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Whilst carrying out some research recently I realised that I need to arrive at a more granular categorisation of the types or categories of value propositions that vendors use.

And in attempting to do that I stumbled across an interesting read on the ITSMA site entitled Why You Need Three Different Types of Value Propositions. I hadn’t heard of ITSMA before but it appears that they  focus on helping high-tech organisations to market solutions and services. I’ll certainly track them from here on in because I felt that I could have written the blog entry myself as it matches my own personal experience very accurately.

The three types of value proposition that the author refers to are in fact not the same as the categories of value proposition that I’m looking for but more of that in a future blog entry. But, I was also struck by the process that the author Julie Schwartz advocates for developing value propositions see below:

Step 1. Understand the market and clients.

Step 2. Determine your true differentiators.

Step 3. Articulate unique value based on customer need.

Step 4. Quantify value.

Step 5. Elicit internal and external feedback and revise.

Step 6. Collaborate with sales to communicate value propositions.

as again it is similar to our own advice on building propositions in my blog entry from last November here.

1. Understand what the competition is doing

2. Understand your own capabilities and how you are different from the competition (*and change your positioning and messaging if required)

3. Understand where your prospects are still willing to spend money – the funded initiatives

4. Understand what pain is causing the prospect to still spend money – what are they looking to achieve?

5. Create messaging by mapping your own capabilities and differentiation, to the prospect’s pains and their willingness to spend

6. Retrain the sales force with the new focus/messaging

7. Use the right medium to get your proposition in front of the right person in the right organisations

Having said all of that, I do feel that there is a terminological difference between Julie’s value proposition and my own. I think the use that Julie has settled on, and let’s be clear there are no hard and fast defitions for the stuff – it’s a matter of personal preference, is similar, but not identical to some of the elements of what I would refer to as the positioning statement.

Personally, I use the value proposition term in two ways. Firstly, and very generally, the statement of the type of benefit that will be enjoyed AFTER a prospect has become a client.

Examples:

It will reduce the risk of failure

It will deliver projects quicker

It will increase profit

Secondly, the internal strategic marketing deliverable that product marketing/communications individuals are responsible for crafting is a formal definition of a specific proposition to a specific audience.

For this I usually follow a format similar to the one below:

1. A statement of quanitifiable benefit that a specific audience will enjoy AFTER they do business with you

2. An interpretation of what that benefit will mean for the specific audience

3. Proof of where the company has previously delivered this value to a similar audience and what the result was

An example (numbers only to illustrate the sections above):

1) By utilising our technology, mobile telephone operators can roll out new services between 2 to 3 months earlier than traditional approaches.  2) In a very competitive market this provides significant competitive advantage and increased revenues as enjoyed by 3) XYZTelco who we helped to bring a location-based SMS service to market in under 3 months from project inception. This led to them gaining a market leadership position for this service.

Anyway, I’ll revisit the categories of benefit/value that I’m really interested in an an up-coming blog but I thought I’d share this interesting read with you.

Danny Goodall

As mentioned earlier in these pages I’m documenting my quest to arrive at a market segmentation model of the cloud computing market. This will allow me to perform a series of REPAMA competitive marketing studies into various vendors in the cloud computing space. I’m uncovering more and more interesting research as I go and one such piece is described below.

The smart people at NIST (The US Governmental agency responsible for something or other – standards I think) have released some interesting work on cloud computing. Aimed at reaching a common set of definitions around cloud computing and its use cases, but recognising that these will change over time, their work can be found here.

I’ve reproduced some sections below because I think they add something to my quest to segment the cloud computing market. That said, I think they’ve omitted, perhaps consciously, an important characteristic and that is the commercial arrangements around cloud computing – namely its pay per use nature.

Anyway here goes:

A Definition of Cloud Computing:

Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models.

Essential Characteristics of Cloud Computing

On-demand self-service. A consumer can unilaterally provision computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction with each service’s provider.

Broad network access. Capabilities are available over the network and accessed through standard mechanisms that promote use by heterogeneous thin or thick client platforms (e.g., mobile phones, laptops, and PDAs).

Resource pooling. The provider’s computing resources are pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand. There is a sense of location independence in that the customer generally has no control or knowledge over the exact location of the provided resources but may be able to specify location at a higher level of abstraction (e.g., country, state, or datacenter). Examples of resources include storage, processing, memory, network bandwidth, and virtual machines.

Rapid elasticity. Capabilities can be rapidly and elastically provisioned, in some cases automatically, to quickly scale out and rapidly released to quickly scale in. To the consumer, the capabilities available for provisioning often appear to be unlimited and can be purchased in any quantity at any time.

Measured Service. Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (e.g., storage, processing, bandwidth, and active user accounts). Resource usage can be monitored, controlled, and reported providing transparency for both the provider and consumer of the utilized service.

Service Models:

Cloud Software as a Service (SaaS). The capability provided to the consumer is to use the provider’s applications running on a cloud infrastructure. The applications are accessible from various client devices through a thin client interface such as a web browser (e.g., web-based email). The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings.

Cloud Platform as a Service (PaaS). The capability provided to the consumer is to deploy onto the cloud infrastructure consumer-created or acquired applications created using programming languages and tools supported by the provider. The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, or storage, but has control over the deployed applications and possibly application hosting environment configurations.

Cloud Infrastructure as a Service (IaaS). The capability provided to the consumer is to provision processing, storage, networks, and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications. The consumer does not manage or control the underlying cloud infrastructure but has control over operating systems, storage, deployed applications, and possibly limited control of select networking components (e.g., host firewalls).

Deployment Models:

Private cloud. The cloud infrastructure is operated solely for an organization. It may be managed by the organization or a third party and may exist on premise or off premise.

Community cloud. The cloud infrastructure is shared by several organizations and supports a specific community that has shared concerns (e.g., mission, security requirements, policy, and compliance considerations). It may be managed by the organizations or a third party and may exist on premise or off premise.

Public cloud. The cloud infrastructure is made available to the general public or a large industry group and is owned by an organization selling cloud services.

Hybrid cloud. The cloud infrastructure is a composition of two or more clouds (private, community, or public) that remain unique entities but are bound together by standardized or proprietary technology that enables data and application portability (e.g., cloud bursting for load-balancing between clouds).

I think this is a really nice and compact definition of cloud computing it characteristics and use cases. I particularly like the notes on deployment models which I certainly want to incorporate into my cloud computing market segmentation.

Kudos to Peter Mell and Tim Grance of NIST!

Danny Goodall

I’m continuing the REPAMA Segment Analysis Study into the Cloud Computing market attempting to arrive at a solid market segmentation and two things have become very clear.

Firstly, every vendor with a remotely related proposition appears to have added the word “cloud” to their product name, presumably in an attempt to bask in the reflected glory that cloud computing provides, perhaps in an effort to appease their investors. This means that there are a large number of vendors claiming to be part of specific segments that may or may not have legitimate claims. This makes the process I’m going through confusing and messy. And if I, as a marketing analyst am having problems, I wonder what sort of success a legitimate prospect would have in finding the product/service they need.

Secondly, the market is still in flux and as such nailing a clear segmentation down is, for some time, going to be like herding cats. This is a classic early market symptom where the market is currently led by vendors’ own ideas about what is needed and what is possible. Once the market starts to form properly and vendors align behind what their prospects and customers are actually buying, then the segmentation will become clearer.

But I have to start somewhere and the good news is that I’ve been corresponding with both Peter Laird of Tendril Inc. and Brad Buck of OpenCrowd and they both have given their blessing to this project and have offered to help if they can. Most importantly they are both happy for me to use their work on a cloud computing taxonomy/model, here and here, as a starting point for my cloud market segmentation.

One thing that I quickly realised was needed for my purposes was some form of professional services (human skills) offer. Plenty of large consultancies, smaller integrators and boutique IT shops offer consultancy services around cloud computing. Both Peter and Brad have rightly focussed on the categorisation of product capability and customer need in fleshing our “their” taxonomy. But to fully understand what propositions are being put together to service the cloud computing “need”, I must include cloud computing professional services.

So far I’ve identified the following list of services under the category of professional services. I suspect that it will grow some and be rationalised some before I finish.

• Strategy, planning and design
• Migration and implementation services
• Testing
• Security
• Cloud application design/porting
• Support services and training

I suspect that cloud application design/porting will be a relatively niche category for a while and that testing, security and support services may all become amalgamated as I carry on my research.

Another major category of cloud computing offer that has also presented itself is that of “Channel”. A number of organisations are white labelling, OEM’ing, reselling or otherwise fronting cloud vendors/service providers’ offerings. One concern that I have is that this sort of partnering is very common in hot early markets where one vendor with no cloud proposition hastily signs a partner agreement to simply tick a box. It does’t mean that either company will do any real business.  I’ll do some digging and and if it looks like a real enough category I’ll add it and blog on it soon.

Danny Goodall.

Just a quick note to say that I’ve updated the Lustratus REPAMA Guide to version 1.1. I’ve added three more studies that have been part of our analysis for some time but hadn’t quite found their way into the guide.

These are:

• Depositioning focus
• Differentiation strategy
• Perceived threat

All of these studies are concerned with interpreting how the vendors under scrutiny approach competitive differentiation in one way or another and are now explained in the guide.

The Lustratus REPAMA guide is available for download, and for the first time in HTML format. Click here for more information.

In putting together our REPAMA analysis into the go-to-market strategies of the vendors in the cloud computing space, we first must arrive at an agreed segmentation of the market. This blog documents that process.

OK so as I mentioned here, I am going to carry out a series of REPAMA Segment Analysis Studies into the cloud computing market. The desired end product is a series of reverse-engineered go-to-market strategies for a set of vendors in each of the categories within the cloud computing market. But first I need to decide on the segmentation of the various technical offers in the cloud computing space.  After that I need to decide which vendors fit into each of the different proposition segments. This series of blogs will capture my journey through this analysis.

Where to start? Well I thought that my colleagues Steve Craggs and Ronan Bradley at Lustratus Research (the market analyst part of Lustratus) would be able to give me a definitive answer on the segmentation of the cloud computing market but as Steve told me, right now there isn’t a universally agreed way of describing the various categories of propositions under the cloud computing banner. Whilst he feels their are some obvious high-level classifications, under there things are a bit grey.

The problem is two-fold. Firstly, it appears that as the cloud computing market is currently at an early stage (albeit using what now are some pretty mature technologies); the propositions have grown, merged, change direction and are only now starting to find live customers amongst enterprises; so categorisation has proved difficult.  Secondly, the analysts involved in this space each has a vested interest in classifying the market on their terms and importantly in a different way to their analyst competitors – a game they will play until the market matures.

So I decided that I would capture the opinion of the great and the good of analysts and vendors alike and come up with our own classification. And in doing this a number of existing works stood out.

1. Peter Lairds – On-Demand Blog Classification

Peter Laird’s “Laird On-Demand blog“, and in particular this post, documents his efforts to arrive at a market taxonomy for Cloud Computing together with a nascent list of the vendors that fit into each category. As you can see from the diagram on the right, Peter is a fellow fan of mind mapping (it’s how Lustratus collects, collates and generally makes sense of the raw data behind the REPAMA studies), his classification has a simplistic appeal that I like.

At the highest level Peter divides the cloud market into

• Infrastructure
• Platform
• Services
• Applications

I feel that this a good way of looking at the cloud market and one that works well for my purposes. I also like the way Peter has classified private and public cloud seperately.  From the perspective of the REPAMA analysis I will be conducting, this is an important distinction between the various vendors’ propositions. (This despite the fact that the same software and vendors may appear in both categories).

2. OpenCrowd Taxonomy

Another interesting approach is provided by OpenCrowd.  I don’t know OpenCrowd but they appear to be a RIA vendor but also deep thinkers who really understand the major trends in the markets in which they compete. They’ve looked at cloud computing and have come up with a very thorough classification as shown in the diagram on the right.

They see the market also categorised into 4 high-level categories:

• Infrastructure Services
• Cloud Software
• Platform Services
• Software Services

OpenCrowd has also gone to considerable effort to sub-categorise these high-level categories and also to identify specific vendors associated with those sub-categories. Again I like this approach for its thoroughness although having looked at some of the vendors in each of the categories, its clear that they have been placed there/asked to be placed there simply because they want to bask in the reflected glory of the cloud computing market, as opposed to having a dedicated or specific cloud focus.

3. Christofer Hoff’s Cloud Model

Finally, a more technical classification comes from Christofer Hoff in his highly entertaining and incredibly well thought out security-focused blog – Rational Survivability. In this entry Hoff publishes his architectural model which appears to be largely aimed at understanding the interaction, dependencies and relationships between the architectural components in a cloud architecture from a security perspective.

It’s useful to have an architectural model to work with as this helps to validate that the vendor-led offers into the cloud market as described above, have some basis in fact. Whilst it won’t figure in my market-led classifications I have added it here for completeness.

So I’m still in the process of collecting my ideas and I’d like to take bit of 1. and 2. above and merge them into something that better reflects the vendors’ perspectives of how they take their products to market. I also need to first ensure that both Peter and OpenCrowd are comfortable with me doing that. The model I arrive at will necessarily be far simplified too as for the purposes of my vendor to vendor comparisons, I need to ensure that I group vendors together that compete even if they don’t intellectually appear to fit into the same market categorisation.  Watch this space.

Danny Goodall.

• Infrastructure
  Public
  Private
  Infrastructure
  Platform
  Biz Users Platforms
  Dev Platforms
  Services
  Storage
  Integrate
  Enablers
  Applications

Carrying on from my blog on “corporate shyness”, I’m looking here at the different ways we evaluate information and make decisions. The first thing to say is that this is a big subject and one that others are much better qualified to cover than I am. Myers-Briggs has led much of the work on personality types and if you’re looking for in depth information that is not a bad place to start. But I am going to look at how personality traits influence the way we make decisions and what impact that might have on a marketing strategy aimed at influencing people.

Intuition

People who rely on intuition to make decisions typically believe that they see the whole picture.  They feel able to quickly see things in the context of a wider perspective.  When presented with details or detailed arguments, intuitive people will feel uncomfortable or even claustrophobic and will instead lean on what they instinctively believe.

Intuitive people are said to favour products that are positioned as breakthrough or next generation. Strategies like these speak to their self-perceived ability to see trends and to place their decisions in the context of these trends.

Intuitive people are therefore likely to respond well to high-level marketing materials that place a technology or a company in terms of trends or breakthrough strategies. Language that claims and defends a new product category for a company will be appealing to intuitives. Details will likely turn off intuitive people to a particular argument.

Thinkers

As the name suggests, the “Thinkers” classification is one that psychologists use for those amongst us who like to rely on their grey matter to arrive at decisions. They typically have very a highly developed sense of logic and enjoy the analytical element of decision making. Processing data and wading through information is what these people are all about.

When putting propositions to thinkers one should be aware that they will latch onto elements that flow logically. Claims that a product can achieve something without supporting information will be likely to turn Thinkers off. Claims that can be validated using their analytical capabilities will, by contrast, draw them in.

For example

Bad…

“The fastest product in the market”

Good…

“By combining ultra low thickness manufacturing techniques with multi-core processors, our new processors outstrip the competition by a factor of two”

Sensors

Sensors again like to deal in facts and distrust quickly formed opinions, generalisations and hunches. They prefer to deal in the tangible  raw information that is at hand. Facts are important and Sensors have the ability to wade through a great deal of detail and to see the facts in context.

Sensors enjoy messages and campaigns that allow them to rely on their “senses” and experience to understand. Messages that state facts that are “generally” understood work well with Sensors. Their ability to “know” that these claimed facts are true reinforces and validates their beliefs. “Service Oriented Architectures now dominate architectural design and ACME is the leading exponent…” may appeal to a Sensor because the fact that they “know” that “SOA dominates architectural design..” validates the statement in their mind.

Feelers

Feelers are a tough crowd in terms of Business to Business sales and marketing.  They tend to arrive at their decisions by trusting their emotions. Detailed discussions turn them off and instead they are sensitive to the feelings of others.

Third-party recommendations from people that Feelers trust or expert endorsement that “feels” real work well with Feelers.  ”Leading CEO Bob Trustworthy says he chose ACME because he trusted the people he was dealing with…” might be an approach that would work but to be honest this is a personality category that matters more in face to face sales situations than in outbound marketing communication.

It’s important to stress that whilst some of these traits discussed here will be dominant, we each of us has a mixture of these personalities traits and are not simply one or another. That said, psychologists do tell us that we fall into one of two broad categories.  We’re either predominantly Perceivers (Intuitives, Sensors) or we predominantly Judge (Thinkers and Feelers).

How does this manifest itself in marketing strategies and tactics?

Well we first have to ask ourselves if it is possible or realistic to create different marketing messages, collateral or  programs for specific personalities. It’s normally the job of the sales team to identify and exploit these personality traits in one-on-one meetings with their prospects. To expect the marketing team to cater individually for each personality type is pretty unrealistic.

It is however critically important to realise that you need balance.  This can be overlooked if your product management/marketing team is good at creating one type of collateral. For example- if the team naturally favours detailed technical specification and performance information, it is essential to realise that some prospects will positively avoid reading such material. Therefore you may need to balance such material with material aimed at other personality types as well.

It is worth stating that personalities types can congregate in specific job roles or even specific industries.  For example, it is common in my experience for there to be more Thinkers than Feelers in the highly technical discipline of software development. But as you move away from the coal face of the overtly technical disciplines and start to look at the management levels in the IT domain, it is my experience that you find people with a rounder set of personality traits.  (I am aware that this appears like a massive and clumsy generalisation – please see the small print below before suing me…)

The small print (Ironic eh?).

Please note that this is not precise science and that wide generalisations have been used to illustrate points. Subtlety and interpretation are critical when dealing with the psychology of product marketing. Lustratus helps technology companies to market themselves more effectively in a business to business context. As such some of the examples in this blog may not be completely relevant to other industries. That said I’m fairly confident that the principles apply across many industries.

Further reading – well anything on differentiation and specifically anything by Al Ries and Jack Trout.  Differentiate or Die by Jack Trout is a good place to start. Detailed information on the Myers Briggs psychometric studies can be found here.

Danny Goodall

I hope you like the alliterative heading for the blog which was born from some work I’ve been doing recently for a client.  I’m not sure that diffident is exactly the right word but there was no way that I was going to ditch it when it looks so beautiful set against all those “diff” words.

Anyway, I was struck recently by the reluctance of some people to fully embrace the concept and importance of aggressive differentiation.  Whilst I’ve long understood that different types of people reach decisions about products (and lots of other things too) in different ways based on our bias towards one of the following psychological functions (Intuition, thinking, feeling and sensing), I’ve seldom before encountered this on the vendor side of the marketing battle.

I’m certainly not sitting in judgement on this.  On the contrary it has made me look carefully at the way I work with my clients moving forward.  My client has a very strong business and is growing at an incredible rate but they are starting to encounter stiff competition hence my involvement.  I’ve been working on strategies to help to grab a position in the market for them that will undermine their competitors and am pretty pleased with the results.  It’s been a great project and I’ve really enjoyed working with them, they are top people and have great products.  The problem lies in their reluctance to stick out their chest, beat the drum and proclaim their greatness.  They are, I guess you would say, corporately shy.

It made me dust off my copy of Differentiate or Die by Jack Trout to review the psychology of differentiation but this time from the perspective of the vendor.  It set me thinking there is no “one” way to build differentiation strategy.  Whilst it’s important to be able understand the behaviour of your target audience, it’s also important to ensure that you are happy with the chosen strategy and that it sits well with the philosophy and perhaps even the ideology of the company itself.

For example could Company A, staffed and populated by conservative and modest management feel comfortable going to market with a message of “We’re different from Company B because we do X better than them”?  It’s not an easy step for them to take.  The opposite of this would be to expect a vendor who really understands competitive differentiation such Oracle to say “Test our product and it will speak for itself”.  Whilst this might be true a company like Oracle will never turn up the opportunity to thrust the differentiation dagger into the chest of the competition.

Somewhere in the middle lies the truth I guess.  There is immense credibility, not to mention the moral high ground in looking to let your product win the battle for you.  But equally, aggressive marketing by aggressive competitors can cause you to be de-positioned in the eyes of your prospects such that they think they know where you are positioned and won’t even bother to evaluate the product.

So I’m going to cover this subject in a series of short blogs taking a look how differentiation works from a psychological perspective and how this translates into corporate psychology.

Danny Goodall.

Just a quick note to say that the updated High Performance Messaging REPAMA Segment Analysis Study has been uploaded to the Lustratus site.  It now contains the reverse-engineered product marketing strategy for TIBCO’s Messaging Appliance P-7500.  Existing customers and Lustratus research subscription holders will already have been contacted with details of free upgrades.

Following on from the blog entry I made when the first version of the report was released I thought I’d show the updated value proposition below.  As I mentioned in a previous blog entry TIBCO’s primary competitive focus is very unusual – it is TIBCO Rendezvous – one of its own products.  The different approach to the market doesn’t stop there as you’ll see from the report extract below.  TIBCO also plough its own furrow by taking a different proposition to the market when compared with most of their competitors.  This one based around green IT and data centre costs (in addition to the obligatory low latency = competitive advantage proposition).

For more information on the REPAMA methodology visit here.

Danny Goodall.

So closing out this series of posts looking at differentiation in markets where technical standards have caused little technical difference between products, I’m going to look at standards bodies and technical education as a technique to create differentiation.

Preach the gospel – Educate

The first point to make is that in my experience products that have developed through the process of ratification of technical standards, first find an audience amongst the technical community.  This means that there is an opportunity, albeit with a finite window of opportunity, to become the first vendor to provide education together with access to evaluation software for these early technical evaluators.

I’ve had first hand experience of this early stage marketing exercise.  We fed the thirst for knowledge and the need for evaluation software (to mix metaphors) to build a loyal community of technical evaluators, developers and systems architects.  We were able to craft an image for the company as the developer-friendly standards implementer, the first company to turn to when wanting to understand how the standards should be interpreted and implemented.

Obviously at some point you have to turn this rather “altruistic” approach into a business that  licences software and keeping that audience with you as you do this is not easy.

“Work” the standards bodies

Another technique that can be exploited, although it needs significant “muscle” to be able to carry off, is that of leading that standards-bodies.  Again I’ve had experience of working for a relatively small vendor that was represented on standards-bodies where we came up against larger vendors.  These vendors were able to almost completely dictate the direction of the body through a mix of funding, bluff, bluster and threats.  It was an interesting process to observe and the outcome, whilst not being everything that larger vendor wanted to achieve, was that they were able to grab territory from other vendors on the committee.  If a camel is a horse designed by committee then all I can say is count the humps on the back of the standard when a large technology vendor charitably volunteers to donate 50 man years of code to “expedite” the adoption of the standard.

Time to abandon standards

Lastly, understanding at what point it is right to move on from the standards to create a “proprietary” offer is important.  This may not be a public admission that your product now features proprietary capabilities alongside the standards-based functionality, but the point will come when in order to take the product forward at the pace required standards become secondary.

Using this message of “We have used standards to get ourselves to this point but now we need to implement specific technology to deliver what the market really needs” can be powerful but is a double-edged sword.  Being seen to “abandon” standards in this way can have a very negative reaction.  Whilst this would typically only happen once the market has reached the later stages of maturity, the benefit to the vendor that can first differentiate with proprietary features whilst externally still being perceived to embrace the philosophy of standards is significant.

So if you can be seen as more devout than the other guys, and preach the standards gospel further afield than anyone else, you can grab a position in the market that other vendors will struggle to defend.

Danny Goodall

I’m carrying on this series of posts on how vendors can differentiate themselves in the market when technical standards have had the effect of removing significant functional difference between competitive products.

This time I’m going to look at partnering to create differentiation in your offer.  Whilst the product proposition will remain materially similar to that of the standards-driven competition, a proposition carved from the synergies of the product and a strategic partner can be beneficial.

Partnering – Other complimentary vendors

As I suggested in this post, broadening the product portfolio is one way to create differentiation.  Whilst this can be done through internal product development, it is also possible to broaden the product proposition through strategic partnerships.  Obviously there are some ground rules here.  Firstly the products must be complimentary in that they should not overlap functionally.  Secondly the resultant product set must take the vendor into new areas when compare to the competition.  Thirdly, the partner must not have the same resultant product set themselves or conflicts can occur.  Lastly, the resultant feature set must not be too much of a departure for your sales team to credibly take to market.  If, to sell the partner’s products would require your own sales team to take on skills that they don’t naturally posses, this can be counter productive.  All of these caveats notwithstanding, one shouldn’t underestimate the value of partnering for obfuscation.  i.e. you partner to achieve a tick in the box and to create differentiation with no real intention of selling the partner’s products.

Partnering – Professional services

Similar in concept to the ideas I discussed on methodologies, differentiation can be created around how you implement your technology within your customer’s organisation.  Third-party system integrators or boutique technical consultancies can add value and create differentiation in your offer.  If you are going to rely on a third party organisation to create differentiation like this. it is essential that the reputation of the third party is second to none and that they provide something that you alone cannot.  Perhaps access to a different audience strata or a reference customer base you don’t posses.  In addition you should be wary of laying yourself open to the challenge that your proposition is so different or complex that you require specialist third-party services to implement it.

Partner – Embed your technology

Finally, the ultimate differentiation through a third party is to embed your technology within a third-party’s product.  Not really differentiation as typically when this embedding is carried out your own proposition is actually hidden within that of the embedding vendor’s offering.  That said, I have had first hand experience of using embedding deals like as references to create differentiation.

The claim that “We’re the solution that is embedded in ACME Corp’s product” can have a significant positive impact on credibility.

I’ll close out this discussion in the next post when I look at the use of standards bodies and technical education for differentiation.

Danny Goodall