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Digital Transformation means technology vendors too!

DEC 09, 2019 | Matt Hatton
region: ALL vertical: ALL technology: ALL

It's not technology, it's people and process

It would be generous to describe the idea that “digital transformation is not about technology it’s about people and processes” as a well-worn trope. Less generous would be to describe it as infuriatingly banal.

We all know that.

Most importantly the enterprises deploying new technologies know.

You don’t need to tell them that the biggest struggle will be in changing decades-old business processes or getting old hands to adopt new practices. Signing a contract with a tech giant and plugging in a new box is the easy bit.

However, a glance at twitter conversations about digital transformation would lead one to believe that it is considered a spectacularly insightful revelation. All of those “3 techniques for ensuring your digital transformation success” or “5 failures when implementing AI” (or whatever) almost always include some reference to it. It’s the new “people don’t buy technologies, they buy solutions to their problems”, which is another phrase that the issuers seemed to think was a great revelation.

Rest assured that enterprises who are buying and deploying new technologies know that they have an uphill battle to navigate the human and commercial challenges internally. What has been given precious little coverage is the fact that suppliers in the space have been very slow to adjust to the fact that these are the prevailing challenges for their customers. That’s what I want to talk about in this blog post: how do vendors of technology products and services need to change their approach to reflect the real challenges that their customers face with deployment?

Here are a few things to think about with regard to selling disruptive and transformational new technologies into enterprises.

New sales strategy

Firstly the sales strategy needs an overhaul. One of the assumptions among vendors is that having a history of selling your legacy products to buyers within an enterprise means that you’ll have an easier job selling new disruptive technologies to them. Take, for instance, mobile network operators (MNOs) who sell some form of service to every enterprise on the planet. Does that mean they will be better placed to sell IoT services? Only at the most rudimentary level. The buyers of the innovative, disruptive and new technologies (which often sit in dedicated innovation business units) are very unlikely to be the same people buying more traditional services, which will often be handled by procurement and/or the IT department.

In the same way that the buyer will tend to be different (as addressed in the previous paragraph), so too should be the seller, i.e. the specific salesperson handling the account. Almost without fail the sale of more novel DX capabilities will require specialist technical sales support. It’s a different proposition from the sale of more established products.

Long-term relationship building

Secondly the vendor needs to position itself for the long haul. In most cases in DX the transformational nature of the products and services being offered necessitate a long-term relationship. The client is often fundamentally changing how it operates, embedding multiple new technologies within their core business. There are some exceptions of course, with most Robotic Process Automation deployments only likely to be for a few years, but IoT and AI deployments are decades-long engagements involving technology that is decidedly non-core for the client but which significantly affect the core business. The vendor is being entrusted with the long-term success of the enterprise, so the former had better be damn sure to establish a reputation for long-term reliability. This also points towards having things like pricing structure and internal KPIs that are predicated on long-term ongoing relationships rather than short-term unit sales.

Services-based business models

Finally, vendors need to realise that everything is a service now. The sophistication and importance of the technologies being implemented, mean that products almost invariably require some kind of systems integration and support. This can be done by third parties, of course, but who is better placed than the vendor to do it? It was interesting to note Libelium’s recent decision to pivot towards IoT project deployment rather than just focus on hardware. I commented at the time that “the less scaleable but still nicely profitable role of implementation is actually noticeably underserved, particularly by companies that actually know what they’re doing.”

For a start-up vendor, client-specific customisation and consulting can be an unwanted distraction from building the core product. However, the vast majority of players in these technology spaces can’t be the perfectly scalable technology unicorn, but they can be the specialist integrator, accepting a lower multiple on valuation because they aren’t as ‘scalable ’. This is particularly appealing once the vendor has been through the initial build phase. Plus, there are nice defendable, high margin long-term cashflows associated with being the de facto incumbent.

It goes without saying that these recommendations are somewhat generic as the challenges of selling IoT is different from selling AI or distributed ledger, not to mention that the buying patterns of different verticals will vary wildly. Over the next few months we at Transforma Insights will dig further into the challenges of deploying and supporting the implementation of all the various types of new technology.

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