Category Archives: Marketing

Foreword to The Next CMO: A Guide to Marketing Operational Excellence

The folks at Plannuh, specifically Peter Mahoney, Scott Todaro, and Dan Faulkner, asked me to write the foreword for their new book, The Next CMO:  A Guide to Marketing Operational Excellence.  (Free download here.)

Here’s what I wrote for them.

CMO is a hard job. Early in my career I worked for CMOs, in sort of an endless revolving-door progression, at one point having 7 bosses in 5 years. I have been a CMO, for over 12 years at three different companies. I have managed CMOs, working as CEO for over a decade at two different companies. And I have guided CMOs, serving as an independent director on the board of five different companies.  Let’s just say I’ve spent a lot of time in and around the CMO role.

In the past two decades, no executive suite role has changed more and more quickly than the CMO. Marketers of yesteryear could focus on strategic positioning and branding, leaving such banalities as lead generation to sales-aligned field marketing teams, managing scraps of paper in cardboard boxes.

Sales and marketing automation systems changed everything. Concepts like pipeline, conversion rates, and velocity were born. From lead generation sprung lead nurturing. Attribution emerged to solve one of the world’s oldest marketing problems.

Artificial intelligence (AI) arrived at the scene, helping with areas like lead scoring and prioritization. The demand for analytics followed suit. Marketing ops arose as the cousin of sales ops.

Digital marketing changed everything again. Spend became even more accountable. Pay-per-click replaced pay-per-view which replaced just-pay. Targeting became more precise both via search and the rise of social media. Content marketing emerged to supplement declining traditional public relations. If yesterday’s marketing was leaflets dropped from airplanes, today’s is A/B-tested, laser-guided, call-to-action missiles.

Technology came at CMOs faster than they could keep up. Software could power your website, run your resource center, generate your landing pages, test your messaging, drive repeatable SDR processes, identify your ideal customer, drive account-based marketing, and even record and analyze prospect conversations.

What’s more, as CEOs and boards knew that entirely new classes of questions were becoming answerable, they started asking them.

  • What percent of the pipeline are prospects within our ideal customer profile?
  • What’s the stage-weighted expected value of the pipeline?
    Forecast-category weighted?
  • What’s our week 3 pipeline conversion rate for new logo vs upsell opportunities?
  • What’s our cost per opportunity and how does it vary by channel and geography?
  • What’s marketing’s contribution to our customer acquisition cost (CAC) ratio and how are we improving it?

And dozens and dozens more.

The hardest job in the C-suite got harder. Today’s CMOs need to be visionary strategists by day and operational tacticians by night. Operational marketing has become the sine qua non of modern marketing. If the website is optimized, if the demand generation machine is running effectively, if marketing events are executed flawlessly, if quality pipeline is being generated efficiently, if that pipeline is converting in line with industry benchmarks, and if and only if all that is being done within the constraints of the marketing budget — spending neither too little nor too much — then and only then does the CMO get the chance to be “strategic.”

Operational excellence is thus a necessary but not sufficient condition for CMO success. So it’s well worth mastering and this book is the ideal guide to building and managing your own integrated marketing machine.

There’s no one better to write this book than the leadership team at Plannuh, Peter, Scott, and Dan. With their experience running marketing teams from startups through multi-billion dollar public companies, teaching and mentoring generations of marketers, and now building a platform that codifies their thinking into a scalable SaaS platform, this guide is certain to raise the IQ of your marketing function.

– Dave Kellogg

How To Get Sales and Marketing Working Together (Presentation)

I spoke this morning to a private equity (PE) firm’s gathering of portfolio company CEOs, CROs, and CMOs.  Our topic, one of my favorites, was how to get sales and marketing working together to drive business results.  While I talked about the predictable subject of alignment, I covered it with an interesting three-level angle (philosophical, strategic, operational).  I prefaced the alignment discussion with examples of what typically goes wrong in the sales/marketing relationship, later revealing that I believe most of the commonly-observed “problems” between sales and marketing are, in fact, symptoms of four underlying problems:

  • Unrealistic plans
  • Function-led mentality
  • Blame culture
  • Non-alignment

I’ve embedded the presentation below and it’s also available on Slideshare.

The Pipeline Chicken or Egg Problem

The other day I heard a startup executive say, “we will start to accelerate sales hiring — hiring reps beyond the current staffing levels and the current plan — once we start to see the pipeline to support it.”

To mix metaphors, what comes first: the pipeline or the egg?  To un-mix them, what comes first:  the pipeline or the reps to prosecute it?  Unlike the chicken or the egg problem, I think this one has a clear answer: the reps.

My answer comes part from experience and part from math.

First, the experience part:  long ago I noticed that the number of opportunities in the pipeline of a software company tends to be a linear function of the number of reps, with a slope in the 12-18 range as a function of business model [1].  That is, in my 12 years of being a startup CEO, my all-quarters, scrubbed [2] pipeline usually had somewhere between 12 and 18 opportunities per rep and the primary way it went up was not by doing more marketing, but by hiring more reps.

Put differently, I see pipeline as a lagging indicator driven by your capacity and not a leading indicator driven by opportunity creation in your marketing funnel.

Why?  Because of the human factor:  whether they realize it or not, reps and their managers tend to apply a floating bar on opportunity acceptance that keeps them operating around their opportunity-handling capacity.  Why’s that?  It’s partially due to the self-fulfilling 3x pipeline prophecy:  if you’re not carrying enough pipeline, someone’s going to yell at you until you do, which will tend to drop your bar on opportunity acceptance.  On the flip side, if you’re carrying more opportunities than your capacity — and anyone is paying attention — your manager might take opportunities away from you, or worse yet hire another rep and split your territory.  These factors tends to raise the bar, so reps cherry pick the best opportunities and reject lesser ones that they’d might otherwise accept in a tougher environment.

So unless you’re running a real machine with air-tight definitions and little/no discretion (which I wouldn’t advise), the number of opportunities in your pipeline is going to be some constant times the number of reps.

Second, the math part.  If you’re running a reasonably tight ship, you have a financial model and an inverted funnel model that goes along with it.  You’re using historical costs and conversion rates along with future ARR targets to say, roughly, “if we need $4.0M in New ARR in 3 quarters, and we insert a bunch of math, then we’re going to need to generate 400 SALs this quarter and $X of marketing budget to do it.”  So unless there’s some discontinuity in your business, your pipeline generation doesn’t reflect market demand; it reflects your financial and demandgen funnel models.

To paraphrase Chester Karrass, you don’t get the pipeline you deserve, you get the one you plan for.  Sure, if your execution is bad you might fall significantly short on achieving your pipeline generation goal.  But it’s quite rare to come in way over it.

So what should be your trigger for hiring more reps?  That’s probably the subject of another post, but I’d look first externally at market share (are you gaining or losing, and how fast) and then internally at the CAC ratio.

CAC is the ultimate measure of your sales & marketing efficiency and looking at it should eliminate the need to look more deeply at quota attainment percentages, close rates, opportunity cost generation, etc.  If one or more of those things are badly out of whack, it will show up in your CAC.

So I’d say my quick rule is if your CAC is normal (1.5 or less in enterprise), your churn is normal (<10% gross), and your net dollar expansion rate is good enough (105%+), then you should probably hire more reps.  But we’ll dive more into that in another post.

# # #

Notes

[1]  It’s a broad range, but it gets tighter when you break it down by business model.  In my experience, roughly speaking in:

  • Classic enterprise on-premises ($350K ASP with elephants over $1M), it runs closer to 8-10
  • Medium ARR SaaS ($75K ASP), it runs from 12-15
  • Corporate ARR SaaS ($25K ASP) where it ran 16-20

[2] The scrubbed part is super important.  I’ve seen companies with 100x pipeline coverage and 1% conversation rates. That just means a total lack of pipeline discipline and ergo meaningless metrics.  You should have written definitions of how to manage pipeline and enforce them through periodic scrubs.  Otherwise you’re building analytic castles in the sand.

Ten Pearls Of Enterprise Software Startup Wisdom From My Friend Mark Tice

I was talking with my old friend, Mark Tice, the other day and he referred to a startup mistake as, “on his top ten list.”  Ever the blogger, I replied, “what are the other nine?”

Mark’s been a startup CEO twice, selling two companies in strategic acquisitions, and he’s run worldwide sales and channels a few times.  I first met Mark at BusinessObjects, where he ran our alliances, we worked together for a while at MarkLogic, and we’ve stayed in touch ever since.  Mark’s a seasoned startup executive, he’s go-to-market oriented, and he has some large-company chops that he developed earlier in his career.

Here’s an edited version of Mark’s top ten enterprise software startup mistakes list, along with a few comments prefaced by DK.

1. Thinking that your first VP of Sales will take you from $0 to $100M.  Startups should hire the right person for the next 18-24 months; anything beyond that is a bonus.  (DK:  Boards will often push you to hire someone “bigger” and that’s often a mistake.) 

2. Expecting the sales leader to figure out positioning and pricing.  They should  have input, but startups should hire a VP of Marketing with strong product marketing skills at the same time as the first VP of Sales. (DK:  I think the highest-risk job in Silicon Valley is first VP of Sales at a startup and this is one reason why.)

3. Hiring the wrong VP Sales due to incomplete vetting and then giving them too much runway to perform.  Candidates should give a presentation to your team and run through their pipeline with little to no preparation (and you should see if they pay attention to stage, last step, next step, keys to winning).  You should leverage backdoor references.  Finally, you should hire fast and fire faster — i.e., you’ll know after 3 months; don’t wait for more proof or think that time is going to make things better.  (DK:  a lot of CEOs and boards wait too long in denial on a bad VP of Sales hire.  Yes, starting over is difficult to ponder, but the only thing worse is the damage the wrong person does in the meantime.)

4. Marketing and selling a platform as a vertical application.  Having a platform is good to the extent it means there is a potentially large TAM, but marketing and selling it as an application is bad because the product is not complete enough to deliver on the value proposition of an application.  Align the product, its positioning, and its sales team — because the rep who can sell an analytic platform is very different from the rep who can sell a solution to streamline clinical trials.  (DK:  I think this happens when a company is founded around the idea of a platform, but it doesn’t get traction so they then fall back into a vertical strategy without deeply embracing the vertical.  That embrace needs to be deeper than just go-to-market; it has to include product in some way.)

5. Ignoring churn greater than 15%.  If your churn is greater than 15%, you have a problem with product, market, or most likely both. Don’t ignore it — fix it ASAP at all costs.  It’s easy to say it will get better with the next release, but it will probably just get a bit less bad.  It will be harder to fix than you think. (DK:  if your SaaS bucket is too leaky, you can’t build value.  Finding the root cause problem here is key and you’ll need a lot of intellectual honesty to do so.)

6. Waiting too long to create Customer Success and give it renewals.  After you have five customers, you need to implement Customer Success for renewals and upsells so Sales can focus on new logos. Make it work. (DK:  Truer words have never been spoken; so many startups avoid doing this.  While the upsell model can be a little tricky, one thing is crystal clear:  Customer Success needs to focus on renewals so sales can focus on new ARR.)

7. Pricing that doesn’t match the sales channel.  Subscriptions under $50K should only be sold direct if it’s a pilot leading to a much larger deployment.  Customers should become profitable during year two of their subscription. Having a bunch of customers paying $10K/year (or less) might make you feel good, but you’ll get crushed if you have a direct sales team acquiring them. (DK:  Yes, you need to match price point to distribution channel. That means your actual street price, not the price you’re hoping one day to get.)

8. Believing that share ownership automatically aligns interests.  You and your investors both own material stakes in your company.  But that doesn’t automatically align your interests.  All other things being equal, your investors want your company to succeed, but they also have other interests, like their own careers and driving a return for their investors.  Moreover, wanting you to succeed and being able to offer truly helpful advice are two different things.  Most dangerous are the investors who are very smart, very opinionated, and very convincing, but who lack operating experience.  Thinking that all of their advice is good is a bit like believing that a person who reads a lot will be a good author — they’ll be able to tell you if your go-to-market plan is good, but they won’t write it for you. (DK:  See my posts on interest mis-alignments in Silicon Valley startups and taking advice from successful people.)

9. Making decisions to please your investors/board rather than doing what’s best for your company. This is like believing that lying to your spouse is good for your marriage. It leads to a bad outcome in most cases.  (DK: There is a temptation to do this, especially over the long term, for fear of some mental tally that you need to keep in balance.  While you need to manage this, and the people on your board, you must always do what you think is right for company.  Perversely at times, it’s what they (should, at least) want you to do, too.)

10. Not hiring a sales/go-to-market advisor because they’re too expensive.  A go-to-market mistake will cost you $500K+ and a year of time. Hire an advisor for $50K to make sure you don’t make obvious mistakes.  It’s money well spent.  (DK:  And now for a word from our sponsor.)

Thanks Mark.  It’s a great list.

Branded Features: Resist the Temptation

Software startups seem drawn by sirens to brand their features. Hey, Apple does it.  Think:  Siri, Facetime.  Microsoft tries it:  Cortana.  Starbucks even brands a cup size:  Venti.  So if they can do it, we should too, right?

Wrong [1].

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But it’s so cool.  Imagine it’s a long time ago and we’re about to launch the first DBMS with stored procedures [2].  Shouldn’t we call them Intelliprocs™ as opposed to plain, old stored procedures?

Then our competitors won’t be able to copy Intelliprocs!

Wrong.  If that’s what you want, get a patent, not a trademark.

Oh, well, then our competitors won’t be able to call them Intelliprocs.

That’s correct.

But we’ll make Intelliprocs the industry term and we’ll  be widely acknowledged as having created both the term and the feature.  Customers will ask competitors if they have Intelliprocs, too!  It will be like going to Peet’s and asking for a Venti latte!

Wrong.  In fact, calling them Intelliprocs and trademarking it virtually guarantees that won’t happen.  The industry will be forced to call them anything but Intelliprocs.  Furthermore, Intelliprocs sounds stupid, and no self-respecting database architect is going to call them that.

By the way, we’re a small company.  Most prospective customers are yet to hear of us here at Sybase [2], so we’re going to dilute our branding efforts.  Instead trying to make people know that Sybase means fast relational DBMS, we’re going split our efforts between that and getting them to first learn the term Intelliprocs and second that Intelliprocs come from Sybase.  That’s three branding efforts when we should be putting all our wood behind one arrow.

Plus, where does it end?  If we call stored procedures Intelliprocs, should call fast commit QuickCommit™, on-line backup ContinuBack™, optimistic locking OptiLock™, group commit GroupFlush™.  You’ll need a thesaurus to understand us when we speak.  And to what end?

If we want the industry to use our language and to know that we invented [3] these features, we should give them common, descriptive names so that others will use them, and then we can market — to the industry and its influencers — the fact that we were the first to deliver them.  That’s how you get known as an innovator.

We’ll save money by not having to register all those marks in 47 countries around the world.

Speaking of international, descriptive features names translate better into other languages than branded names.  If you think we’ll be hard to understand when we speak English, imagine how hard it will be when we’re speaking French, Greek, or Mandarin — with all these untranslatable, English-rooted, branded feature names popping up every two seconds.

We’ll be in a way better position, legally, when it comes to defense.  If we name stored procedures descriptively, it will help us if someone else claims our name is their mark.  We’ll just argue, correctly, that it’s a descriptive name and not a brand.  The more “brandy” we name them, the harder that is to do.  So our branding strategy should be to have one brand, Sybase, and then name everything (e.g., products, features) else descriptively.  It the best marketing, and the best legal, strategy.

Last of all, remember branding first principles.  It’s Jell-O brand gelatin.  Levi’s brand denim jeans.  Kleenex brand tissues.  Zoom brand videoconferencing.  Tinder brand dating.  While you certainly can brand features, the primary purpose is to name and differentiate your company’s offering from the other ones.  Branding is not first and foremost about features.  It’s about companies.

So, if you’re not a multi-billion-dollar company, then maybe you shouldn’t emulate the marketing strategy of one.  If you take a breath, pause, and think about what it means to create branded features — to your branding, to your comprehensibility, to your industry leadership, to your international operations, to your legal strategy (and associated costs) — you’ll decide to pass on branded features every single time.

# # #

Notes

[1] This post is a fresh take on a post I did in 2006 entitled On Branded Features, which actually uses the same example.

[2] This is a fictitious conversation about a real example.  Sybase was the first relational database to introduce stored procedures.

[3] See note 2.

[4] Closer to reality, first brought to the relational DBMS more than invented.

All trademarks are the property of their respective owners.

 

Upcoming PMM Hive Interview, Marketing Strategy in Hot vs. Cold Markets

Just a quick post to plug my upcoming appearance on a podcast / live interview hosted by PMM Hive, a product marketing community that was recently launched by my old friend and colleague Crispin Read, and that’s already loaded with some superb product marketing content.  Check it out.

I’m excited about this session both because it’s one of my favorite topics and because Crispin is one of my favorite marketers.  The topic is critical because too many marketers (and CEOs) hit rewind/play on their last successful experience without considering their situation and the marketing strategy that should support it.  Crispin’s great because he’s world-class at messaging and positioning, sharp as a tack, enjoys what we’ll call “spirited debate,” and has a dry English sense of humor that keeps things not only interesting, but fun.

The session is on July 8, 2020 at 9:00 California time.  You can register here if interested.  Playback should be available after the event if you’re interested and can’t make it.

Hope to see you there!

Congratulations, You’ve Created a Category. Now What?

(Revised 06/27/20)

I was talking to an old friend the other day who’s marketing chief at a successful infrastructure startup.  “Congratulations,” I said, “I know it was a long slog, but after about a decade of groundwork it looks like things have really kicked in.  I hear your company’s name all the time, I’m told business is doing great, and Gartner literally can’t stop talking about your technology and category.”

“Yes, we’ve successfully created a category,” he said, “But I have one question.  Now what?”

It reminded me, just for a minute, of the ending of The Candidate.

While it’s definitely a high-class problem, it’s certainly a great question and one you don’t hear very often.  These days a lot of very clever people are out dispensing advice on how to create a category — including some wise folks who first dissuade you from doing so — but nobody’s saying much about what to do once you’ve created one.  That’s the topic of this post. category2

Bad Fates That Can Befall Category Creators
Let’s start with the inverse.  Once you’ve created a category, what bad things can happen to it?

  • It can be superannuated.  Technology advances such that it’s not needed any more.  Think:  buggy whips or record cleaners [1].
  • You can lose it to someone else.  Lotus lost spreadsheets to Microsoft.  IBM lost databases to Oracle [2].  Through a more oblique attack, Siebel lost SFA to Salesforce.  Great categories attract new entrants, often big ones.
  • It can be enveloped, either as a feature by a product or as a sub-product by a suite.  Spellcheckers were enveloped as features by word processing products, which were in turn enveloped by office suites.  See the death of WordPerfect [3].

Given that we don’t want any of these things to happen to your category, what should we do about it?  I’ll answer that after a quick aside on my views on categories.

My Principles of Categories
Here are my principles of enterprise software categories:

  • Companies don’t name categories, analysts do.  Companies might influence analysts in naming a new category, but in the end analysts name categories, not vendors [6].
  • Categories sometimes converge, but not always.  Before the SaaS era, enterprise software categories almost always converged because IT was all-powerful and saw its role as entropy minimization [7].  SaaS empowered line of business buyers to end-run IT because they could simply buy an app without much IT support or approval [8].  This is turn led to category proliferation and serious “riches in the niches” where specific, detailed apps like account reconciliation have born multi-billion-dollar companies.
  • Category convergence is about buyers.  Analysts like predicting category convergence so much they get it wrong sometimes.  For example, while the analyst prediction that BI and Planning apps would converge [9] served as the face that launched 1000 ships for vendor consolidation [10], the reality was that BI was purchased by the VP of Analytics while Planning was purchased by the VP of FP&A.  You could put Brio and Hyperion under one roof via acquisition, but real consolidation never happened [11] [12].  Beware analyst-driven shotgun weddings between categories sold to different buyers.  They won’t result in lasting marriages.
  • In category definition, the buyer is inseparable from the category.  Each category is a two-sided coin that defines the buyer on one side and the software category on the other [13].  For example, when categories converge it’s either because the buyer stayed the same and decided to purchase more broadly or the buyer changed and what they wanted to buy changed along with it.  But if there is no buyer, there is no category.

What’s a Category Creator To Do?  Lead!
Having contemplated the bad things that can happen to your category and reviewed some basic principles of categories, there is one primary answer to the question:  lead.

You need to lead in three ways:

  • Grow like a weed.  Now is the time to invest in driving growth.  Nothing attracts competition like fallow land in a new category.  You created a category, you’re presumably the market share leader in the category, and now your job is to make sure you stay that way.  Now is the time to raise lots of VC and spend up to $1.70 to purchase each new dollar of ARR [13A].
  • Market your category leadership.  Tech buyers love to buy from leaders because buying from leaders is safe.  Reinforce your position as the category leader until you’re tired of hearing it.  Then do it again.  Never get bored with your own marketing.
  • Lead the evolution of your category by talking about your vision and your plan to realize it.  This makes you a safe choice because customers know you’re not resting on your laurels.  It also forces your would-be competitors to shoot at a moving target.

The vision for category evolution typically takes one of three forms:

  • Double down.  Make your thing the best thing in the market.  Stay incredibly close to your customers.  Understand and cater to their precise needs.  Your strategy is thus category defense via customer intimacy.  You simply know the buyer better.  Large companies can’t put their best people on everything, so this works when your best people are better than their average ones, they don’t put a massive investment in the space (instead preferring a good-enough solution), and the buyer cares enough to want to buy the best and can continue to do so [14].
  • Build out (i.e., lateral expansion)Move into adjacent categories, ideally sold to your existing buyer, giving yourself economies of scale in go-to-market and your buyer the ability to buy multiple products on one platform [15].  GainSight’s move into product analytics is one example.  Another is Salesforce’s systematic move across buyers, from VP of Sales to VP of Service to VP of Marketing.  This strategy works when you can afford to build or acquire into the adjacent category and, if the category involves a different buyer, that you can afford to invest in the major transition from being a single-buyer to a multi-buyer firm [16].
  • Build up (i.e., vertical expansion) [17]. Build up from your platform to create one or more applications atop it.  An ancient example would be Oracle expanding from databases into applications [18] which was first attempted via in-house development.  Anaplan is a contemporary example.  They first launched a multidimensional planning platform, had trouble selling the raw engine in finance (a more saturated market with more mature competition), shifted to build sales planning applications atop their platform, and successfully used sales planning as their beachhead market.  Once that vertical (i.e., upward) move from platform to application was successful, they then bridged (now laterally) into finance and later into supply chain applications.

What If You Can’t Afford to Lead?
But say you can’t afford any of those strategies.  Suppose you’re not a particularly well-funded company and your market is being attacked on all sides, by startups and megavendors alike.  What if staving off those attacks is not a viable strategy.  Then what?

If you’re at risk losing leadership in your category, then your strategy needs to be segment.  Pick a segment of the market you created and lead it.  That segment could be on several dimensions.

  • Size, by focusing on SMB, mid-market, or enterprise customers only — this works when requirements (or business model) vary significantly with size.
  • Vertical, by focusing on one or two vertical industries — ideally those with idiosyncratic requirements that can serve as entry barriers to horizontal players.
  • Use-case, by focusing on a specific use-case of a platform that supports multiple use-cases.  For example, what if Ingres, instead of focusing on appdev tools after placing 4th round I of the RDBMS market, instead had focused on data warehousing, a distinct use-case and one to which the technology was well-suited?

Conclusion
If you’re reading this because you’ve created a category, congratulations.  You’ve done an incredibly difficult thing.  Hopefully, this post helps you think about your most important question going forward:  now what?

# #  #

Notes

[1] I struggle to find software examples of this because the far more common fate is envelopment, typically into a feature — e.g., spellchecker.  I suspect it happens more in hardware as the underlying components get smarter, they eliminate the need for higher-level controllers and caches.

[2] Despite both inventing the relational database and being the leader in the prior-generation database market with IMS.

[3] The precise cause of death is still debated and a final lawsuit concluded less than a decade ago.

[4] Software industry evolution led to the SaaS model, which then put huge importance on renewals which in turn led to the creation of the VP of Customer Success role which created both the demand for and buyer of Customer Success software.

[5] And either way, a great company.  (I know both the founder and the CEO, so see my disclaimer.  I can say I’ve also been a customer and a happy one.)

[6] I credit Arnold Silverman with pointing this out to me so clearly.

[7] To reduce the degree of disorder in a company’s software stack, IT had a strong tendency to prefer one-stop-shop value propositions over best-of-breed.  Ergo, vendors incented by economies of scale in go-to-market, were naturally aligned with buyers who wanted to buy more from fewer vendors.  Both forces pushed towards developing suites, either in-house or through acquisition.

[8] As I did in the early 2000s when I was CMO of a $1B company and the CIO said I needed to wait 4 years for lead management in Europe during our CRM deployment.  “That’s funny,” I thought, “we have leads today and if I wait 4 years for lead management, I can assure you of only two things:  I won’t be CMO anymore and the CIO will be the only person coming to my going-away party.”  That’s when I bought Salesforce.

[9] That was the initial use of the category name enterprise performance management (EPM), which later evolved before eventually, and only of late, being retired.  A key point here is that while these categories organ-rejected each other, that took place literally over the course of decades.  Thus, paradoxically, you likely would have been “dead right” as a BI vendor if you rejected the inclusion of financial planning in 2003 .

[10] Cognos acquiring Adaytum, Business Objects acquiring SRC and Cartesys, and Hyperion acquiring Brio, among others.

[11] Meaning you could ask someone who worked in the organization “which side” they worked on, and they would answer without hesitation.  You can’t sell financial planning systems without significant domain expertise that the BI side lacked, and that was more about DNA than training.  (For example, most EPM sales consultants had years of experience working in corporate finance departments before changing careers.)  It was more conglomeration than consolidation.

[12] Amazingly, this pattern repeated itself within EPM in the past decade.  EPM  was redefined as the convergence of financial planning with financial consolidation, both within the finance department, but again sold to different buyers.  Planning is sold to the VP of FP&A, Consolidation to the Corporate Controller.  While both report to the CFO, they are two different roles, typically staffed with two very different people.  Again, the shotgun wedding ended in divorce.

[13] Each category has one primary buyer.  A given buyer may buy in several different categories.  As a marketer, the former statement is 10x more important than the latter.

[13A] See my post on the CAC ratio.  Data source, the KeyBanc 2019 SaaS survey, shows median of $1.14 with mid 50-percentile range of $0.77 to $1.71.

[14] The tension here is between letting, e.g., the VP FP&A purchase their own best-of-breed Planning product versus a good-enough Planning module subsumed into a broader ERP suite decided upon by the CFO.  This is a real example because Planning exists on both sides today; there remain several successful SaaS planning vendors selling best-of-breed outside the context of a financial suite while most ERP vendors bundle good-enough Planning into their suite.

[15] When accomplished via M&A, the single-platform benefits are typically limited to pre-defined integration but can hopefully over time — sometimes a long time (think Oracle Fusion) — become realized.

[16] Typically this means creating product-line general managers along with specialized overlay sales and sales consultants, product management, product marketing, and consulting teams.  It also means the more difficult task of going to market with products at differing levels of maturity, something very hard to master in my experience.  Finally, in apps at least, the more you are multi-buyer, the more IT needs to get involved, and the firm must master not only the art of the sale to the various business buyers, but to IT as well.  Salesforce has done this masterfully.

[17] Vertical in the sense of up, i.e., atop your platform; not vertical in the sense of focusing on vertical markets.

[18] Which, for ancient software historians, was the failed strategy that Oracle gave a mighty try before giving up and acquiring PeopleSoft in 2005, the first in a long series of applications acquisitions.