It is in economic hardship that many offerings are put to the test and not least, the enterprise software offering. I’m reminded of this every day since I work supporting one of the most well-known suites out there, Microsoft 365 (disclosure). It was brought back to my attention by this post in The Information: Zoom Could Draw Suitors Even Though Customers Are Balking at Software Bundles (registration may be required). The context is Cisco being a potential suitor to Zoom.
The nub of the article as it pertains to what I want to talk about is captured in an excerpt below:
The question is whether Cisco, or another enterprise software firm, could get full value out of (acquiring) Zoom – part in brackets mine. The point of our report today is that customers of enterprise software tools are becoming increasingly resistant to buying bundles of software products. Like the millions of consumers who’ve dropped cable TV in the past decade, irritated at paying a fortune for channels they don’t watch, cost-conscious companies are now questioning why they’re paying for software tools they don’t use, according to the report by my colleague Aaron Holmes. This isn’t an issue just for Cisco—it likely affects all enterprise software companies that pitch bundles of different software services, from Salesforce to Oracle to Microsoft.
I’m not sure on what basis they conclude that “customers of enterprise software tools are becoming increasingly resistant to buying bundles of software products”. There is reference to a report but no detail. It does make sense on the logic of it – why pay for things you don’t use. Especially in challenging economic times.
Suite or best of breed is a longstanding discussion topic. Although the article has another focus, it does touch on one more aspect for suite or bundle sellers: “…software firms need to justify the value of each tool, rather than trying to use one to sell another that may be less popular. Another option is that software firms will need to sweeten the pricing on bundles”.
Which is where I’d like to focus next, to bring two important yet different perspectives.
What buyers care about
Buyers are often a collective, like a purchasing department. Or it comes down to a single or few decision makers with a budget. They are the ones who care about cost and price and all roads lead to them. They very often have no idea of the user’s perspective as they should – they are making decisions based on cost.
On the slim chance they do care about the user’s perspective, it’s often just to determine how many users are using a given tool so they can argue they should pay only for what is being used. I often get the request to help determine what current usage rates are.
Not to say there isn’t merit in usage-based pricing models and there are a lot of SaaS vendors moving in that direction.
The problem with just focusing on usage is that it is a proxy for value but says nothing about actual value being gained from the use of a tool and what that is worth to a customer.
For this you need to get the users perspective – more on that below. But if cost is the primary concern, then for sure you need to be justifying the value of each tool, whether standalone or as part of a suite. Bundling good with bad is never a good idea. More on value later.
What users care about
Users care about utility. How easy is it for them to do what they need to do. How does a tool or set of tools help them get their job done, on their own and/or with others.
What business outcomes does the software help them achieve is probably the most important metric focused on.
Sometimes needs are unarticulated or unmet and you need to help identify them and sometimes they are blindingly obvious. The more you can help users map outcomes to these needs, the better. Bringing this back to the buyer/s will make a pricing or cost-based discussion much easier.
With collaborative software the value is often collective, i.e. you get more value out of it, the more users use it, so called network effects. When collaborative software is used as a layer on top of other software, and you can collaborate successfully with others when using it, value doubles. I’ve written about collaborative apps before: Hyperconnected business and driving the next level of productivity with collaborative apps.
The single most important thing to focus on when trying to capture what users care about – stories. User stories are not the same as user personas which are typically created beforehand and used to help define how you develop products or sell them. User stories typically happen post use and capture how a product has been used and to what end. Ideally it captures successful use or why create them (other than for lessons learned) and if done well, will spur on further successful use. Brief thoughts on a related topic here Thought Rocket: Anatomy of a Perfect Customer Success.
What really matters and what you should focus on
Outcomes and the value they create in business terms and in the eyes of business users to make it super clear. I’ve given examples of what I mean in relation to a product suite here: How Microsoft Viva can drive Performance – Correlating and Tracking Business Outcomes.
And just to bring it back to the suite versus best of breed context which I’ve digressed from slightly 👇
Interoperability, which is where platforms come in, makes for more usable products in a suite.
When you consider that in organisations these days, the average number of Apps being used (depending on the research referenced) is 1-200 Apps, then anything that can be done to make these work better together, so much the better for the users and ultimately the business.
Because one tool can never do it all (especially in complex organisations with many needs) and shouldn’t, this would seem to lend itself to the suite argument. This is totally ignored in the article, but I guess that wasn’t its point.
Not that I am pushing for one or the other. But when a suite is a platform that drives interoperability and delivers multiple and much needed functions in a joined-up way, without redundant or unnecessary features, it will beat best of breed any time. And it will win because it delivers better value in every sense, not just in better business outcomes but better value for money too.