Big customer of a small vendor, or small customer of a big vendor

The CEO was perplexed that despite his product having all the features and more when compared to the market leader, most enterprise customers were shy of giving him business. His product was priced at a discount to the larger and dominant players thus providing great business cases and ROI; the technology platform was current versus competition. Customers liked the product and agreed that it met specifications and requirements; however it did not result in business. His company was a young startup and had few customers.

The world of startups is exploding and they offer solutions for existing and imaginary problems that you may have never thought about. Consumer applications are finding their way into the enterprise while the choices for enterprise applications have increased manifold. Convergence across the differing use cases creates opportunities for IT to automate and/or create new process efficiencies. These are beginning to offer viable alternatives to the large vendor solutions with complex licensing models and maintenance contracts.

Meeting a few entrepreneurs exhibited the most prominent feature across all the discussions was the belief and the passion in their ideas. Everyone had a dream to challenge the big players, wanted to solve problems of the world, and almost everyone was born a digital native. For these individuals the pursuit of their dream overshadowed the difficulties they faced learning to survive in fiscal deficit. With loads of infectious enthusiasm they happily demonstrate the value of what they have or plan to build to anyone interested.

They have like-minded teams with great technology skills and ability to create solutions with velocity that puts many enterprise IT teams to shame. They are able to react quickly to market and demands of their sparse customers; the struggle is largely around creating a dialogue with business and IT leaders on how their solutions will benefit the enterprise. They are the advocates and the best salespersons for their companies and solutions and in an endeavor to get first few customers, it is highly probable that they are willing to offer bargain prices.

Most enterprise CIOs and business heads find themselves meeting these entrepreneurs more often, now competing with the larger well established local or global solution providers. The gorillas with loads of muscle power, large number of customers, and an ecosystem of system integrators create doubts in the minds of potential buyers on the stability and longevity of the minnows. Thus in the face of perceived risk most customers end up making the expensive choice of going with the well-entrenched players.

Good news is that there is a wave of fresh air wafting through the crevices in the enterprise fortress – the data center and the application landscape; some successful and early adopter CIOs have taken calculated risks and the call to work with startups. The benefits in almost call cases have been beyond compare with quick and unbelievable ROI; for the struggling beginners these saviors were embraced and they stretched to exceed expectations. The CIOs pleased with success built symbiotic relationships by mentoring them.

For the safety net seekers following conventionally long implementation cycles, the larger players provided rich functionality though with restrictive practices offering ROI over 2-3 years. They became victims of their choices when they could have taken an alternative approach and experimented with the newer generation solutions and enjoyed associated benefits. The loss of agility came with its own set of challenges considering the fact that rarely a solution change is undertaken after long cycle of implementation.

Startups nurture their customers who imposed faith in them; large enterprise customers bring them credibility. They contributed significantly to their revenues which in turn helps them raise money from interested sources. For the large players another customer is just another customer even if you are a dominant force in the industry; exception being companies who are larger than these large vendors and they are just a handful. Relatively size does makes a difference to the treatment the vendors give to a customer.

All things being equal the question is where do you want to be ? A big customer to a small vendor or a small customer of a big vendor ? Your choices will determine not just your success but also your ability to influence the product direction, shape industry solutions, and finally give you a financial advantage. Having been in all the three camps, I would say that being a big customer of a startup outweighs the perceived risks; the sluggishness imposed by big vendors can be a big challenge; finally as a part of startups now I love big customers !

How not to implement an ERP in today's world

I recently met one of the senior team members of an enterprise who had decided to move away from bespoke custom developed solutions to implement a market leading ERP solution. For the company it was a big step forward after much discussion, debate and hesitation on the changeover and expected resultant business impact. They had thought about it many times, engaged with different consultants to assess the business case and every time decided to retain status quo fearing business disruption and no change readiness.

The ERP wave that started in the mid and late nineties ebbed almost a decade back with almost everyone taking one or other solution. The resultant automation, integration of business processes, and transparency brought about a quantum jump in efficiency for most. Some enterprises resisted the change to process and practices embedded in the solutions, ending up with highly customized implementations. They delivered superior results over the earlier tailored solutions though with overhead of maintaining the custom code.

In the ensuing years with the changing industry and economic dynamics, maturity and evolution of the solutions with new features and technology, and new business models, the ERP implementations began to appear as monolithic and unwieldy. The high level of customization became a roadblock towards leveraging newer technology and innovation. Soon it was evident that new strategies will be required to overcome the agility challenge; to gain benefit from the new age solutions, it became imperative to review the IT landscape.

Business CIOs took up the challenge and recommended trimming bolt-on and fringe solutions with every version and technology upgrade. The brave ones endorsed and took up reimplementation of their ERPs which eliminated changes to the core solutions and depended on parameterization over custom code to the extent possible. Advent of the Digital world and on-demand service models gave them an opportunity to stay current and relevant. Few who had implemented out-of-the-box solutions stood validated and happy.

In conversation with my friend I was curious to learn about his journey on the project which had high visibility in the industry due to the large size and complexity as well as the reputation of his company being risk averse. They had gone live after multiple misses to the timeline stretching the project to a level where the fainthearted would have got palpitations. He was not too happy with the end outcome; the project which to begin with had been planned well down to the last level of detail had not gone the anticipated way for many.

The going in mandate was to stay with out-of-the-box best practice processes and functionality with help of one of the best global implementation partners. Everyone had aligned to this direction which was deemed to be the best approach for a large enterprise. Functionality was cast in alignment to available features, changing process to ensure that business requirements are met. Progress suddenly faced potholes and bottlenecks with some new constituents challenging every decision that steered away from changing the system.

Archaic views prevailed over commonsense and best practices were overruled as being irrelevant to the company’s context. The direction was changed to the well-trodden path of an era gone by as the new players had only been on that track which lay mothballed and abandoned by the newer generation of IT leaders and followers. Thus began the regressive journey of change that brought in a battalion of programmers to fit all processes with customizations even if it meant breaking the core to batter the system into a familiar face.

When the secret chambers are opened and fundamental innards tinkered with, something has to break; and it did colossally spinning a spiral from which it became difficult to surface. Despite the writing on the wall the team plodded through with fear of retribution should they even raise a whimper. Deadlines came and went. The chaos and delays started hurting the business who finally found their voice and asked uncomfortable questions. The inept leadership reduced project scope, blamed everyone but themselves, and finally declared go-live with a badly bandaged system.

With an embargo on communications, the real state of affairs will probably never be known, though murmurs are heard off the records of the adverse business impact and the loss of credibility of the team with the business. Published numbers do indicate everything is not hunky dory; I guess that this episode will remain under the carpet for some time to come. Custom applications and customizing commercial off the shelf systems are getting buried. Unfortunately the challenged in positions of power continue to hurtle enterprises down the ravines of ignominy.