Andy on Enterprise Software

A marketing tale

June 7, 2006

Marketing is a tricky thing. One lesson that I have begun to learn over time is that simplicity and consistency always seem to triumph over a more comprehensive, but more complex story. Take the case of Tivo in the UK. A couple of my friends bought Tivo when it first appeared in Britain and started to have that kind of scary, glazed expression normally associated with religious fanatics or users of interesting pharmaceutical products. I then saw a cinema ad for Tivo and it seemed great: it would find TV programs for you without you having to know when they were scheduled – how cool was that?! It would learn what programs that you liked and record them speculatively for you; you then ranked how much you liked or disliked them and it would get better and better at finding things you enjoyed. You could turn the whole TV experience from being a passive broadcast experience into one where you effectively had your own TV channel, just with all your favorite programs. Oh, and it looked like you could skip past adverts, though of course the Tivo commercial politely glossed over that.

Well, I bought one and I was like a kid in some kind of store. I soon acquired the same crazed look in my eyes as my fellow Tivo owners, and waited smug in the knowledge that I was at the crest of a wave that would revolutionize broadcasting. My friend at the BBC confirmed that every single engineer there was a Tivo fanatic. And then: nothing happened. Those BBC engineers, myself and a few others constituted the entire UK Tivo market – just 30,000 boxes were sold in the UK. Eventually Tivo gave up and, although Tivo is still (just about) supported in the UK, you can’t even buy Tivo 2, or even a new Tivo 1 except on eBay.

What happened? The message was too complex. Years later Sky caught on to the DVR concept and brought out the vastly functionally inferior Sky+. How did they advertise it? They just showed a few exciting clips with the viewer freezing and then replaying: “you can replay live TV” was all that was said. This was a fairly minor option on a Tivo that the Tivo commercial barely mentioned, yet it was simple to understand. Sky+ sales took off, and myself and some BBC sound engineers are left with our beloved Tivos, praying that they don’t go wrong. It is another Betamax v VHS story, but this time the issue was a marketing one. Tivo still limps on in the US, still growing slowly in subscriber numbers through sheer product brilliance (helped by being boosted on “Sex in the City”), but has clearly not fulfilled its potential.

What this little parable should teach us is that a key to successful marketing is simplicity, stripping everything down to the core thing that represents value to the customer, and then shutting up. With a simple message people can describe the product to their friends or colleagues, and so spread the word. With a complex, multi-part message they get bogged down and so cannot clearly articulate what the product does at its heart. It is so tempting to describe the many things that your product does well, but it is probably a mistake to do so. Find the one core thing that matters to customers, explain this as simply as possible, and repeat as often and as loudly as you can.

Size still isn’t everything

Madan Sheina, who is one of the smarter analysts out there, has written an excellent piece in Computer Business Review on an old hobby horse of mine: data warehouses that are unnecessarily large. I won’t rehash the arguments that are made in the article here (in which Madan is kind enough to quote me) as you can read it for yourself but you can be sure that bigger is not necessarily better when it comes to making sense of your business peformance: indeed the opposite is usually true.

Giant data warehouses certainly benefit storage vendors, hardware vendors, consultants who build and tune them and DBAs, who love to discuss their largest database as if is was a proxy for their, er, masculinity (apologies to those female DBAs out there, but you know what I mean; it is good for your resume to have worked on very large databases). The trouble is that high volumes of data make it harder to quickly analyse data in a meaninfgul way, and in most cases this sort of data warehouse elephantitis can be avoided by careful consideration of the use cases,probably saving a lot of money to boot. Of course that would involve IT people actually talking to he business users, I won’t be holding my breath for this more thoughtful approach to take off as a trend. Well done Madan for another thoughtful article.

Revenue recognition blues

Cognos shares have slid nearly 20% in recent weeks as an SEC probe into their accounting continues. The questions raised are in the notoriously tricky area of US GAAP rules, specifically on “VSOE” (or vendor specific objective evidence) which determine how much revenue can be credited for a deal in current figures, and what amount should be deferred. The post-Enron climate has ushered in a much harsher review of software industry practices than was normal in the past, and such esoteric sounding accounting rules can seriously impact a company, as Cognos is now seeing.

Word in the market is that the underlying business is actually quite robust at present, so hopefully this will be a blip for the company rather than anything more serious. Cognos 8 means that there is quite a lot of potential for Cognos to gain revenue as customers upgrade to the new software, which features much better integration between ReportNet and Powerplay, and a complete revamp of Metrics Manager, which is retitled Metrics Studio. These improvements should see Cognos customers steadily upgrading, and so having a positive impact on the company’s already pretty healthy finances. However perhaps some more conservative interpretation of US GAAP on their part would be wise.