“Blessed be the chaos, because it is a symptom of freedom,” Enrique Tierno Galván, former mayor of Madrid, once said. And with the climate that we observe today in the technology solutions market, it would seem that the apparent chaos brings freedom in its wake; Freedom to choose and build solutions. But this was not always so.
There was a time when customers were prisoners of technology and its provider (in fact, some still are). Marta Dominguez, a specialist in innovation, and Internet start-ups, describes in her article “From the captive client to the client as a collaborator”, the captive client model; which many companies have used to protect their research and development, and which basically uses three tools:
- A high entry cost
- absence of alternatives (the provider has absolute control over the client’s options), and
- A high cost to replace the product or supplier with another (contracts with conditions or loss of benefits, for example).
This model was very common in the software industry, and throughout the technology industry until about 10-15 years ago. Both the computer equipment on which the software was designed run, and the software itself, were very expensive and complex to implement. There were no alternatives for hosting the equipment outside the office, so it was normal to have a small room (or even the space beneath an employee’s desk) where companies placed the servers on which the business software would run, and that could only be modified by the provider; for big bucks. Those were good times for suppliers that had captive customers.
But all this changed with the arrival of emerging technologies such as cloud services: Infrastructure + Platforms + Software as services, digital communities, technology such as Artificial Intelligence, Machine Learning and Robotic Process Automation, all within reach of the budgets and the needs of organizations. Marta Domínguez explains: “Digital communities are the essence of the strategy of innovative companies and allow intelligent management of consumers. The restrictive market model has stopped working, and now, the Open Company is in charge of allowing customers to participate in the projects. And all the time the products continue to improve.” These new players have given customers the freedom to choose, when putting together their platforms:
- A lowentry cost
- Greatercustomer satisfaction (with added value and with many options to choose from), and
- A low exit cost (making it so that the client is able to leave)
But most importantly, these conditions have made the customer a collaborator. The most common fallacy for a long time in the sale of software was that the supplier knew more than the customer. What actually happened very often was that the software on offer contained a limited amount of business fuctions, which normally did not fit 100% to the client’s business, which therefore had to be adjusted to fit what the software could do. In that scenario, the provider was an expert in the software, but not necessarily an expert in the client’s business. At last, the client is now able to collaborate with the provider to build the solutions and collect the data that their business really needs.
Michael Grinich, a computer scientist and physicist at MIT and co-founder of Nylas (one of today’s most complete and powerful desktop email clients) explains that, by unlocking patterns and facilitating the use of data, workers with the knowledge are solving problems that the creators of the software did not even foresee: “For example, in the intelligence community, analysts can complete complex tasks, such as tracking international money laundering schemes or rebuilding communities in areas devastated by war, [activities] that require connections through networks powered by structured and unstructured data. The same goes for global bankers, multinational lawyers, retailers with distributed supply chains, medical researchers and other professionals facing complex challenges.”
The key today is integration. Companies need to match all the data generated by the different systems used by companies, both internal and external, to integrate into a single source of information about their customers, their employees and their key metrics. Obtaining value from data, especially unstructured data, requires putting that data in context. By matching unstructured data with structured data, companies can enhance their comprehension of people and processes.
Therefore, the relationship with new suppliers is increasingly oriented towards the building of relationships, decision-making and analytical skills, according to the research of Derk Erbé and Barbra McGann, analysts at HFS Research. No wonder the most sought after skills, and the most difficult for recruiters to find to work in the areas of Business Operations, are critical thinking, creativity and complex problem solving. Erbé and McGann point out that they have found a common trend in organizations to consolidate and prioritize / classify suppliers, in order to achieve better negotiating capacity, more effective and compatible supervision, and a more collaborative and committed approach, instead of just managing from the other side of the desk.” It does not matter what your operating model is if you do not have the right talent. The right talent will make the relationship with the supplier effective for the business,” conclude Erbé and McGann.
So customers have gained greater freedom through software that today they can configure for themselves, because the client knows their business better than the provider and is developing the necessary skills to face a complex environment. The captivity of the client has been transformed into a relationship with the provider of collaboration and commitment. And I think that means we are moving towards healthier and more productive relationships; even if it sometimes brings a bit of chaos.
Author: Jorge Oropeza
Derk Erbé , Barbra McGann: “Supplier Relationship Management in 2017: It’s all about talent, standardizing processes, and RPA”, February2017, www.horsesforsources.com (blog of HFS Research)
Marta Domínguez, “From the captive client to the client as a collaborator”, January 2013, the-i-thread.com
Michael Grinich: “Enterprise Software 3.0”, November 2016, medium.com.