Redefining risk in enterprise IT

A few weeks back I received some really disappointing news.

After a protracted evaluation process, one of our prospective clients (I’ll call them PlumCo) informed us that they couldn’t do business with us because of the risks associated with our size.  In spite of the fact that they loved our solution, and were unable to find a more suitable solution in the market, PlumCo is going to build their own SAP Integrated B2B webshop in house.  As if that’s a less risky proposition :-).

A few days later, Forrester happened to publish their very first B2B ecommerce Wave report.  They came right out and said that their study only included companies that had more than $20M in annual sales (IBM, SAP, Oracle etc.).  Again implying that “small” is equivalent to “risky”.

But wait a minute.  

Are PlumCo and Forrester implying that the opposite is true?  That buying from SAP (or IBM etc.) is a safe bet?

I don’t think the New South Wales Australia’s Department of Trade and Investment would agree.

Thanks to SAP’s recent announcement that they are cutting the losses on their “strategic” >$3B Business ByDesign investments, the fifteen month old NSW project is migrating 8500 employees from a legacy ERP platform to what is now an abandoned one.  Yikes! I am sure someone at NSW thought they were making a safe bet eighteen months ago.

Oh wait, what about those 30+ SAP customers who survived the SAP Web Channel Experience Management (WCEM) 3.0 ramp-up on May 23 only  to have SAP pull the rug out from underneath them one month later by sunsetting WCEM in favor of hybris?  How safe was their decision to follow SAP’s lead into the WCEM eCommerce world?

Honestly, it is hard to not be negatively effected by the news.

And then I got to thinking.

How do I reconcile the PlumCo and Forrester size-inadequacy-invoking messages with the reality that a growing number of multinational, multibrand and billion dollar plus organizations are calling us their “Strategic eCommerce Platform” of choice?   These established companies are entrusting us with the lifeblood of their businesses; a couple of them are over 100 years old and I’ll guarantee that everyone reading this blog uses their products.

How is that possible?

How can these large, conservative, risk averse organizations be making such a so called “risky” decision to do business with a “small” best-of-breed provider of the world’s only cloud based SAP integrated eCommerce B2B platform?

The answer?  Clearly their rewards must far outweigh their costs and the probability and impact of their risks have to be well within their tolerance limits.

I’ve often written about calculating the return on investment (ROI) of your B2B ecommerce initiative over the years, so I won’t repeat myself here.  Suffice it to say that our costs are typically an order of magnitude less than our competitors’ and we get our clients live in one third the time.  That makes it pretty easy to get a positive ROI almost from the very first day you Go Live.  We have clients who are supporting as little as $1M a year with their eCommerce initiatives and clients who are generating 100’s of million in revenue and they are all ecstatic about their investments.  We’re clearly making B2B eCommerce accessible to the masses.

But what about the risks of doing business with us?

Well… when Shelly Peet, Charlie Chiodo and Barry Brunetto, the CIOs of Nordson, Drive Medical and Blount respectively, decided to do business with us 5-6 years ago, the risks were huge.  They were our first three clients.  They invested in a new company with a new product and a new business model.  We had no revenues, no references and no track record.  What we did have was a compelling vision, the passion to pursue it and the commitment to realize it.

And we delivered.  For them and for every client that followed in their footsteps.

To our clients, the risk of not doing anything, or taking too long to deliver the “perfect” B2B portal to their customers, is a much bigger risk than potentially having to do it all over again in a year or two.  Especially if they can get online within weeks…not months or years…and for 10’s of thousands of dollars…not hundreds of thousands or even millions of dollars.

To them it’s all about Agility.

As far as size is concerned, our clients prefer the attention, expertise and results they get from us, over the false sense of security that comes from making the safe choice with (“nobody-ever-gets-fired-for-doing-business-with-SAP/IBM/etc.”).

The moral of the story?

I guess risk is truly in the eyes of the beholder and size really doesn’t matter.

As we embark into our seventh year of business we are now a “safe bet”.

• We survived and continue to thrive.  60% of startups fail within their first 6 years. We’ve proven our business model and our ability to manage it.
• We have the experience of supporting >150K registered website users 24×7 with 99.5+% availability.
• We’re an employee owned company with 11 (soon to be 12) consecutive profitable quarters (and distributions) behind us.
• We have zero debt and no outside investors breathing down our necks to fuel an irrational growth rate.
• Our strategy has remained the same since we first adopted it in 1998.  No wavering.  You focus on making SAP ERP the core of your Order to Cash business processes and we’ll bring it to the web for you and your customers.
• Our cloud-based business model means you won’t have any capital expenditures or have to hire any new employees. In the worst case, amortize your investments with us within a year and feel free to move on to a better solution.  Our 100% retention rate says that no one has had to use that safety net.

Thank you Shelly, Charlie and Barry.

While it wasn’t your goal at the time, the risks that you embraced all those many years ago have not only paid off handsomely for your organizations, they’ve made today a safer place for a growing number of your SAP Manufacturing peers.

 

Sam

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