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> unable to fully productize their solution In my experience with this type of problem, it happens due to a failure of vision and leadership. The software comp

by n00b101 10y ago

> unable to fully productize their solution In my experience with this type of problem, it happens due to a failure of vision and leadership. The software company focuses a vast majority of resources on POCs and "consulting" revenue (really, rent-a-coder revenues) and these "consultants" end up failing as product innovators (i.e. they contribute practically nothing to the productization or even harnessing of institutional knowledge) and they also fail as true consultants (i.e. they do not have deep industry experience or management consulting prowess to be able to deliver unique value and engage with clients). Ultimately, this happens because leadership neglects product and becomes too caught up chasing deals and burdening the organization with custom development work to close the gap between the existing product versus market needs. This is OK if your software company's consulting services are affordable. Enterprise clients tends to be quite accepting of the need for customization after product purchases. However they do not expect to pay McKinsey levels of fees (let alone $18M per year?!). An alternative business model that seems to work is management consulting, where you can charge huge consulting fees (if you have earned the requisite reputation), and you can even cross-sell relatively low cost in-house software products or services alongside the consulting work. However, high value consulting engagement like McKinsey tend to last weeks (not years), making the expense palatable to clients (e.g. around 500k fee, for 2-3 consultants for a month or so). The difference between management consulting and enterprise software is that when paying $200k for 2-3 "millennial" "management consultants" for a week of work, the client doesn't expect delivery of a complete working software solution - the client only gets a PowerPoint presentation suggesting what and how management should do in order to achieve some given goals. There is an interesting potential disruption occurring at the intersection of management consulting and software, but not much has changed yet with traditional business model divide between old-school management consulting and enterprise software, and Palantir doesn't seem to have cracked that code.

salemh 10y ago
"Enterprise" Management Consulting (with code) is what kept ringing in my head reading this article. You hit the nail on the head, though I would also highlight this from the article: >But Kimberly-Clark was getting cold feet by early 2016. In January, a year after the initial pilot, Kimberly-Clark executive Anthony J. Palmer said he still wasn’t ready to sign a binding contract, meeting notes show. Palmer also “confirmed our suspicion” that a primary reason Kimberly-Clark had not moved forward was that “they wanted to see if they could do it cheaper themselves,” Kelt told colleagues in January. My own experience (small, not a big-5 at all) with Management Consulting, and following the sales and execution process, was many times this issue. Providing enough information and value to get FURTHER engagements, with many clients seeing "20% increase in savings is better then $xM a year to $firm" (our little firm). Additionally, our company was used as a cudgel against procurement contracts, such as telecom, wherein, if we are brought in, perhaps the 5 year $30M telecom deal would create a cost decrease of 45-55%, so, the incumbent immediately shaved 20% off of the renewal contract, and the company did not engage with our firm further. telecom and IT procurement savings normally dealing with CFO's/CIO's at $1b-$5b companies. Engagements from 3-8 months standard, with a few at several years. Every contract was a big fight of the above push and pull.
ryandrake 10y ago
> The software company focuses a vast majority of resources on POCs and "consulting" revenue (really, rent-a-coder revenues) and these "consultants" end up failing as product innovators (i.e. they contribute practically nothing to the productization or even harnessing of institutional knowledge) and they also fail as true consultants (i.e. they do not have deep industry experience or management consulting prowess to be able to deliver unique value and engage with clients). Ultimately, this happens because leadership neglects product and becomes too caught up chasing deals and burdening the organization with custom development work to close the gap between the existing product versus market needs. Wow, that's a good summary. It's a trap that companies fall into and can never get out of: 1. Company has Product X and a bunch of smart engineers excitedly working on it. 2. The sales process ensues. No customers actually want Product X, but a few whales say "We don't want that, but you have smart people, we will pay you for this sorta-related ABC custom solution for us!" 3. Company tries to stuff ABC into Product X. They think they are improving their product AND getting the customer to pay for all the NRE! Woohoo! But in reality they've just turned into a contract engineering company and don't know it. 4. Steps 2 and 3 repeat until Product X is a franken-product that has so many features in it, nobody knows what it is supposed to do, customers still don't want it, and the engineers eventually realized that they are no longer working on the product they were so excited about.

by n00b101 10y ago

salemh 10y ago

"Enterprise" Management Consulting (with code) is what kept ringing in my head reading this article. You hit the nail on the head, though I would also highlight this from the article: >But Kimberly-Clark was getting cold feet by early 2016. In January, a year after the initial pilot, Kimberly-Clark executive Anthony J. Palmer said he still wasn’t ready to sign a binding contract, meeting notes show. Palmer also “confirmed our suspicion” that a primary reason Kimberly-Clark had not moved forward was that “they wanted to see if they could do it cheaper themselves,” Kelt told colleagues in January. My own experience (small, not a big-5 at all) with Management Consulting, and following the sales and execution process, was many times this issue. Providing enough information and value to get FURTHER engagements, with many clients seeing "20% increase in savings is better then $xM a year to $firm" (our little firm). Additionally, our company was used as a cudgel against procurement contracts, such as telecom, wherein, if we are brought in, perhaps the 5 year $30M telecom deal would create a cost decrease of 45-55%, so, the incumbent immediately shaved 20% off of the renewal contract, and the company did not engage with our firm further. telecom and IT procurement savings normally dealing with CFO's/CIO's at $1b-$5b companies. Engagements from 3-8 months standard, with a few at several years. Every contract was a big fight of the above push and pull.

ryandrake 10y ago

> The software company focuses a vast majority of resources on POCs and "consulting" revenue (really, rent-a-coder revenues) and these "consultants" end up failing as product innovators (i.e. they contribute practically nothing to the productization or even harnessing of institutional knowledge) and they also fail as true consultants (i.e. they do not have deep industry experience or management consulting prowess to be able to deliver unique value and engage with clients). Ultimately, this happens because leadership neglects product and becomes too caught up chasing deals and burdening the organization with custom development work to close the gap between the existing product versus market needs. Wow, that's a good summary. It's a trap that companies fall into and can never get out of: 1. Company has Product X and a bunch of smart engineers excitedly working on it. 2. The sales process ensues. No customers actually want Product X, but a few whales say "We don't want that, but you have smart people, we will pay you for this sorta-related ABC custom solution for us!" 3. Company tries to stuff ABC into Product X. They think they are improving their product AND getting the customer to pay for all the NRE! Woohoo! But in reality they've just turned into a contract engineering company and don't know it. 4. Steps 2 and 3 repeat until Product X is a franken-product that has so many features in it, nobody knows what it is supposed to do, customers still don't want it, and the engineers eventually realized that they are no longer working on the product they were so excited about.