Your CMS Vendor Still Wants to Sell You Services

  • 6-Feb-2019

Four years ago I outlined why letting a Web Content & Experience Management (WCM) vendor also serve as your integrator was generally a bad idea. Since then the problem has only gotten worse, as RSG's subscribers report to us that some WCM vendors are still crowding out their channel partners and seeking to implement large deals themselves.

The case against vendor-as-integrator

Let's quickly review why software vendors are generally ill-suited to providing integration services:

  • They don't staff for the long-haul and don't retain institutional memory about your environment
  • They focus on their system, not your broader needs
  • They don't bring wider business skills to the table
  • And so on...

To be sure, a vendor's services organization can provide very useful spot support: architectural and security reviews, generic developer training, module validation, short-term staff support, and so on. This is different from supporting a large, ongoing program over several quarters or even years.

So a savvy enterprise customer keeps a vendor in its proper lane.

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Why Now?

Why are some vendors are pushing harder than ever for new services revenues? The typical answer is, "because it's there." Enterprise digital budgets are growing, but I think there are deeper trends at work here that as a customer you'll want to keep closely in mind.

1. Cloud

As more vendors roll out their own managed hosting offerings (SaaS or more commonly PaaS), they increasingly include in the monthly fee a kind of part-time producer role. It comes under many guises, but usually something like "customer success manager." This is a nice subscription service, but that person gains deep visibility into your operation and often becomes a kind of inside sales manager when they see needs crop up.

Also, fast-evolving vendor cloud environments often have specific or unique features that implementation partners may not fully grasp. So the vendor often turns to its own resources to implement them for you. That seems convenient at first but make no mistake, it becomes high-risk for you, because at that point you are leaving the all-important ecosystem and have now put three eggs in a single basket: software, hosting, implementation.

2. Complexity

WCM tools have become much more complicated in recent years. In RSG's categorization of the market, we keep moving vendors from lower to higher complexity. Also, vendors are releasing new versions faster. The better channel partners do keep up, but many of them fall into the uncomfortable position of explaining to customers that the vendors snazzy new features are often betaware (think personalization here).

So sometimes it falls to the vendor's own services team to try to cash the checks that their salespeople wrote during the demos. That rarely ends well. Pro tip: when the vendor and their channel partner disagree, you almost always want to listen to the partner.

3. Juicing

Some vendors are under intense pressure to book revenue — any revenue. This could prove especially germane for pre-IPO players, like Acquia, Sitecore, and perhaps Episerver. Unconstrained by public reporting requirements, they are, uh...freer...in how they book revenue. The key thing, though is to show growth, and their current venture investors — who just want to exit as quickly and cleanly as possible — aren't as picky about the sources of revenues.

But once a vendor goes public, investors tend to get very, very picky about where revenue comes from. They frown on larger proportions of implementation services revenues for the perfectly sound reason that these fees carry lower margins and less predictability. Financial analysts are getting smarter about investigating income statements to suss out what's really recurring revenue and what's not.

So for a vendor, services fees are like PEDs — lots of short-term gain with long-term risks. For you the customer, though, this can become a worst-case scenario, as the vendor cuts back on its services team after going public, leaving you to scramble to find an integration partner.

What you should do

Successful digital leaders will take advantage of the unique, specialized needs of their various suppliers. They will pick the right long-term technology, but then rely on a "village" to get maximum value. Over time that village may include vendor services, agency partners, systems integrators, boutique advisors, independent developers, and staff augmentation firms.

Most importantly, I believe, successful enterprises will build up their own internal capacity. (How are you doing in that regard? Benchmark yourself to find out.)

If you want to make the best technology resources for your unique circumstances, check out RSG's decision tools and let us know how we can make you more effective.

 

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