• United States

Mgmt. vendor post mortem

Sep 15, 20033 mins
Data Center

* What killed some management software vendors

It’s common knowledge that the last few years have taken their toll on not only IT budgets, but also many of the companies seeking to sell to IT customers. On the whole, infrastructure management vendors have fared rather well, as they help IT organizations take control of chaos and do more with less.

There’s no question that there has been a reduction in the number of management vendors. Many companies are gone. Others are lingering on with tenuous sales. But many more are showing stability and in many cases robust, positive growth.

Was it simply Darwinian selection – where fitter products thrived and those less worthy disappeared? Or were other factors involved? Is the world, in fact, now much the poorer for these losses? What role did acquisitions play in this mix?

The inspiration for this column came from going over old contact lists to make them more current – far from a statistically valid or comprehensive piece of research. Nevertheless, I noticed that in this particular contact list, there were 30 fewer company listings than before. To be honest, I expected the number to be higher. Of these, eight disappeared through acquisitions. (In one case a company was acquired and the acquiring company failed – so I counted that as a “gone.”)

Looking down the list, I wondered what the companies that had “gone” had in common. Here are a few observations.

* Timing is everything. Many of these companies failed because they had not yet gotten enough critical mass in terms of product, sales and marketing to withstand the questioning eye of second- or third-round investors. Timing is also relevant because the majority of these companies, sad to say, truly were innovators. They took chances on new types of technologies and addressed advanced requirements for IT without in many cases having a compelling “must have” for IT buyers today. They were ahead of their time, but also, perhaps in some respects, behind it.

* Too grand ambitions. Many of the companies tried to do too much too soon. Some of them – a nontrivial number – could boast happy customers. These companies had products that worked and offered customers real benefits. But these vendors couldn’t focus their products to fit a well-defined and compelling value proposition. As such, they were overextended in both sales and development, and increasingly lost in a crowded market.

* Stubborn technologists. One of the parallel issues here is the fact that too many technologists stubbornly resist recognizing that marketing ultimately needs to provide guidance and direction to their development efforts. This is in many cases the root cause of the above issue, “too grand ambitions.” All technologies are only enablers, and no one buys enablers only. This filter between technology and real product and benefit was prevalent in nearly three-quarters of those names that disappeared on my lists.

In looking over the lists, I have to say that most of these companies, as product providers, probably didn’t particularly “deserve’ to survive. On the other hand, even those that disappeared often left behind some valuable legacies. They invested in technologies and ways of thinking that ultimately may still change the industry. And all provided added insight and proof points that only the complacent would simply cast aside.