Five Rules for Enterprise Software Buyers

Just Say “No” to Vendor Hegemony

If you’ve been watching the news lately, it should be pretty clear that the enterprise technology business is changing ― and fast.

For one thing, the private equity guys are stepping in – lured in part by the ongoing revenue streams created by maintenance contracts, perpetual licenses, the “upgrade handcuffs,” and other affectations of an industry in which the established vendors have been able to ride herd over customers for far too long.

But enterprise software leaders are being disrupted by changing consumer preferences up and down the application stack ― Google Apps over Microsoft Office, Dropbox and Google Drive over corporate file systems, Solar Winds over Tivoli, and so on ― and by superior cloud-based offerings in virtually every layer of the enterprise technology stack ― from platform to database to network monitoring and IT management.

Meanwhile, enterprise hardware leaders (like Dell) are being disrupted by the proliferation of post-PC-era devices like smartphones and tablets, consumer preference for them, and corporate IT’s grudging acceptance of them (BYOx).

I’ve written about this topic ― enterprise software sales and procurement practices ― a lot in the past.  Watching corporate customers continue to kowtow to old-guard enterprise software vendors ― and put up with antiquated business practices that make no sense ― makes me crazy.  It’s like watching your kid step out in front of a bus.

As the guard continues to change in enterprise technology vendors, it’s going to be more challenging (and expensive) for customers to continue to cling to the status quo.  Some of the best new enterprise technology is coming out of start-ups, working from cloud platforms and the open-source software stack – both of which are proven and reliable concepts.

For most customers, it’s past time to move into the 21st century.  If you don’t, you risk being left behind holding the bag ― the bag of money being proffered to vendors with little expectation of customer control over product performance.

However, if you’re still clinging to the old ways ― or feel that you need to while you get your senior management team acclimated to the new world ― here are five rules to protect yourself:

  • Don’t buy something if you don’t know it works.  Don’t buy slideware!  Seems obvious, but even yours truly has fallen victim to this, unfortunately.  This is hardest with new products/start-ups – but it’s a good discipline for both the start-up and the customer.
  • Don’t pay in perpetuity for something that you may only use for a short period of time.   In particular: Don’t continue to pay maintenance for products you are no longer using!
  • Get the procurement and sales people out of the way. Let the engineers ― on the vendor and customer sides ― be the primary drivers of product evaluation and selection.
  • Make the vendor commit to deploying in production at scale.  Just installing software does not value create.
  • If the vendor does their job, give them public kudos, especially if it’s an early-stage vendor.  Public kudos mean a lot to early-stage vendors ― far more than the money you will pay them ― because they seek validation for their innovation. You’ll help their cause ― and yours.

If every buyer of enterprise software would just stick to these five basic rules, many of the enterprise software leaders ― particularly Oracle ― would go out of business.

Also, check out new services ― such as TrustRadius ― where you can get objective opinions from real users on what works and what does not.  Services such as this will likely replace firms like Gartner or Forrester over the next decade. 

To traditional enterprise tech vendors with outdated business models, bloated engineering organizations, and outrageous costs of sales, I say: “Be afraid. Be very afraid.”   It’s a new world.

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9 Responses to Five Rules for Enterprise Software Buyers

  1. The other side of this is most “customers” don’t know how to buy things. They aren’t trained in analyzing their own business challenges, how much it costs to solve or NOT solve the problem a vendor may have a product for.

    What I often here is “your product is too expensive”–without any retort of “because we know our problem costs X to solve”.

    Very little of the challenge is a vendor problem.

  2. Rainer Fuchs says:

    Andy,

    I agree with your sentiments. Would probably expand on the 3rd rule: Get the procurement and sales people out of the way. When it’s time to close the deal, get the engineers out of the room, bring the procurement people back in. If — and that might admittedly be a big if — you have a good procurement group, they can get you a better deal than your engineers (that have already fallen in love with the product) would.

  3. Mark says:

    Startups G2 Crowd and Bestvendor are crowdsourcing/collaborative filtering enterprise software reviews and sentiment, challenging the old school Forrester/Gartner expert models. Really smart folks involved in both ventures.

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