lustratus REPAMA

Posts Tagged ‘value proposition’

I’ve just uploaded the first draft of my latest Cloud Computing REPAMA Segment Analysis Study.

This time I’ve looked at a couple of vendors in the Cloud Software / Cloud Management / Application Services Management segment (using the Lustratus REPAMA Cloud Computing market taxonomy / segmentation model). Specifically I’ve reverse-engineered the key go-to-market strategies of 3Tera and Appistry. I will add another couple of vendors to the study as time goes on but for the moment I thought these would be two good candidates to start with. They are very different companies with very different product approaches to solving similar, if not quite the same problems. I wanted to spend a little time here highliting some of the interesting findings.

Differentiation

I’ve already blogged on my concern that Cloud Computing vendors/ providers are currently differentiating themselves against previous paradigms as opposed to creating differentiation strategies versus their real competitors – i.e. other cloud computing solutions. So it’s no surprise to see that this trend continues in this study with 3Tera. Looking at where 3Tera fires its competitive differentiation fire power in the UNLIKE element of the positioning statement we can see that the focus is:

traditional dedicated infrastructure

To be honest this is an implied competitor/alternative because whilst 3Tera is very clear on its value proposition and target audience, it doesn’t appear to engage in traditional competitive differentiation. Nowhere does 3Tera clearly define what type of solution they feel they are a better alternative to. There is an obvious implied competitor / alternative which is the traditional ways of doing things. But this is never called out explicitly by 3Tera.

Appistry is clearer on its competitive situation. It believes that its competitive differentiation lies versus:

infrastructure approaches to cloud computing

The implication here is that Appistry focuses on the application and not the infrastructure which they believe yields many benefits.

Existing Applications

One area of strong correlation between the vendors in this study is that they both stress their ability to work with existing applications. This correlation suggests that this is a key customer requirement in this particular market segment. As shown in the chart below:

As you can see from the dashed pink line on the chart above (which represents the market mean – the average marketing strategy for this segment) there is strong support for existing applications in addition to the somewhat obvious “table stakes” feature of automated application deployment and management.

Value Proposition

Another strong area of correlation is in the value proposition. The first chart below shows the raw claims made by each vendor for the value they ascribe to their product offer.

Much of these categories of benefit/value are fairly generic and are all very similar to the the value propositions I would expect to see for a cloud computing product. When these value propositions are interpreted against our MITICOR value proposition classification, we can see a very strong correlation between the products of the different vendors as the chart below shows.

The value proposition for both of these products boils down to operational improvement and cost saving which again is very much as I would expect for a cloud computing technology in this segment.

Positioning Statements

I’m not completely 100% happy with either of these positioning statements as both of these companies appear to aim everywhere and focus nowhere. This lack of focus is important to note in itself as it is common in immature markets, but it does make nailing down a semi-accurate reverse-engineered positioning statement a little tricky. But here they are:

3Tera AppLogic Positioning Statement

FOR organisations looking to deploy successful online services to millions of users WHO are struggling to manage the complexity of the infrastructure required to serve online services to online users OUR AppLogic IS A grid operating system for web applications THAT PROVIDES the ability to assemble existing software into portable applications that run on any grid and scale from a fraction of a server to hundreds of servers with a single command UNLIKE traditional dedicated infrastructure OUR PRODUCT makes it extremely easy to deploy scalable web applications without dedicated IT resources and personnel

Appistry CloudIQ Platform Positioning Statement

FOR enterprises seeking to take advantage of cloud computing WHO need to migrate existing applications to the cloud and virtualized environments OUR CloudIQ Platform IS A Cloud application platform THAT PROVIDES enterprises with the ability to move multiple existing applications to the cloud and manage them across multiple cloud environments UNLIKE infrastructure-focussed approaches to cloud computing OUR PRODUCT allows existing applications to be packaged and deployed to a cloud without re-architecture

Both statements are weak in the target customer and their respective pain, need or desire reflecting the lack of clarity in their outbound marketing.

Slides

I’ve placed a slide deck which expands upon this research on Slideshare.net and this is embedded below. If you’d like more information on this study or a copy of the slides, please contact me. Details of  how to interpret REPAMA studies can be found in the Lustratus REPAMA Guide here.

Danny Goodall

I’ve been working on a way of categorising value propositions for some time. I’ve arrived at something I refer to as MITICOR which I believe represents the atomic value proposition elements.

By this I mean that all business to business value propositions can be broken down into these 7 base elements. I’m sure I will refine this over time but for our purposes these elements allow us to analyse and categorise the different value propositions that vendors use in their go-to-market efforts.

So what do these categories refer to?

Market

Elements categorised as “Market” include value propositions that relate to the organisation’s market or competitive situation, new product or service introduction as well as the organisation’s marketing efforts such as awareness, public relations or image.

Income

“Income” includes any offer that proposes to increase or sustain existing revenue. In addition new revenue streams fall into this category.

Time

“Time” relates to any value proposition that reduces the time it takes to achieve some organisational objective. Importantly this does not refer to reducing the time to achieve a tactical objective as this would likely be categorised under Operational below.

Institutional

Institutional value propositions relate to the organisation as an entity. Chief amongst these are value propositions that deliver value to shareholders. Taxational or political issues such as “green” policies also come under this heading.

Cost

Reduction in costs, offsetting costs and cost restructuring all fit under this value proposition category.

Operational

Propositions that deliver positive changes to the operational efficiency of the organisation come under this classification. Included in here would be propositions that provide visibility into the current operational effectiveness of the organisation.

Risk

The removal or mitigation of risk at a corporate, personal or project level falls under this value proposition classification.

Multiple Categories

Specific value propositions that vendors create will break down into one or more MITICOR category. It may be that a value proposition from a vendor relates to only one MITICOR category but it is likely that it will break down into more than one MITICOR category.

Examples

I’ve listed below some examples of vendor value propositions and the MITICOR categories that they break down into.

Value Proposition	Potential MITICOR Categories
Reduces development time	Operational, Cost
Reduces development time allowing products to be brought to market quicker	Operational, Cost, Market, Time
Reduce corporate carbon footprint	Institutional
Reduces power consumption and corporate carbon footprint	Institutional, Cost
Provides insight into current financial position	Operational, Risk
Opens up new market opportunities	Market, Income
Allows enterprises to differentiate themselves	Market, Income
Increases service provider sales	Income
Organisations no longer need to purchase expensive dedicated hardware but can instead rent space in our data centres	Cost

I wanted to document this classification in this blog because I will refer to them in future REPAMA research. I’ve also noticed during the course of my research that there are some very predictable value propositions/MITICOR element combinations. In a later blog I will try to document these MITICOR “chains” and specifically how they relate to the members of the decision making unit (DMU).

Danny Goodall.

Steve and I had an interesting and refreshingly different call this morning with GigaSpaces.

They had reached out to us to make sure we knew all about them so that they could be fully represented in each of the categories in our cloud computing market landscape / segmentation / taxonomy where they have a solution.

And after the call I can see that instead of just being in

• Cloud Software / Compute

They also have a valid claim to

• Cloud Software / Data

and may be even

• Cloud Software / Cloud Management ( /Application Services Management )

This raised a bit of a dilemma for me. I certainly want to represent vendors and providers accurately in the segmentation model but I want to avoid vendors appearing in lots of different segments just because they believe that some esoteric feature or other qualifies them.

Instead I want the segmentation model to reflect where the vendor/provider specifically and actively addresses a market need with a specific capability and value proposition. So if I hear from a vendor/provider “yes we can do that too”, I’m reluctant to simply add them to a segment. After all the motivation behind producing the segmentation model was to remove some of the confusion present in the Cloud Computing not to perpetuate it.

So I think we’ll need to reflect on what we heard this morning from GigaSpaces and think how best to represent those vendors in our market segmentation document that have a single product with broad capabilities. Having said that I think there is enough about the XAP proposition that means I will be adding it to at least one more segment of the market landscape.

Anyway, the refreshing part of the call was that GigaSpaces’ marketing seems to focus on what they can do for organisations rather than simply placing the “Cloud Computing” term before, after and in the middle of their product name everywhere it appears. In fact you have to go digging on their web site to find references to the cloud-enablement features of their product line. I’m not sure whether they have taken this approach consciously or if it is that they’re not sure how best to position their offering in the cloud market. The risk I guess is that as they are not positioned specifically as a cloud computing vendor, they may not be placed on clients’ long lists. But it certainly differentiates them and different is usually good unless you’re selling 8-fingered gloves.

These calls with vendors are useful for many reasons but mainly to test some of my assumptions. As with many of the products and companies I have looked at in compiling the segmentation model, I had “assumed” that I knew what the product was and what it did. It turns out there are many more strings to XAP’s bow than I had at first realised. I knew GigaSpaces as a purveyor of extremely scalable application servers but that, it turns out, is only half the picture.

One interesting feature of GigaSpaces’ XAP product is its application services management layer (my term not theirs – they use application management services!). This layer understands service level commitments for the infrastructure as well as the applications that are deployed to it. It’s common practice for the infrastructure to “understand” the service level that is expected from the infrastructure itself – usually measured in CPU percentages, data volumes or some such. However it’s not so common for the infrastructure to understand the commitment that the application developer has made about the service level that the application will deliver. These application layer service levels are usually described in some business metric and to then have the infrastructure react to automatically provision more infrastructure to meet the business’ requirements to ensure that application SLA commitments are met is a certainly an interesting claim. One that we will dig into a little further over time. GigaSpaces’ Jim Liddle explains a little more here – whist also picking a fight with TIBCO over whether its claim that “self-aware elasticity” is something unique to Silver.

Interestingly, it appears that with a number of GigaSpaces recent Cloud Computing customer wins (they claim to have 75+ “cloud” customers) they have in fact used this application management services layer to control and manage Amazon’s EC2 infrastructure. This ability to manage application services outside of its own compute infrastructure goes some way to answering my rhetorical question of whether any vendors were focussed on providing a pure play layer for application services management. It appears that there are.

So I’ll make some changes to the segmentation model in light of our conversation this morning and I’ll also keep an eye on how GigaSpaces’ cloud proposition develops – specifically following their Platform as a Service partnership with ServePath’s Go-Grid announced earlier today.

Danny Goodall

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

I have decided that the time is now right to take a detailed look at the marketing strategies and tactics adopted by the various vendors in the different market segments that make up the cloud computing market. This means that we’ll be carrying out a series of REPAMA Segment Analysis Studies to nail down how some of the vendors are taking their products to market. We’ve already looked at high-performance messaging, ESBs, BPM, Mainframe SOA and SOA adoption generally so now it’s the turn of cloud computing.

Lustratus has helped a number of cloud vendors with their go-to-market strategies and tactics over the last couple of years and one thing has been clear.  It has been a classic early market in that the protagonists were “selling” a technical proposition to technologists and not a great deal of actual business was being conducted. The market hadn’t fully formed and “sales” were not being made in a traditional way.

By that I mean that sales were being “bought” by vendors looking to gain early market share and the justification for most of these early market customer projects was typically R&D. But now the market seems to have found a bit of structure and organisations are starting to look seriously at cloud computing as a way of delivering on business imperatives, so now I feel the time is right to look at how vendors are lining up to address the market.  What are their value propositions, how are they positioned, why do they think they are unique and what features do they lead with?

All good questions, but where to start?

There are many different categories of offers and propositions all falling broadly under the banner of cloud computing and hundreds of different vendors that have aligned themselves with cloud computing.  Some of these vendors are using cloud as a cynical proposition slip-streaming exercise which I can’t blame them for:

Cloud is hot so let’s ensure we appear to have a proposition for cloud.

I would, and  indeed have done the same myself, but for the purposes of my analysis I’ll have to sort the wheat from the chaff. So first I need to do some preparatory work on proposition segmentation and the market taxonomy. In upcoming blogs I’ll share my thoughts on how that is shaping up and I’ll also start to share some of the early REPAMA findings as I go.

Danny Goodall

It’s an easy question isn’t it?  But its one that in my experience is so often misinterpreted or wrongly answered by high-tech software vendors through their web sites, marketing materials and meetings with prospects.

When a prospect poses that question of a software vendor, what are they looking to understand?  The answer is that they actually want to know what you can do for them.  They want to quickly envisage what will be left behind after they have bought software from you.

So an answer like:

“ACME provides KJ8 compliant infrastructure that is compatible with the latest WP* series of standards”

…does not really answer the question “What does ACME Corp do?”.

Consider the situation when a sales representative from a high-tech company engages a prospect in conversation and the prospects asks the question:

“…so what does ACME do”?

Behind that questions is the implication that the prospect wants to know what ACME Corp. could do for him.  But instead of providing that information, I’ll wager that the sales rep will list a series of facts about ACME Corp.  He’ll start by telling the prospect the name of the company, the product name, the product category and he may also go on to describe some of the features of the product.  Like this.

“ACME Corp has recently introduced our DooperSuper product which is an advanced enterprise capability product that features support for the KJ8 standard”.

This is wrong.

Well it’s not wrong, but it’s the wrong time to provide this detail.  Remember the context of the question is that the prospect is thinking “What will this do for me?”, “What would I be left with if I were to become a customer of ACME Corp.?”.  An answer like the following would be more suitable:

“ACME Corp. helps our customers to reduce their data centre capital and energy costs”

This immediately tells the prospect what they would be left with if they were to become a customer of ACME Corp. and, if they’re interested, they can follow-up by asking for more detail.

So the question remains.  Why do so many high-tech vendors not lead with such a value proposition in their marketing communications?  The answer I think is two-fold.  Firstly, I think then many early marketing high-tech vendors have a very technical audience which means they feel that they should lead with some technical facts rather than translate this to a value statement.  This is naive because even the technical audience wants to know what they would get if they were to become a customer.

Secondly, many vendors do not understand the value that they can provide.  They’ve never documented the business value enjoyed by their customers.

So here are a few lessons for high-tech vendors:

1. Review your current customer successes
2. Look for a patten of the benefit or value that you’ve delivered
3. Adjust and tier your prospect communication.
   1. Lead with what your prospects will be left with – what will persist after the sale has been made.
   2. Add supporting technical detail where relevant.
4. Train the sales force to engage prospects in the same way

Danny Goodall.