Understanding The Value Embedded In Technology Supply Chains
Earlier this week, I saw an article on CMSWire by Tjeerd Brenninkmeijer of CMS vendor, Hippo. In How to Survive in a World Being Eaten By MarTech, he makes the point that marketing technology vendors need to integrate to enable users to aggregate the benefits of individual classes of application and to avoid jumping on every new bandwagon that comes along. This is from the ‘No Vendor Is an Island’ section:
“As the poet says, no man is an island. Well, no enterprise is an island either. Any vendor that claims it can do everything on its own is delusional, or not paying attention. Sure, some vendors will try to acquire all emerging tools and platforms, but this approach leads to inflated prices for customers that prefer an incremental approach to scaling their solutions. It also limits clients’ choices in terms of which solutions to work with.” [Read More]
Regular DAM News readers will note that Tjeerd’s perspective has more than a few parallels with the DAM Value Chain concept we have described previously on DAM News and also CMSWire a couple of years ago. Although similar, I don’t believe Tjeerd was ‘inspired’ by our piece, I am fairly certain he came up with it entirely by himself (or at least without having seen what was written by anyone contributing to DAM News). I suspect that more people who both use and provide software applications are starting to understand this now and I have started to see this advanced by some analysts also (albeit a highly select group of them).
Where I think there is still an element of debate is whether there is really full understanding of the context in which it is taking place and the full implications of the concept. I don’t know if this was a factor leading to Tjeerd writing his piece for CMSWire, but earlier this week, I also got sent some press from Bynder about their recent partnership with Hippo. This is interesting for the fact that while the article gives the impression that Hippo are seeking to refine their offer and focus their attention on their core strengths, their partners, Bynder are widening the scope of their proposition. According to the press, Bynder are “best of breed”, however, they are currently offering no less than seven different applications: DAM, creative project management, brand guidelines, web to print, brand store, product information and iPad apps. Either that is the opposite of what is discussed in the CMSWire article, or I have radically misinterpreted what he meant.
It should be noted, Bynder are not unique in this respect. Many other DAM vendors will (apparently) wholeheartedly agree with concepts like technology value chains when asked to comment on them, but then go on to do the exact opposite when it comes to their commercial operations. In investment terms, this is a form of greed or fear. The greed part comes from wanting to take on every single sales opportunity that is passed in front of them. The fear element is that a potential lead will get lost because they believe their solution lacks some attribute which the competition had. My limited understanding of these subjects is that those who succumb to one or both of these negative instincts generally end up losing by pursuing ill-advised capital allocation decisions to either go after something completely unsuitable or because the missing element wasn’t that important anyway (or was an outlier case etc). Obviously, those with deep pockets can last longer at the speculation game than their less well-capitalised counterparts, but even for them, you can’t use this strategy forever (and remain an independently financed entity, at least). If you are in the technology business, carefully considered capital allocation decisions are more or less essential for survival. There are numerous examples of tech businesses who did not give this the proper care and attention it deserved (and not many of them are still actively trading today).
Tjeerd cites Scott Brinker’s landscape of marketing technology solutions as the evidence for the points he makes (in particular how the number of entities in it grows exponentially each year). I don’t actually agree with the perspective that DAM is an exclusively marketing technology, since I work with a number of clients who don’t have anything to do with that business function and still need DAM solutions, but I take his point and I would acknowledge that this segment is currently largest single use-case in DAM. One factor I note with technology, in general, is that just using it seems to generate even more technology just to manage what you’ve already got. For example, if you have an account with a service like Twitter and then either acquire a number of followers (or just start following more than a few people yourself) fairly soon you need to invest in third party applications to help you maintain lists and categorise them etc. The market for ancillary tools in DAM to handle image processing, video manipulation, databases etc also follows similar patterns. Some long-standing applications like Photoshop with a 20+ year history have entire ecosystems of subsidiary products which depend not just on the core platform, but sometimes other third party tools as well (the same is true for many other established application brands). The longer a given technology survives for, the more value add-ons it acquires and the more complex and inter-dependent the market gets. At should be clear, value chains develop because users in markets demand ever higher levels of optimisation so they can compete more effectively themselves. How far up the specialisation curve firms will end up going depends on quite a few factors, including wider demand for whatever markets the wider value chain services, but it seems like there is a momentum for technology value chains, perhaps far more than physical ones.
I would contend that technology vendors (and DAM ones, especially) need to start to comes to terms with this idea and start to think about how they will operate in the context of value chains. It is highly unlikely any of them will be able to come up with an innovation that most of the rest of the market cannot copy within a relatively short space of time. As alluded to in the article discussed, this is now becoming a case of choosing which battles you plan to fight (and doing so on the basis of a realistic expectation of winning them).
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