Is your tech vendor really your ‘strategic partner’? Probably not!
Software vendors, do you believe your solution is a strategic solution? Do your sales people promise a ‘strategic partnership’ between your firm and the customer? And, most importantly, do you think your firm is a ‘strategic partner’ with your customers?
All great sales people truly believe in the product/solution they sell. They believe it’s the most incredible thing on the market. They believe it trounces competitive offerings and they also believe that customers share this same passion for their solution.
Reality check time: customers don’t see your products/solutions the same way your firm does (and vice versa). For all the talk of strategic partnerships, 99% of them are merely cases of unrequited love.
So, to you technology providers, many of your customers see your firm as a ‘vendor’. Your firm may be one of thousands of vendors or suppliers that this company deals with. Your firm is someone to be reckoned with from time to time and isn’t the sort of firm they like to deal with.
“If you’re not a strategic partner, God help you,” says William R. McDermott, SAP’s head of global sales and service. (as reported in BusinessWeek, pg. 36, “Cheap Tech for Hard Times” )
Most software vendors see themselves in an all-important light. They believe they are more essential to their customers than they really are. Vendors rarely are strategic because they sell the same commodity to hundreds or thousands of other customers. Seriously, how can a vendor say with a straight face “Now that you are our 68th customer in the micro-widget sub-vertical in the state of Alabama, this makes you one of most strategic accounts!” Forget the President’s Club, those sales reps should be winning Academy Awards for their acting abilities.
Many vendors sell products bloated with years of accumulated functions and features that few users really need. So, how can the same solution that is sold to every customer in the same vertical industry be strategic to any of these customer prospects? It isn’t unless a few very special acts occur. It also can’t be a ‘strategic’ relationship if this vendor has been selling the same old thing for a decade or more. If a Ford dealer sold you a 10-year old car and called it ‘strategic’, that doesn’t really make it strategic, does it?
Strategic software provides a unique, differentiated, competitive advantage to its user. Custom code, not packages, often fills this definition. Packages that are implemented ‘plain vanilla’ are definitely not strategic. Packages that don’t change with the speed of business are also not strategic – they’re liabilities. So, do software buyers find spreadsheets, general ledgers, payroll systems, etc. strategic? Most probably don’t.
Lower level technologies, like operating systems, compilers, etc. are rarely, if ever, strategic. If the technology cannot materially impact a customer’s market standing, share price, etc., it’s not strategic.
Remember, ‘strategic’ does not mean cost effective, low cost or competitively priced. These are attributes about the sales price and not about any meaningful impact the product has on a customer’s industry standing, market share, etc.
Strategic partners do two things: They provide ‘unique value’ and solutions to their customers. And, they do so in a collaborative fashion. Most application vendors are anything but strategic partners. Don’t believe me? Ask yourself:
- Did the vendor engage the prospect heavily as part of the sale and, afterwards, try like hell to get far and away from them? Is most of our ‘strategic’ value tied up in ‘strategic selling’?
- Will the vendor continue to work with customers long after the sale? Are they still improving the customer’s business in a material way 4, 6, 10 years after the sale or are they just delivering a few new features along the life cycle of the product?
- Is the vendor providing anything unique to the customer? Worse, is the vendor taking knowledge it gleaned from another customer and pimping it out to every other competitor this customer has in their industry?
- Does the vendor treat the customer like a partner or another customer? Sure, you give some of your special, high-dollar new customers some preference seats with advisory committees, but, these do not equate to a strategic partnership. This is marketing.
For vendors, what kind of technology company are you? - Are you a vendor? – You sell things. You do things to customers, not with them. You are one of hundreds of vendors this customer has.
- Are you a partner? – You need this customer to help you get a foothold in a specific vertical or geography. They’ll help you as a reference or provide some functional knowledge you’ll need in your product. These ‘partnerships’ are transactional and short-lived. They benefit each party but they may not last long as the value each partner receives is helpful short-term but not unique.
- Are you a pseudo-strategic partner? - These are software firms that think they’re strategic but they’re not. They delude themselves into thinking they’re strategic. ERP vendors, desktop application vendors and even some outsourcers suffer from these delusions. Account managers, partners, etc. in these firms believe that they ‘own’ specific accounts but they don’t. Remember, a (strategic) partnership is one where both parties believe there to be a partnership that delivers value to each firm. While your tech firm may want a strategic relationship with a customer, it isn’t strategic unless the customer is willing to reciprocate. These pseudo relationships are a lot like unrequited love.
- Are you a strategic partner? – Rarely will a Fortune 500 firm have more than 2-3 technology providers in this category. You might be stunned to see who they think is actually a strategic software partner.
A colleague took on the role of key account sales for a major, major software vendor. He was given a list of existing customers (all Fortune 500 firms) and told they were all strategic partner accounts. His job was to call on these firms and see if he could expand the relationship. He quickly learned that none of the CIOs he attempted to reach viewed his firm as a strategic partner. One CIO famously told him that he, the CIO, only dealt with the company’s strategic partners and his firm wasn’t one of those.
For technology buyers, you need to do several things.
- First, make an honest assessment of the situation (See Vital Analysis graphic). Are you wanting a strategic relationship but the vendor is incapable or unlikely return the favor? Well, don’t waste any time pining for a love that was never meant to be. Do you want a transactional relationship but the vendor is pitching this partnership woo heavily at you? In this case, you can tune out their entreaties, set them straight or try to take advantage of the newfound interest in your firm.
- Second, realize the finite limitations of your partner and their interest in your firm. If you are the first customer they’ve bagged in your industry, they’ll be real nice to you until they bag another. In fact, your strategic value to them diminishes with every market success the vendor experiences. This relationship is like dating someone who wants to cat around and you want exclusivity. It’s going to fail – just steel yourself and get all you can out of the deal as early as possible in the relationship.
These partnerships are not exclusive, they are not permanent and they resemble the way teenagers date: short-lived, fun for a time and rarely satisfying for the long-term.