Today, the most important thing about a purchase is the culture of your vendor.
By John Sumser
The economic downturn is having an interesting impact on HR software vendors.
Continuous years of flat or declining revenues have resulted in bloated functionality.
While there was nothing to do, the software companies began improving and expanding their offerings.
It’s a simple situation. With little in the way of active market prospects, vendors slashed marketing and sales budgets. The general idea in technical companies is that you have to preserve the technology at all costs.
Bye-bye marginal sales and marketing performers. Hello R&D projects.
In other industries, R&D is an investment in the future, in things that may or may not come to pass. Take biotech. In the world of genetic experimentation, R&D often breaks new technical grounds. The same is true in energy, defense, auto, and hardware technologies. R&D is a speculative investment.
In the HR software world, R&D is another word for product development. In other words, the next generation of the tool you are using is built with R&D funding. When times get tight, the development team is kept intact by feeding it projects from the next generations of software.
As a result, there is a huge supply (three years or more) of new functionality in backlog—three years’ worth of new ideas and functions that have rarely (if ever) been purchased.
Basically, it’s now pretty difficult to tell one vendor from the other. They all seem to offer the same set of functions. Loosely, there’s a difference between HRIS offerings and talent acquisition and management products. But, both areas are heavily commoditized, and the differences are often hypothetical.
You might be surprised to discover that this is due to a lack of investment in marketing and sales. The budget cuts reduced or eliminated most companies’ abilities to deliver narratives about their products. A solid and compelling story is usually the result of a combination of work from marketing people (whose job it is to explain the product to the market) and sales people (whose job it is to discover improvements in the marketing message).
The net result is a whole lot of software that looks and feels the same.
That’s why demos are increasingly important. If you can’t tell the difference between products, you can at least tell the difference between the teams that support them. A demo gives you a chance to see the functionality of a tool. More importantly, it gives you an opportunity to see the culture in action.
Heavily scripted demos (as some industry folks use) create the false impression that software functionality is all that matters. The idea behind scripted demos (and entertaining competitions to perform in that environment) is precisely to try to shield the buyer from the culture of the vendor.
The most important thing about a software purchase is the vendor’s culture. The scripted demo is an archaic idea from the 20th century, designed to showcase differences in performance and features. By stripping culture away, you are theoretically seeing through the clutter.
If you take away one thing from this article, remember that functionality is blurring. The difference between one vendor and the next may not be in the inner workings of the software itself. Rather, the differences are in company culture, financial viability, and the core ideation of the company’s marketing message. In the market, companies such as SuccessFactors are proving that the sales process itself can be the most important feature of a software product.
One thing is always true in unscripted demos and the day-to-day use of software tools. Something always goes wrong. Software always does what it wants and seems to resist the things that you want. It does it on stage, and it does it in the cubicle.
Every software product has a user interface, a code stack, and a group of people who do stuff when the software doesn’t do what it’s supposed to. The interfaces and code stacks are becoming commodities. The real differentiation is the vendor’s team and culture. Software always has people on the inside.
It takes a real demo to start to see how they operate.