Thursday, September 01, 2011

The Changing Shape of B2B Services

In the last few months I have been hearing a bit about, which seems to be a Dropbox-type of solution for corporations, so I was interested to read a somewhat lengthy interview at Business Insider with Aaron Levie its youthful founder and CEO. Here are a couple of smart points:

(On why the big office Suite products that bundle email, social, CRM, collaboration, ERP etc in a big coalition -- are not such a threat) ...If you go to the average company in America, that's not what they've implemented. They've implemented Salesforce as their CRM, Google Apps for email—a large number of them, in the millions—they'll be thinking of Workday or NetSuite for their ERP. Each of those companies is or will become a multibillion-dollar company just focused on that best-of-breed aspect of what they're trying to solve. With the Web, you can connect these properties together, you can connect this information together, so you don't actually take a productivity hit by having different services. There might be a slight management complexity, but there's new technology that helps with that, we distribute our products is totally different from how Oracle and Microsoft distribute their products—we're direct to the customer, we're all over the Internet, you don't have to go through a whole network and channel of distribution. The way our applications are built—we release updates to our products every week. Microsoft takes 3 years to release a new product. So the whole DNA of our company is completely different. That will take some time to cycle it into Oracle and Microsoft.

(On why its not a problem selling into corporations that have pre-existing agreements) ...That [agreement] will expire and the customer will be ready to jump when it does. Companies that keep customers captive because of contracts aren't always the hardest to disrupt. Ultimately, it doesn't create a great customer-vendor relationship. There's a lot of fractures in the market where that exists. Business Insider August 26

These thoughts chimed with mine because we have in the last few months been seeing some RFPs (Request For Proposal) from larger magazine companies that we would love to work with and are to an extent already working with. It seems that the major magazine companies are now fully realizing that that they need a comprehensive digital magazine strategy and the Chief Information Officer who is often (but not always) charged with framing the strategy is inclined to look for a single contractor and a comprehensive solution from one supplier.

The perplexities we have with RFPs are quite instructive. The RFPs that we see are almost always too detailed (in one case 12 features are required for iPad app deployment). They omit crucial elements (no mention of search, subscription terms, or compliance with Apple iTunes policies in one RFP). They envisage a solution that is much more expensive and more front-loaded than one we would supply. They underestimate the absolute necessity of instant and rapid improvements to web or app services (an RFP that asks for timetables between software releases and 'support policies' for previous releases is thinking in years and quarterly release mode, when app developers need to plan month by month and web solutions have to respond within days to a new requirement). An RFP that covers the range of options that a digital magazine strategy now needs to address is fundamentally flawed if it does not take advantage of a modular development and deployment strategy. RFPs often have a 'completion date' in mind. Remember that this is a consoling fiction (put there for the benefit of Finance Directors and CEOs), successful digital development does not complete but builds for the next stage. Modular development and deployment can be guided by an RFP but it cannot be ruled by it.

We will continue to see RFPs and we will continue to dutifully respond to them, but we are increasingly finding that a bottom up strategy works best for us and the larger companies that we are working with. This means:
  • Start with one or two magazines
  • Start with one or two modular services (universal subscriptions or branded iPad apps for individual magazines)
  • Work with a contract which allows the publisher to give notice on the service whenever they choose. Software as a service means that the service can be terminated by the publisher/customer whenever they choose. In the medium term a service provider does not build a good relationship by 'keeping customers captive' with an exclusive contract.
  • Continue to develop and improve the services in response to environmental changes (iOS 5 or Android or Twitter or HTML5 or whatever comes along next....)
  • Minimise up front charges and have the accent on 'shared success', which means payment by results.
  • Respect the needs of the end-user first and foremost, and then provide close attention to the requirements of the publisher or the content owner.
  • Don't try to do everything and avoid customised solutions for individual publishers. That principle guides scaleable solutions but makes it hard to cater to individual RFPs!
  • Focus on the resources and integration that we can provide through web services (ours and those provided by other companies: Google, Twitter, Facebook, Dropbox, Amazon, Apple and yes Salesforce and
In short the API and the app store matter more to our publisher partners than the RFP.

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