H. Barnes Note: This is a guest post from Joe Skorupa. Joe is one of the contributing analysts to the Gartner Future of IT Sales Special Report. This post provides some highlights of the research he contributed to around evolving trends in infrastructure technologies and the impact that has on business and sales strategies.
When I was asked to lead a research note for our Future of IT Sales special report, I was initially frustrated by that “blank sheet of paper” that we all face. After all, I’m not a former sales guy, but then I realized that much of what I’m seeing is shaping the new world that Sales will live in.
Over the past couple of years I’ve been writing (with Greg Young) about the move away from hardware-based appliances to software on off-the-shelf hardware, for example see How to Determine the Right Mix of Network and Security Appliances (Physical, Virtualized, Virtual) for Your Data Center (subscription/fee required).While we’ve covered the topic of the separation of software value from the underlying hardware from the end user perspective, it’s now time to explore how this shift will impact technology and service providers.
The separation of software value from the underlying hardware enables new business models that threaten some existing players while enabling new entrants and a subset of other existing players to disrupt the market. We call these companies Protectors and Disruptors.
Protectors have large share in their core market that results in a very profitable business. Consequently, the focus of the Protector is to aggressively defend their market share, revenue, profit margins and large installed base during the period of transition. Their reputation and customer loyalty are very significant assets to be leveraged during market disruption. This will enable the Protector to manage its transformation to new business models.
Protectors will have to deflect attacks from startups as well from competition from other large vendors that may be more willing to make pricing concessions to win business because they are seen as a safe alternative.
Disruptors stand to gain by attacking the status quo and either do it with evolutionary or revolutionary approaches. Existing players (Evolutionary Disruptors) have the unique challenge of striking a balance between disrupting the existing business model of Protectors, while at the same time defending their own business from other Disruptors. New entrants (Revolutionary Disruptors) challenge the status quo via their more nimble business models. They lack the complexity in their go-to-market strategies but most are unknown brand names and will need to adopt radical new approaches to sell into a market that is dominated by a handful of large incumbent defenders.
In order to succeed in this new environment companies need to understand their role (Protector or Disruptor) and will then need to adjust their business models to suit this new environment. These changes will affect everything from product design, licensing terms, supply chain relationships, marketing, channel partner selection, sales training and sales compensation.
We cover this topic in detail in a new research note Tech Go-to-Market: Breaking the Bond Between Software Value and Underlying Hardware Disrupts Long-Standing Sales Motions (subscription/fee required) that I developed in collaboration with Tiffani Bova and Eric Goodness. You can get started on the concepts outlined in the note by making a frank assessment of your company.
- Large, often dominant positions in their core market
- Deep financial resources
- Loyal channels and customers
Evolutionary Disruptors have:
- Large, often dominant positions in a market that is adjacent to the disrupted market
- Deep financial resources
- A willingness to take aggressive pricing and distribution actions to gain share in the disrupted market
Revolutionary Disruptors have:
- Fresh, new technologies and products that challenge the way buyers think about solutions to a problem
- No allegiance to existing business models, channels or partners
- Nothing to protect and a need to grow at almost any cost
So what are you? And why do you think so?