The remit of systems integrators (SIs) has expanded in recent years. Previously, they were primarily only called on to stand up solutions and integrate systems. Today, software customers depend on them more heavily to assemble and maintain complex microservice architectures, to enable the exposure of data, and to work as a commercial partner by continuing to optimise their tech stack.
Solutions providers, therefore, must prioritise SIs & agencies in their own commercial strategies, and work to optimise these relationships.
To help software vendors better harness SI partnerships, The Martalks Podcast invited Joel Farquhar to share his advice collected from years of experience in technical architecture, and his last 7 years at Pivotree, a highly successful SI in enterprise ecommerce.
You can listen to the podcast here, or read an article based on it below.
The opening of this article sets out the market changes which have made SIs more important as commercial partners. This information may not be new to every reader, but it provides helpful context around the nature of the SI’s importance and power in the relationship with the software end-user.
The second section delves into the role of the SI as a commercial partner to software buyers, as well as technical partner, and how this can be leveraged by partnered solutions providers amidst growing competition.
Finally, I set out three key pieces of advice for how startups and enterprises can the most of an SI relationship, particularly in helping them help you to succeed.
SIs’ growing remit in the relationship with software customers
The rise of MACH architectures in the last 5-6 years has broadened the remit of SIs and digital agencies, as more clients depend on them to assemble and maintain complex software platforms.
“I don’t know if any solution we’re involved in, especially if it’s net-new, is not at least headless first… Whether that’s CMS, ratings & reviews, payments – everything is now trending towards composable solutions.”
Recently, however, the SI’s remit has expanded further still, as customers press for MACH solutions to fully deliver on their promises: of improved digital experiences, improved service delivery, and lower friction around innovation.
“Trying to make that whole experience frictionless – it’s a term you hear a lot. How do we make that end-to-end buying experience better for our customers, so that our customers can compete with Amazon and some of the larger players that are producing marketplaces.”
Some buyers now strive towards increasingly ambitious business models, enabled by more powerful software. Joel reports a particular interest in building marketplaces – which necessarily rely on more complex technical architecture – amongst larger customers.
But a wider trend, which applies to many different companies, has been demand for more frequent software releases, particularly on the front end.
“The biggest trend we see amongst customer is that they are pushing front-end changes out often. That can be daily or every other day.”
While back-end deployments may only take place monthly – as Joel puts it, “your shopping cart behaviour doesn’t change that much” – continuous customer experience innovation on the front end is now recognised by many companies as a critical competitive factor.
This awareness is not yet ubiquitous, but it’s growing.
“In this space, the difference in the level of maturity between organizations can be very large. A lot of legacy behavior exists even amongst companies which have already moved on to new architectures. We see customers who can’t wrap their head around having this degree of agility, partially because of legacy IT departments. And so some of them haven’t fully adopted the full benefit of being able to manage and launch multiple go-lives.
But there’s some maturity coming. Some of our larger customers are really aggressively executing some of this.”
All of this adds up to an increased workload for SIs & agencies – as well as increased power in the market.
However fast awareness matures, it’s slower than the maturation of technological capability, customer-side, that would enable them to execute these developments on their own.
As a consequence, the SI often now owns more of the client budget, and more of the client relationship. That, in turn, makes the SI a more important and valuable partner to the solutions provider.
Systems integrators are now key commercial partners
The question for solutions providers is how best to leverage their SI relationships. Solutions providers should start by considering SI’s transactional touchpoints with the customer.
In a recent conversation with Jay McBain, a channel analyst, we discussed how, in the decade of the ecosystem, there are now typically 6-7 partners involved in every software buying decision.
The majority of these partners are non-transactional (i.e., they may not resell the solution, but may influence the purchasing decision by virtue of integrating nicely with yours via API).
The SI, however, is a transactional partner. A company such Pivotree may be responsible for buying your solution on behalf of the customer, and also for buying the solutions that integrate with it. In 24% software marketplace transactions, as Jay McBain explained, the agency or SI presses buy on behalf of the customer.
By virtue of purchasing and working across companies’ architectures, SIs have necessarily become partners in their customers’ commercial success. This is particularly evident in how Joel describe their involvement in the various steps of an ecommerce order.
“In the early years of ecomm, software vendors took the attitude that, when they received the order, they threw it over the fence and let it be somebody else’s problem. And today, many of the back-end platform providers still operate in this way.
We’re not going to throw it over the fence anymore. We also focus on supply chain and fulfilment; we focus on that end-to-end experience all the way from the order placement, through the order delivery, to returns, exchanges, etc.”
The systems bought and maintained by the SI influence every step of the customer journey and of their client’s fulfilment operation. Each of these is a point where money can be spent, earned, lost or saved, influenced by the effectiveness and efficiency of the customer’s technology.
Beyond ecommerce purchases, Joel describes a wide range of technological challenges, deriving from the adoption of microservice architectures, which the SI is now called upon to solve.
One of these challenges is digital transformation – an ongoing project at every enterprise – and figuring out the cost implications of unfamiliar technology approaches.
“Large enterprises are moving towards API-first/MACH-type technologies gradually, because a wholesale replacement of that platform is not realistic for them… So a lot of them are using the strangler pattern: segregating out customers, pricing, inventory, etc., either leveraging existing platforms, or in a lot of cases we’re building custom cloud-native microservices for them.
With complexity you gain agility, which is why our customers are driving towards MACH, but we can’t fool ourselves into thinking what we are ultimately going to deploy is significantly more complex than a monolith.
With a monolith, it’s reasonably easy to figure out your total cost of ownership. One of the biggest challenges we see with our customers making this shift is in wrapping their heads around the cost of it. That’s where we’ve come in, helping our customers understand the costing model and the long-term technology implications.”
In many cases, buyers of software are hiring people to oversee the management of these challenges and drive technological development. Characteristically to MACH technologies, these expert buyers are less likely to be technology specialists; more likely to be leaders of the other business departments which stand to benefit the most from change.
“It’s not the CIO anymore. If I go back 10 years, these were almost always IT-driven projects; the platform was a technology choice. Now very rarely are we dealing with the IT department and the CIO. They have a voice but they’re no longer driving the charge.”
The types of job titles overseeing this change varies between different types of business. At B2B organizations, Joel explains, it’s more likely to be the Chief Sales Officer, since they expect significant purchase activity to take place in technology-enabled environments. On the B2C side: Chief Digital Officer (CDO) was a relatively rare term 5-6 years ago, whereas now, nearly every retailer has somebody playing that role.
These new job titles will prove valuable for technology companies’ own business development hit-lists; solutions providers should absolutely seek to engage every stakeholder in the purchase of their products.
But in the decade of the ecosystem, direct sales is no longer enough to secure and prolong growth. This is partly because many sales are now indirect, but it’s also due to the nature of the sales & marketing funnel.
The sale of your solution starts well in advance of the purchase itself. Much this process occurring in the networking that takes place amongst industry stakeholders, amongst whom, SIs are now increasingly powerful players.
“A lot of this stuff starts with partner managers and relationships. I’ve been doing ecommerce for 20+ years. You tend to see people move around the major platform providers.
But on my side as VP of engineering – and I own the architecture team as well – we spend a lot of time looking at the platform markets, analysing the market, and looking at what analysts are saying.
The best indicator for us is what our customers are looking at, some of them are pretty savvy especially in the B2C space. We use those indicators to say where should we place our bets on who’s going to be successful.”
Certainly, the brand-side CDOs I met at Shoptalk this year were slicing and dicing each individual software module on show, asking whether it generated lift and running the numbers.
But with professionals across the entire martech ecosystem influencing the software buying decisions, it’s clearly not sufficient for a vendor to wait around for customers to say nice things about them to an SI.
Given SI’s buying power, and their wider range of influence with the customer, vendor must invest appropriately in nurturing SIs themselves.
Collaboratively marketing & selling with systems integrators
SIs were often undervalued by legacy software vendors, whose business models depended more on long-term contracts and sticky products, than on partnerships.
“I’ve worked with other platforms in the past, where they didn’t care about the SI necessarily or the agency. They were more focused on the licence sale – “get the licence sale done and if they SI loses a ton of money I don’t care”.”
For such legacy providers, the greatest perceived value of the SI was in providing the development talent to execute an integration.
In a today’s more fluid environment, however, of subscription-consumption contracts and easily-replaced microservices, many vendors are aware of the SI’s significant strategic value.
Joel advice’s, for a company wishing to engage an SI on these terms, is as follows:
- lean on the SI’s experience and perspective to create a truly differentiated position
- invest time at senior level (ideally founder level) to give the SI the insight and the confidence they need to proceed with the partnership
- support the SI with sales and enablement, to mitigate the risks of adopting a new solution.
Differentiating your martech proposition
Joel points to Spryker as an example of well-differentiated proposition. The company has successfully avoided competing with commercetools’ enterprise-class commerce back-end by positioning as a primarily B2B solution.
For many companies, however, in a market with several, and sometimes dozens of competing providers in every product category, more creative solutions may be needed.
“The core functionality in any ecommerce platform or CMS tends to be the same – so understanding the differentiators can be tough.
Ecommerce isn’t just shopping cart anymore, so what is going to make you different? In the B2C market, mid-market level and up, how are you going to differentiate yourselves from Salesforce? And if you’re going after the mid-market and down, how are you going to differentiate yourself from Shopify? You’re going into a space that’s going to be tough to penetrate.”
Joel’s advice is that founder’s vision is often the best starting point for articulating the company’s differentiation. If the founder can share this insight in early meetings with the SI, it will likely provide excellent fodder for early cobranding and marketing efforts – and also help the SI evaluate the likely upside of the partnership.
Founders should invest time in the SI relationship
New solutions pose a significant degree of risk to the SI, given that they now called upon to make strategic recommendations on choices of platforms.
“That first deal is the toughest on a new platform. The customer is going to ask us how many of these we’ve done before and if the answer is zero, they ask “Why should we trust you?” You can go into your experience, but these solutions are still reasonably complex, especially in the enterprise space where we play. Customers are trying to do difficult things, and they want a partner that ideally has experience.”
In these cases, Joel advises that vendor’s leadership team’s willingness, to collaborate in getting the solution to market, is primary signal of whether to invest in the relationship.
“There’s a lot of different people in those organization that we try to get to, to figure out if it’s something we want to invest in.
Depending on the size of the firm, we’re talking to the founder about where they’re taking the product and what they see is the future of ecommerce. This is especially true at VTEX, where the founders are passionate and heavily engaged in the success of the product.
If the senior leadership team’s values are aligned with where we feel the market is going, that’s when we engage.”
Collaborate with the SI on sales & enablement
Finally, solutions providers are likely to need to support the SI with sales and enablement, particularly given the cost of this investment.
“We’re not Deloitte; we don’t have unlimited resources to train unlimited people. In MACH-type or pure microservice technology, the number of people that know how to build native cloud applications and API-first based applications properly, and avoid well-known anti-patterns, are in short supply.
We’re investing heavily in that because we do believe it’s where this market’s going, but a partner’s willingness to invest in enablement is a major factor.
At the end of the day, it’s my organization’s role to deliver the world that our customers want. So if those platforms deliver the success and vision they’re hoping for, I want to be well-positioned to execute.”
‘Aggressive and hungry’ startups, as Joel describes them, are often quick to grasp these concepts, as they seek to close those all-important early deals.
But I’d argue that this advice applies equally to enterprise technology firms seeking to retain customers and expand their business.
Enterprises – both monoliths, and established MACH providers alike – are vulnerable in their own ways: the former at risk of being phased out, the latter of being swapped out for a similarly flexible solution. Both types of business should consider how the ecosystem may be leveraged in order to stave off competitive threats.
The monoliths, to date, have mostly responded to this challenge by creating basic, out-of-the-box API connections to popular new SaaS tools. This strategy alone will not secure the lifespan of a monolith indefinitely, since it does not address the fundamental issues of cost, agility and data security that are driving customers towards microservices architectures. But it may buy the monolithic provider valuable time as they innovate around new products. Indeed, Joel says that Pivotree is working with many customers on SAP’s Spartacus product, which is positioned as a headless alternative to the legacy software.
In any case, the SI’s dual perspective – on evolving customer needs, and on the market for suitable solutions – is now invaluable to legacy providers in figuring out how to staying relevant in the market.
Similarly for new-breed vendors: many of them have great potential beyond their early successes, and will need robust commercial strategies in order to break of their startups and go on to continued growth. The most notable example of this is the headless commerce providers. For all their success in Europe, they have been slow to break North America, and are likely to benefit greatly from local SIs in repositioning their solutions for the US market – as Rosenstein Group wrote about recently.
Importantly, no solutions provider can expect the SI to make up for work they should be doing to develop, market and sell their own propositions.
On the contrary, you need to work harder.
If you look at any industry, the proliferation of novel solutions necessarily leads to falling prices and greater customer choice.
SIs, much like marketplaces, reduce this complexity for customers – and they can also simplify sales for market players, for a reasonable fee. But this increases the incumbency on the vendor to make sure that they stand out in a crowded room, and that they own as much possible of the conversation, the customer relationship, and ultimately of the revenue.
Vendors who recognise this are those most likely to win the support of SIs – who are both partners and customers of the solutions they support – and they are most likely to invest savvy and proactive commercial teams.
In Joel’s words…
“We’ve been doing this a long time so we can recognise when we have a good willing platform partner.
And vice-versa, we want to be a good partner to them. We’re no use to them if we’re not actively out there trying to sell their platform and bringing them deals.”
About Rosenstein Group
Rosenstein Group has been recruiting the leaders in martech sales for over 20 years. As the #1 executive search firm in martech, supply chain, ecommerce and SaaS, we specialise in recruiting heads of sales, channel sales leaders, and other members of the commercial team.
Learn more about Rosenstein Group here.
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