John Katsaros

The "ilities" aren't enough

The "ilities" don't work as value propositions because everyone has them. You know what the ilities are - marketing buzzwords like scalability, reliability, usability, maintainability, interoperability, openness-ability and portability. These do not reflect any basic customer sensibility or requirement. Most customers are immune to these words since all vendors make the same claims. But what we find most worrisome is that despite these glaring problems, many vendors actually seem to believe their own nonsense for instance by believing that their "scalability" is better than anyone and customers will line up for a piece of it. It is one thing to fib politely in a customer presentation (where you are not exactly expected to speak the complete truth), and it is another thing entirely to build a business strategy on the same flimsy reasoning (to ‘‘inhale your own exhaust'' as it is colorfully described). To our horror, in all too many cases, after mixing their marketing Kool-Aid they actually drink it. We are not against marketers who spin stories to promote their new products. This is part of the game when dealing with creative and highly charged entrepreneurs. As insiders we enjoy seeing creativity at work. The ‘‘spun'' truth is as OK as a polite lie, but can be deadly if you actually believe it. What are we preaching? If you rely on the ilities, it's time to rework you value proposition to something much more substantial (read on...).

Creating Killer Value Propositions — Time for a "big bang" value proposition

Value propositions are the vehicles by which positioning translates into the potential that your product holds for your customers. Like positioning, value propositions are about the future. Value propositions hold the promise for what your customers can gain by working with you. They are about what your customers want to become. It's up to you to create compelling killer value propositions that can hold up, even in this difficult economy. For this discussion we'll use some data center examples but the "killer value propositions" ideas are relevant to all technology markets.

The past three years has seen a huge transformation in the data center. Using virtualization as a key technology, CIO's have consolidated their distributed data centers from many to just a few. Data center operators have been buying fewer, more costly, physical servers to host their virtual servers. While on the surface it may look like spending is about the same, the reality is that virtualization has brought about a huge change in budgets and allocations. Consolidation has greatly reduced the number of data centers which both reduces costs (less power, fewer racks, fewer network ports) and lowers operating expenses. So last year's value propositions might not be relevant for the modern data center buyer. But newer, potentially revolutionary value propositions open up. For instance:

a) Changing the spending dynamics in an IT organization - traditionally, innovation spending in IT was only 20%-30% of the budget while the rest went for support. By, among other things, automating data center operations, CIO's believe that they can invert this so that 80% of IT spending is targeted at bringing new applications online. That can be a big competitive advantage.

b) Extending data center lifecycle - Once upon a time, data centers which housed mainframes had a 10 to 20 year lifetime. That's not the case with modern virtualized data centers - most CIO's figure that in five years they'll need to do significant upgrades. Strategies that can add even just one or two years to the operational usefulness of a data center will have a huge payback. If you're able to increase the utilization of a $300M investment by 40%, that's a huge benefit for any CIO.

c) Resiliency - With virtualization, data center operators are a significant step closer to either redeploying their high availability and disaster recovery infrastructure or, for many, actually putting in place HA/DR capability where none existed before. In either case, these are important high value strategies that can be addressed from a different perspective.

d) Network Convergence - Moving traffic onto a common physical connection. Right now each server in a data center has three connections (to cloud, to other servers and to storage) - double that when you count redundancy. Converging this onto the same fabric will "flatten" out the interconnect complexity in a similar manner as VoIP flattened out the telephony infrastructure.

We'll leave the rest to you — We're hoping that these examples can stimulate your thinking about developing your own killer value propositions and the ways that you can express them.