It's all about the business process now

There was a short announcement on the wire that I thought worth paying attention to on Monday February 25, 2008 — today, as I write this.  It said, “Market2Lead and ExactTarget announced a partnership to integrate ExactTarget’s email messaging web services into Market2Lead’s comprehensive, multi-channel marketing automation products.”

As announcements go it was the kind of thing you see a lot in the technology world. Two companies coming together to make a deal that makes a headline and is promptly forgotten. Too often this kind of thing starts off as a 50/50 partnership in which each side characteristically, and far from explicitly, expects that the other will put in 51 percent of the work needed to make the partnership fly. 

Good partners deliver in the high 40’s percentage-wise and the partnership teeters for a bit and is then forgotten. I don’t know either of the parties that well though I get briefings, but I see some things in the market that make me believe this time will be different.

My reason for optimism is rooted in simple market dynamics — this partnership will succeed because it has to.  There are too many other companies that offer both kinds of products already, so the fate of both companies hangs in the balance and failure is not an option for either one. How did we get to this point?

In case you’ve missed it, there has been a slow but steady move from monolithic software solutions to an approach that starts with the business process and works backward to see which solutions need to be integrated to provide end-to-end support.  This approach is entirely analogous to what happened when computer hardware suppliers opened up their busses and let in a growing army of peripherals suppliers. 

Over a few years we went from the computer manufacturer as a sole source for everything (Ok, we’re talking about the mainframe business in the 1970s before you were born, just humor me.) to an open environment where the operating system and system bus set the standard. Work with those two and you were a member of the club in good standing.

Today the ubiquity of processing power, wide open bandwidth and free storage have left us all free to imagine any number of options for supporting our business processes.  The net positive is that it is now possible to at least consider retiring all of those spreadsheet based “applications” or department based and developmentally challenged PC applications with more professional approaches. It sounds good and it is but it also involves many of what Chris Anderson termed “long tail” applications — things for which there are thin markets that do not usually support a massive software effort in the traditional sense.

That brings us back to partnerships. Increasingly, the onus is on the vendors to think bigger and to consider the whole business process, not just some little piece of it where they can put a fence up and open a lemonade stand if they are to find sufficient markets for their wares.  More importantly, everybody needs help generating market pull.  For this generation of integrators, the open standard is not the system bus or the operating system but the platform and stack. Like the hardware entrepreneurs of old, today’s software wiz kids know that building applications to the platform’s standards means greater interoperability.

Platform vendors like Salesforce.com and others (ok, guys like me) saw this several years ago and now the message is getting to the vendor and the customer. This might represent software’s new Golden Age but it could just as easily mark a top in the market. After all, during the bad old days of hardware maker hegemony a megabyte of memory had a cost of a mega-buck. Today hardware margins are thin and the business is not a lot of fun anymore.

What will happen in software is anyone’s guess but for sure it is part of the grand structure that the economist, Joseph Schumpeter, described as “creative destruction”. So it’s all about the business process now, ExactTarget and Market2Lead are just the latest examples.

Comments

[Adam Blitzer]

While I agree with you that it is important for vendors to keep the entire business process in mind when designing a solution, I think a customer may be better served by adopting best of breed solutions in multiple categories. As long as the solutions play well together (i.e. the marketing automation system, CRM, and back off systems can all talk to one another) the organization will be in good shape. It is problematic, however, when these solutions operate in silos, which is so often the case. I think we will see more sophistication with integrations over the next few years and see less and less mega-applications that try to be all things to all people.