Lustratus REPAMA - Strategic Marketing Analysis

Updated High Performance Messaging Report

Just a quick note to say that the updated High Performance Messaging REPAMA Segment Analysis Study has been uploaded to the Lustratus site.  It now contains the reverse-engineered product marketing strategy for TIBCO’s Messaging Appliance P-7500.  Existing customers and Lustratus research subscription holders will already have been contacted with details of free upgrades. 

Following on from the blog entry I made when the first version of the report was released I thought I’d show the updated value proposition below.  As I mentioned in a previous blog entry TIBCO’s primary competitive focus is very unusual – it is TIBCO Rendezvous - one of its own products.  The different approach to the market doesn't stop there as you’ll see from the report extract below.  TIBCO also plough its own furrow by taking a different proposition to the market when compared with most of their competitors.  This one based around green IT and data centre costs (in addition to the obligatory low latency = competitive advantage proposition).

For more information on the REPAMA methodology visit here.

Danny Goodall.

Low Latency Messaging Event

The good people at 29West have asked Lustratus to moderate a panel discussion at their upcoming Zero Latency Tour event in London on Tuesday 19th May.  It promises to be a good discussion as the participants all have solid real-world experience of building and implementing low-latency systems.  We should have a lively debate attempting to answer the basic questions of how close to zero latency you can get and how you go about achieving it.

Speakers include:

• Nigel Woodward, Global Director Financial Services, Intel
• Martin Thompson, Director of Engineering, Tradefair
• George Andreadis , Head of AES Liquidity Strategy, Europe, Credit Suisse
• Mark Reece, eTrading Solutions Architect, HSBC

A similar event is also taking place in New York in June.  Visit the 29West web site here for more information.

TIBCO eats itself

Cannibalization.  You don't get to see that very often unless something strange has happened.  No, I'm not talking about the act of eating the flesh of the same species.  Instead I'm referring to where a vendor eats into its own sales by promoting one of its products ahead of another in the same market.  It is highly unusual for a vendor to be willing to sacrifice sales of one product line to increase another.  In my experience these things usually happen through some form of mistake or oversight in planning.  However, that doesn't appear to be the case with TIBCO's recent announcement of the TIBCO Messaging Appliance. 

As we suggested in our report The High-Performance Messaging Arms Race, we thought that the introduction of hardware into this market would have an impact.  And that certainly appears to have been the case.  In light of TIBCO's new product introduction I'm in the process of updating the REPAMA SAS on High Performance Messaging (where we looked at the marketing strategies of 29West's LBM, IBM's LLM and Solace Systems' Content Router).  As regular readers will recall, one of the key elements of the reverse-engineered positioning statement that we use with the REPAMA methodology, is the UNLIKE section.

UNLIKE (primary competitor or alternative)

This element of the positioning statement is usually used to aim the full power of the vendor's USP at a specific competitor.  However, in my early findings for the TIBCO, the UNLIKE element for TIBCO's Messaging Appliance appears to be:

UNLIKE TIBCO Rendezvous

That's right.  TIBCO sees the Messaging Appliance's primary alternative as TIBCO Rendezvous.  Which begs the questions; why aim the full power of this new product at an incredibly successful existing product?  Why is TIBCO happy to cannibalize sales of Rendezvous for the benefit of the Messaging Appliance?  It appears that the answer could be three-fold. 

1. TIBCO no longer believes in the proposition for Rendezvous (in software). 
2. Extreme competition exists from other software vendors that are able to simply replace Rendezvous and perform far better.  
3. As referenced here in SDTimes, TIBCO sees the advantages of blurring the CapEx/OpEx boundaries through the love that keeps on giving - the annual lease. 

So whilst self-cannibalization of sales is usually the by-product of poor planning, here it appears to be TIBCO's only choice.  Either way it's a risky strategy and represents a big opportunity for software vendors that are able to do what Rendezvous does (IBM, 29West, etc.) and is also a pat on the back for Solace Systems - who had more than a little hand in the production of TIBCO's Messaging Appliance.

Danny Goodall

P.S. Apologies for the image at the top but I usually like to select an image that matches the blog subject.  But having image Google'd "cannibalism", I just couldn't use any of the images!

REPAMA Guide Now Online

Despite being available in "beta" form to REPAMA users for some time, I finally got round to packaging up a publicly downloadable version of the Lustratus REPAMA Guide. This can be downloaded from Lustratus.com for no charge. 

I should say a big thank you to clients, colleagues and everyone else who has provided feedback on the guide, which studies should be included and how they should be presented. So "Thank you"! 

And for those looking to understand the product marketing and go-to-market strategies of TIBCO's competitors in the High Performance Messaging space - specifically  Solace Systems' Content Router, 29West's LBM and IBM's WebSphere MQ LLM - I've also put the High Performance Messaging REPAMA Segment Analysis Study in the store.  I'll be adding the individual reports on each of the vendors in the coming days

Dan.

An "average" marketing strategy

Mean.  It's a great word isn't it.  But what does mean, mean?  If you see what I mean.  It's either hateful, the intended meaning of something or, as I want to use it here - an average.  In this case it's the "average" marketing strategy for a specific marketing segment.  What would be the value of knowing the "average" marketing strategy for any number of strategic marketing elements for the segment in which you compete?

i.e. on average for your market segment who is the ideal target customer organisation? On average what job roles do your competitors target? On average which vertical markets are favoured? On average who does your competition see as their primary competition? etc.

(click the image for a larger version)

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(click the image for a larger version)

The above Marketing Element Distribution(TM) charts are taken from a recent Lustratus REPAMA(TM) Segment Analysis Study into High Performance Messaging.  The study compared the marketing strategy of IBM's WebSphere MQ Low Latency Messaging (LLM), 29West's Latency Busters Messaging (LBM) and Solace Systems' Content Router.  Whilst the study contains full details for each of these vendor's strategies, the calculated "Market Mean" reflects the mean value of each of the marketing elements across those 3 vendors.

Lustratus produces this intelligence as part of the Lustratus REPAMA Segment Analysis Study and we obviously plot the positions of each of the vendors in addition to the mean, but this is relatively simple exercise to conduct for yourselves.  The question is what do you do once you know the mean?  Do you look to be outside of the mean?  The religion of "differentiate or die" suggests you probably do.  But the idea that what "most" of your competitors are doing must be right, suggests that you might want to simply track them.  Look at the Vertical Market Segmentation chart above and ask yourself whether you want to aim outside of Financial Services?  Well it might be an uncontested space, but at the same time their might be a lot of tumbleweed.

The answer of course is that whilst you can compute an "average" marketing strategy, the right strategy for your organisations depends on many factors.  Aiming at the average vertical market and at the average ideal customer might be valid strategies because it suggests that is where the rest of the segment feels there is opportunity.  But if you attack these prospects with "average" messaging and "average" differentiation it will be death by a thousand ho-hum cuts.

Either way, knowing what your competitors are doing is a good place to start.

Dan.

You can spin, but you can't hide

We spend a lot of time at Lustratus looking into the performance of early market companies.  Quite often these companies brief us and tell us how well they're doing and how well they're latest re-positioning is being received in the market.  Most of the time I believe them.  And what if I don't, what can I do to prove/disprove their claims?  As an early market company they're typically not public and probably don't have to file detailed financial results.

The answer lies in the footprints they leave in the Internet snow.  That and something that we refer to as the press release boilerplate evolution.   As you probably know, the boilerplate is the short, reusable text that appears at the end of press releases.  But why is this text that is designed to succinctly describe the company to the press so important?  Because it's creation is typically one of the most political processes within a marketing organisation.  Everybody has an opinion on the boilerplate text from the CEO down and because it's tacked on to the end of the press release, everybody who reviews the press release during its creation gets to see it and pass comment.

It therefore changes and develops over time.  Just like the rings of a tree which reveal much about the environment that the tree was growing in at that moment in time, so each press release archived on the vendor's web site reveals much about the vendor's view of the then current trading, competitive and market environment.  If you analyse the changes that are made at each stage over time, you can get a view of the vendor's changing confidence, or lack of confidence in their current strategy.  Some changes obviously reflect a healthy company tuning its strategy and adding more and more supporting information to the boilerplate that simply better describes the growing company.  Others changes can reflect massive changes in strategy that might point toward a much more troubled organisation that is struggling to gain traction in the market.

An example from a current REPAMA project is shown below.  I've removed the detail behind the project but what you can see is two organisations (29West and Solace Systems) who have made significant changes to their press release boilerplates over time.  We rank and categorise these changes and "points" are scored for both minor and major changes over each of the following categories:

• Company/Commercial
  • Business model
  • Channel
  • Location/Offices
  • Back story
  • References
• Target
  • Company type
  • Industry
  • Individual
• Features
  • Capability
  • Capacity
• Value and proposition
  • Value derived
  • Proposition

When this is represented graphically you can see the cumulative changes over time.  The steeper the line, the greater and more significant the changes. 

As you can see from the diagram above (click to enlarge) Whilst 29West's boilerplate remained static for a number of years of the early market company's evolution - suggesting a committed long term focus, in recent quarters the company's boilerplate has been through a number of rounds of changes.  Most of these changes however were evolutionary, such as removing the overtly technical / product statements from their early years and replacing them with more business value statements as well as adding detail about new product developments and office openings, etc.

However Solace Systems' boilerplate by contrast has seen a much more volatile evolution.  Quite significant changes in organisational strategy, business model, target customer, pain solved and value proposition have been made over time.  These changes point towards an organisation that struggled for some time to understand where its market was and how best to position itself and its offering.  More worryingly perhaps for Solace Systems is the last 8 quarters chart that shows how stable the organisation's strategy (such that it is embodied in the boilerplate) has been. 

The trend for Solace Systems, especially in recent quarters has been to make significant changes to its boilerplate.  I'm sure Solace would suggest that this now reflects a better understanding of its market and given some of their recent announcements this is likely to be the case.  

So as these press releases are thrown on to the wires to end up in publications, web news aggregators or blogs.  The trail they leave helps us understand a lot about what is really going on in an organisation.  I'll post something on the Boilerplate Delta (how far removed the boilerplate is from the current reverse engineered position) in a future blog.

Dan.

"We all target the same prospects"

I hear this a lot in the high-tech marketing world.  Organisations tell me that when they are prospecting they and their competitors target the same organisations and the same people. 

I want to highlight how assumptions like this can be very dangerous in competitive marketing.  It's lazy to assume that your closest competitors are saying the same thing to the same people as you are targeting.  

Sure there are major similarities in most highly competitive markets but when Lustratus studies the protagonists and their relative offerings in detail we always find significant clear blue water between them.

We developed the REPAMA methodology to bring a little clearer insight into competitive marketing.  We've recently completed a REPAMA Segment Analysis Study (SAS) on a subset of the High Performance Messaging market.  There are some really interesting things going on at the moment in that market.  Some really clever software and network architecture techniques are being used to remove the delay between one application sending a message and another application receiving it.  In addition dedicated FPGA hardware is now being used to replace software servers.  The primary beneficiary of this capability (minimizing the delay) is the financial markets where saving time exchanging information can literally translate to millions of dollars lost or gained.

We were asked to look at IBM's WebSphere MQ Low Latency Messaging (LLM), Solace Systems' Content Router and 29West's Latency Busters Messaging (LBM).  Prior to starting the analysis we were led to believe that "we all target the same prospects".  Whilst it is true that there is massive similarities between the strategies of the respective competitors, there is also significant, subtle as well as not so subtle difference. 

The image above (click for a larger image) shows the ideal target customer as inferred by the language of the vendor in their outbound marketing activities.  This puts a lie to the argument that "we all target the same prospects".  In reality, there is a great deal of similarity in the industry of the target prospects (with the exception of the channel business of Solace Systems) but the specific targets differ significantly from company to company.  Relying on a lazy assumption would almost certainly result in ceding market opportunities to the competition.

OK so I'll close out with two very interesting charts (well they're interesting if you're a marketing analyst). 

The image above (click for more detail) shows the features and benefits that they various vendors ascribe to their products and services.  As you'll see, there is a high degree of correlation between them.  In fact you would assume that when they are in front of a prospect, each of these individual companies would be saying much the same thing and that their arguments would be indistinguishable from each other.

That may well be true whilst they are talking about the technology and its features.  There is certainly a high degree of correlation.  However, once the vendor interprets these features into benefits that the business would enjoy, the picture shows a different story. 

Here, in the diagram above (click for more detail), we can see significant differences in the value ascribed to the respective products by their respective owners. 

What does this tell us?

Well if the vendors sell on technical features to technical people then there are similarities that will likely only be resolved by comparing the products in detail and perhaps looking at the specific performance through benchmarks or evaluations.  However if the vendor sells based on the value of the technology to the business in business terms, then we can see that the vendors are very different in their approach.  As part of the study we also infer the place where the vendor looks to start the sales process as well as their likely commitment to value-based selling.

So "we all target the same prospects" might be true in once sense but it takes a detailed analysis of the picture to really infer how organisations actually take their products to market. 

Lesson?  Never assume that you know what your competitors are doing just because you know what you do.  They will be different.  Better?  Worse?  Well that depends. But knowing that there is a difference is the first step in building a "better" story and selling more. 

And remember "different" makes it easier for prospects to make decisions.

Dan.

A quantum of Solace? (Systems)

So, as I mentioned in my previous blog that Lustratus has been looking at companies in the High Performance Messaging (middleware) space recently.  A couple of ex-colleagues from Sonic (Dave Clare and Annalisa Sarasini) have both found themselves in this space, with Solace Systems and 29West respectively.  My colleague Steve Craggs is looking to produce a paper on the space so we arranged a couple of briefings. 

Steve and I have both served our message oriented apprenticeship.  Steve ran IBM's MQSeries division for many years and I was part of the team at Sonic Software that brought SonicMQ to market and then launched the ESB category. So we both understand the manic vendor space race for continually lowering latency in message delivery.  For years the delays in message transmission to reception have been falling mainly as factor of incremental improvement in software techniques, network improvements and ever increasing hardware processing speeds.

However now, Solace Systems together with other vendors such as Tervela and Celoxica are using dedicated hardware platforms to handle message delivery.  They promise dramatic increases in the number of messages per second that can be handled and an equally dramatic reduction in message delivery latency.

Comparing Solace Systems' and 29West marketing approaches is an interesting exercise.  For organisations that appear to address the same basic pains, they take a very different approach to marketing their respective offerings. 

Solace System's proposition, it appears,is aimed at financial institutions, information providers and communication services providers.  Their dedicated hardware solutions for message and content routing appear to have a broad appeal outside of the obvious market of financial services.  Contrast this to 29West and you see a company that has a razor sharp understanding of it's target market and target prospect - financial institutions who see the opportunity created by reducing the delay in exchanging market data and trading information between computer systems.

So 29West is focused on it's target market but does it risk being an 8 fingered glove company?  How big is the market opportunity provided by this very narrow niche?  The good news for 29West is that the market for low-latency, high performance middleware within financial services is quite a broad narrow niche - if you see what I mean.  But it does mean that 29West's growth is certainly limited by their incredible focus.

A greater concern for 29West is that, perhaps in recognition of fact that their market opportunity is limited, they appear to be taking off those 8 fingered gloves and are attempting to reach outside of financial services and into the realm of generic application to application messaging.  The issue will then become one of differentiation from the many long standing products that already exist in that space who are now seeing messaging as an enable to SOA with all the additional expected capabilities that that might imply.  Achieving this is not an easy, inexpensive or quick thing to do.  Still, the company is run by good people (ex-Talarian/ex-TIBCO) so we'll watch with interest.

So Solace Systems comes off best in the marketing strategy comparison then?  Well - maybe.  They do suffer from another early market trait - that of evangelism over proof.  It appears that they're doing a lot of evangelism about the way that they enable exciting new ways for organisations to manage content in their network.  And whilst this evangelism in itself is not a sin (I've done it myself countless times and it's an essential part of the early market marketing mix), they don't appear to supply many references to back up their claims. 

They do describe their very interesting relationship with TIBCO, who have bundled/white-labelled Solace's technology to help the ancient Rendezvous limp through another couple of years of maintenance revenue. But other than that I can see little evidence of the claims they make.

As I said above, Steve is going to take a little look at the technological and product strategies of the two companies in an upcoming paper so we'll track them from here on in and see what develops.

Dan.