Software // Enterprise Applications
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11/18/2013
08:06 AM
Louis Columbus
Louis Columbus
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10 Signs Your Enterprise Software Vendor Will Survive

Worried about the future of your enterprise software vendor? These 10 signs indicate a vendor is in it for the long haul.

One of the most common questions from CIOs and senior management is how to spot enterprise software vendors that have the best chance of surviving.

It's difficult to predict which vendors might be acquired by or merged into larger companies. The innate financial strength of a vendor certainly determines whether it can fend off M&A efforts that aren't in the best interest of customers, but senior managers want to get beyond cursory analysis of financial statements and SEC filings.

Here are 10 attributes I've seen -- based on visits with a wide variety of vendors -- that show that an enterprise software company has what it takes to survive.

1. Successfully balances technology-driven innovation and speed of delivery
This is where many on-premises enterprise vendors fail because they have allowed their cost structures to get so bloated that the maintenance dollars are being used to keep the business running. Complacency kills innovation. When maintenance revenue is flowing in but there isn't a burning urgency to get new applications out, software vendors lose their competitive edge.

[ How to treat your customers like people, not market segments. Read Build Richer Customer Relationships Using 'Small Data'. ]

If you're paying maintenance but not getting innovation, it's a sign the vendor is having trouble keeping up with nimbler, faster competitors. It's time to start looking for vendors that have a deep engineering bench and the ability to deliver new applications with a strong sense of urgency.   

2. Changes development-cycle cadence in response to customer requirements, needs, and pace of change
The most dynamic, fast-growing enterprise software companies are working hard to make this part of their DNA. Their product managers, development teams, sales, marketing, professional services, and senior management are unified on the common goal of not just keeping commitments to customers for new roadmap features but exceeding those commitments. There is a common perception this description only applies to cloud vendors, but that's not the case. When this trait is in evidence, it's an indicator of a strong sense of urgency to meet and exceed customer commitments and expectations.

3. CEO demonstrates passion for serving customers of every description
Myriad factors drive vendor growth, but a lot of it comes back to the CEO, her mindset, and the attitude she projects. CEOs who are inclusive, paying attention to the smallest and largest customers, create corporate cultures where customer service strengthens the fabric of the business. Conversely, elitist CEOs who are very restrictive about which customers they meet with create a culture of privilege and ranking that tends to polarize departments and service levels.

4. Shares stories of epic customer success
People learn through stories. When you find an enterprise software company that can share stories about helping customers save time and money, there's a good chance that mindset permeates development, services, and support. Great companies balance the highly precise, technical aspects of running a software company with the fuel that keeps it going: emotions, passion, and belief in the vision of the business.   

5. Works respectfully with customer teams and finds ways to trim implementation cost and time
Viability hinges in large part on how vendor teams interact with, talk about, honor commitments to, and, in general, respect customers. Does the professional services team look out for the customer, presenting alternatives to cut cost and deployment time -- even if it might mean less revenue for their company? Or, conversely, do they treat customers with contempt? Respect and signs of looking out for the customer are leading indicators of financial viability.

6. Employees know the products and take pride in the software
When vendor employees know their way around the applications and take pride in the software and what it does for customers, it's a sign of commitment and growth. In software companies not winning deals today, few people can demo the software, and there's a tendency to look at the demo staff as high priests of an arcane science. Great software companies design applications for how people work rather than forcing customers to change how they want to use their apps.

7. Welcomes scrutiny of customer relationships
It's a good sign when a vendor tells you to talk to any customer, versus handing you a vetted list. Go to vendor conferences and talk to as many customers as possible. Get off the grid of vetted references and you'll learn more than any analyst organization can tell. Analyst firms usually get vetted references when they do their research. Get around the filter and speak to customers yourself.

8. Exceeds commitments and holds on to existing customers
Viable vendors are accountable, setting and keeping delivery dates and detailing progress against visible roadmaps. When product management and engineering work together towards these deadlines and get feedback from customer advisory boards, a vendor has a very good chance of winning new deals and holding onto its customers. The opposite is true when roadmaps lack dates, teams lack urgency, and product schedules often slide. If your software vendor can't commit to a roadmap, be concerned.

9. Takes collaboration to a new level
Great software companies have gone beyond using portals for posting documents and information: They have interactive dialogues across a variety of forums. From hosting internal community sites to making pervasive use of real-time collaboration and social-networking tools, growing software companies tend to freely share knowledge. The more a company hoards knowledge, the slower it tends to move. In contrast, companies that move quickly often have a much more fluid and open approach to sharing data with customers.

10. Cares more about customer status than its own Facebook status
You can learn a lot about what a company really values by examining how it uses social media. If PR teams are just talking about events the company itself created, and there is limited or no mention of customer wins or success stories, that's a cause for concern. If all you see is self-congratulatory BS on Facebook, it's a sure sign that vendor isn't winning new deals and won't survive over the long haul.

Louis Columbus is a product marketing executive at Plex Systems and an adjunct professor in the graduate business and marketing program at Webster University in Irvine, Calif.

Want to relegate cloud software to edge apps or smaller businesses? No way. Also in the new, all-digital Cloud Software: Where Next? special issue of InformationWeek: The tech industry is rife with over-the-top, groundless predictions and estimates. (Free registration required.)

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Lorna Garey
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Lorna Garey,
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11/18/2013 | 2:34:00 PM
Escape plan
I'd like to add: The vendor gives you a clear plan to get your data back in usable form, promptly and without a lot of hoops. Maybe it does not survive OR you just decide you want to move -- whatever, you should have a clear picture of how to unravel the relationship. Of course this is more important with a SaaS provider, but I think a company that really believes in its product will follow that old "if you love something, set it free" ethos.  
D. Henschen
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D. Henschen,
User Rank: Author
11/18/2013 | 9:41:57 AM
Fair and balanced perspective
Louis may work for a SaaS vendor (Plex Systems), but he manages to provide a pretty even-handed perspective here. It could be he's slamming competitors with his references to vendors who have "few people who can demo the software" and "self-congratulatory BS on Facebook," but what vendor is going to challenge these points? Anybody care to add more signs to this list? 
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