The Past, Present and Future of the IT Business
I have worn several hats in my career and I have seen or participated in many successes… and a fair number of failures too. In this series of blogs I’d like to share my experiences of working in the technology industry and the lessons I took from hard-won experience. I promise I’ll be frank, concise and honest. IT has changed enormously over the years, and mostly for the better.
Let’s start by looking at some of the bigger changes.
From a hard sell to a partnership
IT started by promising the world, with huge operational savings and efficiency improvements, the premise of which was ‘automate the heck out of everything’. Enterprise software sales tactics were often aggressive and sometimes left the customer feeling bruised and pressurised in a business model based on perpetual licences and annual maintenance renewals. Often there was little interest in talking to customers once the deal had been done with resulting undelivered promises, shelfware and unhappy customers.
Today, the cloud model depends explicitly on customer satisfaction: customers sign up for a defined period of time on a Software-as-a-Service (SaaS) model and pay per-user, per-month, with the option not to renew the agreement at the end of the initial contract if they are not happy with the vendor’s ability to deliver on its promises, or if the expected ROI was not achieved. Given that the software vendor recognises the revenue rateably over time as the service is delivered and it’s easy for their customer to swap out to another supplier, this changes the tables stakes of the relationship. Now, the focus of the software vendor has to be more on maintaining customer satisfaction by ensuring the purchased licences are deployed and not left on the shelf, and that the ROI that the customer signed up for is being delivered.
In addition, the vendor needs to continue to develop features and functions that deepen engagement and differentiate its solution in an increasingly crowded market. For a long time, people have talked a good game when it comes to building ‘trusted partnerships’ but now they’re a reality. That’s progress.
From speeds and feeds to selling value
IT companies have had a horrible habit of selling on bits and bytes with techies developing stuff and selling to other techies without the connection to “why” it is needed or “what” value it will deliver to the business: computers with faster benchmark speeds, chips with more transistors and megahertz, laptops with bigger screens, storage with more terabytes…
Today, marketing and sales people tend to be better at telling stories about how companies can become better versions of themselves. Successful IT firms are collaborative and try to understand the genuine business needs of buyers and then work in partnership with their customers to ensure that real tangible and measurable value is being delivered by aligning products and services and ways to pay with those needs. Successful IT firms also understand their customers’ businesses intimately and couple this with deep vertical knowledge of their sector to bring intellectual capital to the table and to leverage success stories of peers in their industry who they have already helped successfully deliver business value.
This approach leads to a win-win: if IT vendors’ solutions really do solve businesses needs and help their customers make more money, save money, add competitive agility or mitigate risk then the seller elevates itself from a commodity purchase to a business solution. That means they can justify a higher price point as the customer is achieving measurable business benefit and fulfilling their ROI expectations.
From telling to showing
A single vendor can’t provide all the answers but it can provide a roadmap towards a solution, based on experience and the ability to compare and contrast the strategies of peer companies, leaders and executives. Today, there’s an obsession with Silicon Valley and the new wave of companies that have grown up and operated in a very different way to companies in the past. The web generation has created new organisational
structures, processes, performance indicators and roles, and placed huge emphasis on global collaboration and ideation. These new digitally native companies can call out ‘this is what your rivals are doing’ and even ‘this is how we do it’, sharing ideas on everything from co-creation to employee hiring and retention tactics and visions of how the next waves of technology will impact us all.
Of course, companies like ours benefit in some ways from having relatively little legacy. But older companies can move fast too (or, as the former IBM CEO Lou Gerstner put it, elephants can dance) and experience is a hugely valuable attribute. But if you’re a company struggling to adapt to new realities, how do you throw off the shackles that are constraining you? Four areas come to my mind here…
Bust siloes. With growth can come siloes as new departments, tools and projects box off people, roles and data. The job of leaders should be to spot these islands of isolation and act when they are having a negative effect on the business.
Identify what you’re good at. At IBM, Gerstner was successful because he liberated the hidden gems of its software unit that had been obscured by the traditional focus on hardware. Businesses always have to make tough decisions, dispensing with products and processes that once made sense but no longer work because, for example, younger, disruptive companies have innovated. This is what the business writer Clayton Christensen calls The Innovator’s Dilemma. The Innovator’s Solution? Create mechanisms that let incumbents also be disruptive.
Fail early, fail fast. Large companies can have cultures where those involved in projects that don’t succeed have a black mark against their name forever after. If the success of Silicon Valley tells us anything it’s surely that the ability to failand then pivot — turning in a new direction or an adjacent market often represents progress rather than a retrograde step. Incumbents and older companies generally need to develop cultures that accept that not all projects will lead directly to profit.
Get help. An external perspective can provide a fresh angle and a different way of thinking. In the old days that might have involved bringing in a blue-chip management consultant such as McKinsey. Today it might be about an automotive giant working with a company such as Pivotal to bring in some rapid application development know-how. Or, for that matter, bringing in a company like Box to help them change how it works both from internal and external collaboration through to automating how they manage and use their structured and unstructured data with artificial intelligence, and all while removing legacy infrastructure cost and adding agility, mobility and increased governance, security and risk mitigation.
I’d love to hear back from you on ways to inject a disruptive, creative ethos.
