Do you experience it’s getting harder and harder to compete with your business software? Do you experience diminishing levels of differentiation? You’re not alone. According to a recent Ovum study, almost a quarter (24%) of high-tech businesses are unable to keep pace with changing customer expectations. Software companies seem to be squeezed from two directions: they had the second highest score (22%) for being unable to keep pace with escalating customer expectations and the second highest score for competitive pressure (7.1).
There are some core reasons mentioned for this:
- New disruptive market entrants” are seen as the top-ranked contributing factor to competitive intensity. This accounts for 18.5% of all “top factor” concerns (rising up from the second-placed “top factor” concern in 2016).
- This top place is jointly held with “ease of substitution of one product or service for another in the customers’ eyes.”
- The largest overall concern was “new products and services causing market fragmentation.”
Now the key question is? What’s keeping business software companies from fighting back? I see ISVs being challenged in a variety of ways:
1) The problem you solve has lost its priority/urgency
In other words, your market has shifted in front of your eyes, and you haven’t moved with it. This is a typical result of the technological evolution of the past decade, globalization, and economic shifts. Customer experience, for example, has gained privileged over back-office automation, Outcome-based services are gaining popularity over Output-based services, etcetera, etcetera.
2) The solution you offer is looking for a problem, rather than the other way around
A common issue with many ISVs is their approach to start their solution approach from the point of using specific cool technology. The current hype around Artificial Intelligence is a perfect example of this. The thinking is “Because the technology is cool, the solution will be cool”. What this is resulting in is solutions looking for a problem, instead of addressing a problem looking for a solution. To make a dent in the market is (and will always be) about offering a breakthrough solution for an existing industry problem, redefining and solving an existing industry problem, or last but not least, identifying and solving a brand-new problem / seizing a brand-new opportunity. Everything else is doomed to fail.
3) What you solve isn’t creating a big enough impact
Simply challenge your solution with the simple question: What’s the single element of your solution that (has the potential to) deliver exponential value to your customers?
Many ISV’s follow the good principle of being customer led. The problem starts however if you are listening to your customers, but rather than listening and challenging them to uncover for hidden needs, you’re responding to the specifications they give you. Remember, your customers are not paid to create solutions, that’s your responsibility. It’s your job to find the needle in the haystack that could revolutionize the impact they can make. If Henri Ford would have asked his customers what they wanted, they’d asked for a faster horse. Instead, he created a car. – The rest is history. This is your duty as well. And this requires a different mindset.
4) You’re not changing behavior
Ask yourself: Is the solution we’re creating aiming to solve a problem that we’ve tried to solve (as an industry) for the past decade(s)? If yes – isn’t that proof enough the whole approach is inadequate in the first place? What would you do if you’d be entering the market today as a startup? What would you do if you had a clean sheet of paper? What’s stopping you from taking this fresh approach? To create differentiation, you have to break with traditions.
5) You believe you’re stuck in a trajectory of historic decisions
An old saying is “When you look at everything that goes wrong historically, you can see a deep chain of continuous mistakes that lead up to it.” In a way, this is very discouraging. However, if you turn it around and think ‘what if I did something right, right now’, you are starting a whole new chain of actions that could lead to a fundamentally positive outcome. So even if you are going in ‘the wrong’ direction, everyone can stop, do something small, and turn the trajectory. Think about it – what would be your first small step?
6) You’re not prioritizing with impact in mind
Last but not least – your backlog looks intimidating, and you believe you should prioritize bottom up, rather than top down. As you evolve and grow your customer base, many ISVs fall into to the trap of crushing their roadmaps with small features, maintenance, contractual obligations, etcetera. The result: This approach leaves no time, no budget, nor energy for the ingredients that will define your future, and not only yours, but it’s also as well impacting the future of your customers! I have heard it many times: “The long-term is about a lot of short-terms”. Very correct, but that doesn’t mean you should stop thinking strategically. To achieve your big ambition is a matter of many small, but rightly focused steps.
It’s time to evaluate your product strategy
So, maybe you’ve lost your edge. Perhaps you indeed need a new product vision. Remember, it’s never too late to change direction, to change the course, shake up your roadmap and free-up the space to focus on a range of small projects that have the potential to deliver exponential impact. Your customers will applaud for it. And not only that. It will give you a new edge to outperform your rivals, or better, create a completely new market segment, generate new customers and acquire top talent in your niche based on newly gained momentum.
If you believe it’s time to do something about it, I can help you rethink your approach to refresh your product portfolio and product marketing approach. I’ve developed an approach to ‘inspire your business future’, a service designed to make your business software company remarkable again.
You’re only one step away from changing the course of your company: click here.