech vendors’ websites and events, industry analysts’ research reports and blogs, channel partners’ online videos, and social media conversations with peers. But customers’ go-to information source preferences vary by industry, company size, and geography. [For more information, see the Forrester report on “The Who And How of Influencing Customers’ BT Decisions.”]
With social media stacked on top of websites stacked on top of events stacked on top of collateral … well, I don’t have to tell you how complex marketing-mix allocation budgeting has come to be. But designing your mix model on a “who-what” framework simplifies the model, and goes a long way to ensuring that you’re investing in the information sources that customers are tapping.
. . . but bad reactive marketing can make the problem much worse.
[co-authored by Zachary Reiss-Davis]
As has been widely reported, in sources broad and narrow, Amazon.com’s cloud service EC2 went down for an extended period of time yesterday, bringing many of the hottest high-tech startups with it, ranging from the well known (Foursquare, Quora) to the esoteric (About.me, EveryTrail). For a partial list of smaller startups affected, see http://ec2disabled.com/.
While this is clearly a blow to both Amazon.com and to the cloud hosting market in general, it also serves as an example of how technology companies must quickly respond publicly and engage with their customers when problems arise. Amazon.com let their customers control the narrative by not participating in any social media response to the problem; their only communication was through their online dashboard with vague platitudes. Instead, they allowed angry heads of product management and CEOs who are used to communicating with their customers on blogs and Twitter to unequivocally blame Amazon.com for the problem.
What is it that you think makes one tech company stand out from another? “My product is better than your product”? Not anymore. “My salespeople are better than your salespeople”? Possibly. “My channel is better than your channel”. You’re getting warmer. How about, “My marketing machine is better than your marketing machine”?
For example, 41% of customers identify “the vendor’s (not including its salespeople’s) ability to understand our business problem”, compared with only 21% who identified “the vendor’s salesperson’s ability to understand our business problem” as the most important vendor action factor when selecting a tech vendor. Marketing is clearly the difference-maker.
But cloud computing changes everything. The implications of cloud computing go far beyond its technology delivery/consumption model. It seems I get questions from tech marketers about all things cloud these days. A few examples:
“How can I use the cloud more effectively to market our solutions?” (Answer: It’s not what you read in USA Today about Facebook and Twitter. According to the results of our 2011 B2B Social Technographics® survey, discussion forums and professional social networking sites (read: not consumer social sites) outpace Facebook and Twitter ten-fold as information sources for informing businesses’ technology purchase decisions.)
If the overarching tech marketing theme in the ’90s was all about marketing as branding, and in the ’00s, marketing as lead generation, then the ’teens are shaping up to be about marketing as education. But not about educating customers about your product, per se. No, what I mean is educating customers about the business process/function and best practices that underlay your product, i.e., that your product supports.
In our recent B2B Social Technographics survey, fielded in Q1 2011, we asked customers, “Which are the most important vendor action factors when selecting the best vendor for a technology purchase?” By far, the No. 1 response was “how well the vendor can supplement our knowledge on the business process/function its product/technology supports.” [Other response options included “vendor’s demonstrated ability to communicate the economic benefit of implementing its product/technology” and “vendor salesperson’s demonstrated ability to understand our business problem.”]
An example is called for. I began my career as a programmer analyst (that title ages me!) for an aerospace and defense firm. I had the opportunity to “rotate” through all of the IT groups, including business applications, engineering systems, CAD/CAM, and IT operations. I won’t say I became a wizard in aeronautical engineering (although I know more than I ever wanted to about downwash), but by the time I wrapped up my stint in biz apps, I’m pretty certain I knew more about most of the company’s business processes than anyone other than, perhaps, the COO.
A lot of tech vendors – and channel partners – are struggling over what channel partners’ play in the cloud services demand chain is going to be. Technology is decreasingly delivered/consumed in the form of on-premise installation (a function performed by and the original raison d’être of channel partners), and increasingly delivered as-a-service by a service provider. In the software sector, that service provider is typically (but not always) the software vendor (think: salesforce.com).
And, in most cases, for good reason. Software has bugs. Early versions of software can be unstable and unpredictable. In the classic channel-partner-sells-and-installs-software model, the product (the software) remains in the control of the software vendor, i.e., the vendor assumes the risk of customers’ unmet expectations. The license is between the vendor and the customer, and the vendor is on the hook for providing bug fixes and tier-2 and -3 support.
As much as many channel partners would like to act as application hosters (and many of them do – approximately 15% of software is delivered via a hosting model today, and 20% of channel partners today have a hosting business [see “Channel Models In The Era Of Cloud”]), when it comes to early-version or mission-critical software, vendors simply can’t risk putting the as-a-service service level/performance responsibility in the hands of channel partners. Service failures, over which the vendor would have no control, would result in egg (or worse!) on the vendor’s brand, not the channel partner’s. Until tech vendors’ partner programs mature to the point where they can certify partners’ data centers, those vendors are going to be reticent to hand over the data center reins to partners.
There were two important pieces of Nokia news of interest to mobile platform developer partners leaked today. First, Nokia’s MeeGo platform, designed to replace Symbian, will likely be killed before ever reaching the market. Second, Nokia’s CEO Stephen Elop purportedly sent a 1,300 word memo to all Nokia employees that includes key sections such as: “We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven't been delivering innovation fast enough. We're not collaborating internally. Nokia, our platform is burning”; and “The first iPhone shipped in 2007, and we still don't have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.”
This dovetails with what we predicted in a November 2010 report, “The Feeding Frenzy Over The Mobile Developer Channel,” in that it would not be the quality of the underlying platform software (Nokia has remained strong there), but the ease of development, viability of the platform, size of the market, and availability of distribution channels that would settle the mobile platform battle. In all of these factors, Nokia has been steadily falling behind its competitors, led by Apple (iOS), Google (Android), and Microsoft (Windows Phone).
Cloud computing has arrived on the market in a big way, with virtually every tech vendor, regardless of size, geography, or solution, vying for a cloud position. But in the race to the cloud, many tech vendors have forgotten that ever-critical customer relationship vehicle: the channel. Or, if they haven’t forgotten it, they’ve coaxed channel partners with the pat mantra, “Do more consulting” (“… while we take care of delivery”). To get channel partners’ perspectives on how the technology value chain is changing in an as-a-service delivery model world, Forrester recently teamed with Outsource Channel Executives (OCE) to survey executives of channel companies across 39 countries, from the local level to the global.
The results of the survey are in, and they tell quite a story: that there is a good deal of angst and confusion among channel partners over their role/value in the cloud services technology value chain; that they aren’t sitting on their hands, waiting for tech vendors to tell them what to do; and that they need a lot of help in transforming their marketing and business models in this new era of cloud computing.
Now, not all channel companies are going to be able to make that transformation (nor should they – after all, cloud computing will never represent 100% of the technology market). But there are going to be many that will try and fail, ultimately resulting in a 12%-15% channel company washout. So think about it – supply (the number of channel companies) goes down; demand (for channel partner assets) remains high. It’s those tech vendors that amp their channel game to enable their partners’ cloud aspirations that are going to come away as the new “channel chiefs.”