Thoughts on selling big ticket enterprise technology after the GFC

Clearly the financial world is a new place when compared with six months ago. If I look back it used to be predictable and ordered although this may have been an illusion. Selling big ticket enterprise technology was about seeing the right people, having the right products and being able to be competitive on the price front. There was serious competition and it was not uncommon to be bidding against a number of small companies playing in your space all vying to dethrone the king. Price became their weapon as they fought to gain footholds in markets that larger so called “less agile” companies reluctantly relinquished.

Then it hit. The Global Financial Crisis (GFC) unfolded and the game started to change. Potential customers went into hibernation as the struggled to understand what this all meant to their business. Some did not even know if they would have a business tomorrow. As the customers struggled with their dilemma, business for big ticket software started sliding. Targets became difficult to reach and many, many folks missed their numbers for the first time in many years. To some extent the predictable world that existed before the GFC made people and companies complacent. The software market was growing; there would “always” be a need for new and innovative systems and given that customers in the financial services field were making unprecedented profits their would be cash to pay for them. Bingo… are you awake now. Sounds like dotcom all over again. Reminds me of some billionaire saying there would never be a need for more than 640k memory or was that 64k. I can never remember but the lesson is the same.

So what now. If you examine the new world you can see that the appetite for risk has diminished. When I speak with customers, they indicate that their budgets have been reduced and the need to justify spend has increased. They worry about sustainability and they worry about stability. But is also clear, that they themselves cannot keep the status quo. The good times lead to excess and bloated staff numbers, inefficient processes, software and poor risk management. If there has ever been a time for business in the financial services sector to stand up and take account of themselves, this is it. Those that move swiftly to replace inefficient and aging software, streamline their operations and improve both their risk profile and cash flow will be the victors. It’s a scary proposition given the tenuous state of some business. It really is a time when fortune will favour the brave.

This is both good and bad for big ticket software vendors. Those that are large but are well run and nimble despite their size will warrant customer’s attention. They reduce the risk for customers through their diversity of earnings, products, services and geography. New world customers would rather do business with fewer low risk vendors than multiple smaller but higher risk vendors. If you are one of these and if your strategy is not well thought out and you have no way to mitigate the risk (perceived or real) of doing business with your company then you are probably going to lose out to a bigger player. It will be time to draw down on your savings accounts or find a big brother to take you under his wing. For larger companies, it is time to capitalize on this opportunity to gain more market share, become more agile.

Its going to be interesting to see how reality treats us, regardless of which way it goes.