Tuesday, 24 June 2008

Where Microsoft (and the software industry) is going (and why they won't like it when they get there) PART 2

Not so long ago I was hired to speak to, and consult with, a company whose name I will not mention but whose name is well known. They are a rather recent player in the software industry but one that has done very well by the standards of Wall Street. Its founder has become quite wealthy from the one size fits all strategy. So, when I criticize this strategy for software, be assured that I am well aware that many folks have become rich because of it.

Naturally Microsoft is one of this company’s main competitors. This alone tells you quite a bit about what this company sells. If Microsoft does it, then it is generic. In other words, this company sells a software platform that helps you manage a process that all companies have to manage. I am putting it this way because, that is my point. The big players in the software industry always sell software that any company could use in principle. This is the route to mega-bucks. It is also the route to lousy software.

This is the dichotomy: one size fits all versus serious work to get the software to know your world. It is easy to see who is winning and why. It is also easy to see that this state of affairs cannot continue.


Why this methodology has won is clear. It has been promoted by every player in the software business and by the financial backers of those companies. Google is also a one size fits all business. (You don’t notice them building special search engines for shipping now do you? Shipping search engines might return, for example, for searches on engine room, something other than the Engine Room Bar in Houston as its first choice.)

Why this methodology will lose is also clear. There comes a point where one size fits all software hits the wall. Let me explain.

Let’s suppose you were selling software for sales. What you put in it? My instinct and, the instinct of most people from the part of the software industry that I come from, would first ask the question: what do sales people need help in doing? In fact, I did build programs to help sales people do their jobs better on a number of occasions. Any reader of this would not be familiar with them. Why not? Because they came from the know your world philosophy of software development.

One of those programs helped people who sold ads for the Yellow Pages sell better. What did that software need to do? It needed to tell a salesperson who was about to call on a doctor how to talk to him and what previous experiences the company had had with respect to Yellow Page ads and doctors. And then it had to do the same with florists, and real estate companies, all of whom behave differently from one another. Real work went into that project.

Another program we built helped salesmen from a very big hardware company sell a consulting service they were having trouble selling by showing examples (and interviews) of people who were successful. The success stories were told just in time as a salesperson needed to hear them to counter objections they were hearing, all in a simulation.

To put this another way, these programs knew about sales.

But that is not the way to make mega-bucks in software. There is a small market for knowledge of how to sell Yellow Page ads. There is a much bigger market for managing sales and essentially replacing the secretary to the salesperson to keep appointments, record events, and help the sales manager track it all. So that is where the investment has been and that is where Microsoft and others compete.

But this state of affairs cannot continue.

Why not?

Because companies that sell platforms have reached a limit. Where is the content? The hope is that the content will be provided by others. These companies are moving towards selling platforms that allow others to provide the content. That is really what Facebook and MySpace are about. But the people on those platforms aren’t doing the serious work in content that I talked about in part 1 of this piece.

Serious work on getting serious content into the software will differentiate the winners from the losers going forward in the software industry.

You can’t just have a platform as a service. You need a brilliant platform to be your service. Knowing all about sales doesn’t just mean coordinating sales, it means helping you make more sales. This is the challenge for the next generation of software.

But that’s too hard isn’t it? Not only is it not too hard, it is what will be happening in the next generation of platforms as a service.

The wisdom of a sales organization isn't in its numbers. It's not in the names of its customers and prospects. Rather, it's in the experiences of its salespeople – the deals they've won and lost, the strategies they've employed, the clever things they've done, and the mistakes they've made. None of these things are currently captured in software companies buy to manage sales. To address the competition the salesman needs just in time information and seriously good performance support to keep the salesman from losing focus, and confidence.

And, this is true in shipping as well as every other industry. The software must change. Right now the model promulgated by the money people behind the software industry is the norm. It makes us think a platform will work for any purpose. This is just wrong.

Content will be king. By this I don’t mean movies or entertainment. I mean software that knows what you are doing and why and can help because it knows more about what you do every day than your secretary does.

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