The Service Dominant Logic and The Cloud, or why you should learn to love the Cloud and sympathise with Microsoft

I like to go back a little. So let me take you to back to 1934 and a chap called John Commons. John wondered how you might isolate each and every aspect of a firm such that you could identify which activites and attributes created competitive advantage and which detracted from it. Every transaction should be analysed - from procurement, through contract terms, delivery, premises and discounts, etc etc. Commons was way ahead of his time, and it took another 35 years before this found common (pun unintended) acceptance in Michael Porter's now famous five forces.  

So what has all this to do with the cloud? Bear with me...

The reason I bring up Commons is that it takes us back to the bean-counting side of realising competive advantage and value. Once we got all of Porter's fancy diagrams, some of the meaning got lost - it was just something you had to put in the marketing plan.

Now fast forward to Vargo and Lusch - a couple of guys that decided to give the startegy hegemony a good shake. They argue that the concentration of marketing on "goods" and transactional exchanges of tangible items was based on a now out-dated economic model dating back to colonial times. This paradigm needs to be updated to reflect a more service-oriented economy where value is derived not chiefly from the producers of goods, but from the owners of knowledge, expertise and skills. VAR's - that's you.

Sorry, I'll say that again - VAR's that's you, you, you, you YOUUUUUUUUUU!!!!!!!!! Its the very V and the very A of VAR.

So why do you now learn to love the Cloud?

Because the Cloud takes away a lot of the confusion caused by ISV's, hardware companies, hosters etc. claiming that they provide the value. They don't - they ship lumps of tin and bits and bytes. They may be very clever bits and bytes and the tin may have an inordinate number of slots in the back and flashing lights on the front - but in the hands of a customer they are about as useful as the proverbial bicycle to a fish.

Until you come in. You make it work. You make it real. You may even claim to make it dance and sing - you certainly should make sure it 'performs' (punny again!). You know how it should work for the industry of your customer, and what value it will afford them in saved man-hours, improved efficiency and savings from bottom, top and all lines in between.

And you do all of this becuase you provide the Service, and Mr Vargo and Mr Lusch say that service is dominant. Ipso facto you are dominant - and the dominant player gets to monetise the most. Unless, of course you are hung up on those ever-decreasing margins given out by the ISV's.

So, next time you are told by an ISV such as Microsoft or SAP that you have to love the Cloud, tell them that you do - and then tell them that you sympathise with the terrible position they will find themselves in.  For there's only one thing worse than not being dominant, and that's having once been dominant.

Product Positioning Pitfall

I was reading an article yesterday about the relative positioning of Dynamics AX, GP and NAV - yes, that old chestnut. The reviewer from dynamicsuser.net remarked on how much easier it was for the competition because they mostly only had one product.

My hackles were raised - Sage, Infor, SAP, Oracle? If anything their lives are much more complicated than that of any Dynamics product marketer. But the issue remains: why is this such a bugbear for Microsoft.

In Microsoft Dynamics (and this goes back to the acquisitions and Project Green) there has been an obsession with trying to get product positioning between AX, GP and NAV correct: or at least as correct as the market and the analysts can be content with. Various "solutions" have been offered from the ridiculous (let's give them each a colour), to the downright dangerous (the infamous product assessment tool that, when all else was even, recommended based on alphabetical order).

And there have been other, more noble and valiant attempts in between, but I am increasingly of the opinion that it was all a waste of time. The problem is one of depth.

In order to be successful, relative product positioning (that is to say the positioning of one product against stable mate) must apply at the level of the buying criteria of the consumer and be delivered by the creator of both products. This sounds both obvious (all marketing is) and easy to apply.

The problem with ERP solutions is that the buying criteria are often given artificial tags in order to make them comprehensible: company size, multi-national or local/ vertical, industry etc. The truth (we all know) should lie at a level of complexity far deeper than this. Unfortunately, though, sometimes it doesn't.

These days I increasingly work with organisations who are in the throes of implementation. And they have got lost. The product they bought is not the one which will cure their ills and deliver the much-vaunted promise of greater efficiency and ROI. The product is a square peg in a round hole, and in one case, far from delivering ROI, the company now needs more staff than to run their old system and orders are now out of the door two days later. They are looking for rescue, yes, and this can be achieved with time and money. But they are also looking or reason. 'Why was I told to go down route A, when route B (or indeed G or N:)) is clearly better for me?'

Well, the phrase 'caveat emptor' could be applied - it’s your own stupid fault for not looking hard enough, or in enough detail. But that's hard on the buying organisation - their job is to describe their business - as it is and how they want it to be - not to tral through feature and function. Or maybe it’s the Microsoft Partner - their job is to sell what they have though. If they don't represent GP, they are hardly likely to sing its praises: ask a blind man the way...

And so we come back to Microsoft. Customers get angry, questions are asked and the product teams take another shot at positioning. It’s a thankless task, most staff and partners will be dissatisfied with the results and it will help customer snot one jot. So, is there another way?

Yes, the relative product positioning of Dynamics ERP must apply at the level of the buyng criteria of the consumer and be delivered by Microsoft. The corollary of this statement is that Microsoft must deliver more depth and here lies the rub. There are a number of reasons they don't feel able to do so:

1. There are very few people in Microsoft commercial positions (sales, marketing) who understand the depth of these products, or can talk knowledgably about more than one of them. This leads to "default" behaviours, ie. bland positioning, talk to a partner for more, or, my product is best. These default behaviours reinforce the marketing positioning of the products and further mislead potential customers. Caveat emptor has replaced officium curae.
2. Microsoft will not give depth because it could compromise a partner. All partners are not equal, especially when a partner brings a nice juicy lead to MS. I'm sure you can imagine the conversations that take place, but the mantra - nice lead, wrong partner, nothing we can do - is a common one. 6 months down the line, of course, there is work for me and others sorting out the mess.
3. Microsoft is not really that used to having multiple similar products which compete. Once they had Word, they didn't bother acquiring WordPerfect or DisplayWrite, and the same is true for the whole of the Office Suite, Windows and Server/Tools. It’s very easy to keep your eye on the ball when there is only one ball. Moreover, providing positioning is about positioning with regards to the competition - and that's easy to provide a load of depth on.

So the cures for Microsoft are not easy, and not cheap. They could take on a whole bunch of product experts and risk the wrath of annoyed partners, they could get rid of a couple of ERP's and finally anoint "the chosen one", or they could go back to Project Green. Now there's a thought... what was it that was so wrong about Green? So long ago I can hardly remember.

Old friends and old ideas

Met an old colleague today to talk about VAR's in the IT industry. All vendors want to tie VAR's to their products - an understandable instinct. If they can get loyalty then the sales will follow. But often the sales don't follow. Why?

I think this is because VAR's and vendors mistake software for solutions. Bits of software, from individual apps to whole technology stacks get called "solutions" too easily and too readily. They simply are not.

And so the role of the VAR get's confused. The "V" in VAR just means the implementation and support of the software they are selling - but that is very limited and not at all what customers want. They want solutions to their problems - not "software solutions" but real solutions.

So I ended up thinking about something I had been talking to TES about. Ie the immortal words of David James at Henley MC. Try turning the phrase:

"Finding customers for products"

into

"Finding products for customers"

Just turning that phrase around gives you a totally different perspective on what the V could be in VAR. Get it right and you will avoid the competition over day rates and make yourself your customer's trusted advisor.

Now, and only now can you start thinking about CLV with any hope of exploiting the opportunity to the full.

Steve