A small (250-person) IT development shop, Tiempo Development, provides an interesting example of several trends affecting IT buyers. The firm is specialized in agile application development, and it does a lot of work in mobile, cloud and analytics.
What’s Interesting #1: It’s not just vendors anymore
What’s interesting about Tiempo is that although they grew their company by providing application development services to software vendors, IT buyers are now 30% of their business—and the fastest growing segment of their market. As these enterprise customers turn to technology to differentiate their business and services, they find that somewhat by definition the capabilities bundled into off-the-shelf software, by virtue of being readily available, are not unique differentiators. Payments and analytics in healthcare and financial services are their typical sweet spots currently. Tiempo isn’t usually building an actual ERP system from scratch—though its CEO, Cliff Shertz, says that sometimes, for retailers, it has. By adhering to common platforms and standards, these companies are feeling safe with the customized software that can be required to deliver their unique capabilities to their customers. These companies are not becoming software vendors, but by contracting for customized software, they are acting more like Tiempo’s original software vendor customers.
What’s Interesting #2: It’s not just the big boys
Tiempo’s IT buyer niche at this point isn’t global-scale multinational companies, but solidly in the midmarket, with a target of $50 million to $1 billion in annual revenue. That’s right, it’s not just the big players in the business identifying and implementing unique differentiators to leverage disruptive technologies and separate themselves in the market. In turn, it’s not just the big IT buyers developing, or having developed, custom IT solutions that provide unique value to their customers.
Traditionally, system integrators and value-added resellers to the midmarket built a good business by customizing proprietary, off-the-shelf software packages for their customers. That customization was most often to bridge the gap between the organization’s quirks and the standardly available capabilities of the software. In the new trend, software is being designed to emphasize and codify those quirks as unique aspects and capabilities of the company’s products and delivery—even for companies with under $100 million in revenue.
What’s Interesting #3: These IT buyers aren’t IT buyers
Tiempo says it works closely with IT executives and departments, of course, but the firm first approaches and is brought in by line-of-business executives (or CEOs), more than by IT execs. Attempting software sales to the CEO—and often succeeding in the case of smaller organizations—is one of the oldest tricks in the technology sales book. But these are custom application developers, even at the midmarket level, being brought in more by the line of business than by the IT department. What’s more, they are usually brought in after the software capabilities have been specified and, often, development has already been attempted, and—ouch!—failed, in-house.
Tiempo’s business is a sign of the times in more ways as well. Its four development centers are based (very) near shore in Mexico, where they’ve found engineers not only share common time zones with the US, but also have a better understanding of the cultural environment and have the visas to visit their US customers whenever required.
Those for whom cloud looks like an updated form of timesharing, and thin clients look like dumb terminals, will recognize this pull to customization. After all, how many companies are now frozen into a dated ERP application because they’ve customized it to death? But there’s a reason that pendulums swing back, or in today’s helter-skelter technology world, collide and sway back in multiple directions simultaneously. Or perhaps more aptly, swirl round in an upward spiral. Custom agile development can get organizations to offer unique capabilities quicker than ever before. Where is custom development best applied, and how is it best managed for the long haul?
At the Buyer’s Lens we will look at these key trends:
- IT buyers building their business differentiation in technology,
- such differentiation becoming pervasive and commonplace in various forms,
- IT decision-making reaching further beyond the IT department than ever previously, and
- managing enterprises to differentiated and deffensible positions with the long-term technology agility to navigate continuing market changes.