Near the end of my Spring conference tour, I am recently back from the RedPrairie users' conference meeting in San Antonio.
It continues the string of what I would say have been generally upbeat and positive meetings that I have attended. The software industry is feeling the effects of the slow down like everyone else, but companies are still buying, especially if a vendor can help them better manage inventories.
In a meeting with press and analysts, RedPrairie CEO Mike Mayoras gave an impressive update on the company. After a string of acquisitions over the past five years combined with internal growth, the company is now at some $290 million in revenue, with very strong annual growth (24%) for several years through year end 2008.
But here was really the music to my ears: Mayoras attributed much of the success to a strong focus on “consultative” selling to customers. That’s not a surprise, as before he went to RedPrairie, Mayoras was CEO of consulting firm Digiterra.
It may sound obvious to many of you, but the reality is many software companies lost that consultative approach over the past decade, as the focus moved to “turning transactions.” In fairness, that change was also, in part, driven by customers, who often went to very formal software selection processes, driven by RFPs and scripted demonstrations, which didn’t leave much room for a more consultative approach.
But the result is bad for software companies and their customers, in my opinion. It led to a self-fulfilling prophecy in some cases, as the lack of opportunity for consultative selling triggered the good, true consultants to leave the software vendors, which meant that there was less value for customers from the consulting they did consider, which led to less interest in those capabilities, etc.
Think about it: in the Warehouse Management System industry where RedPrairie has its roots, the systems were mostly custom through the end of the 1990s. If you are going to write a heavily customized system, you better have consultants who can really define what it is that is needed and work with customers to get that right.
But with advent of much more packaged software, that need declined, and the process moving away from consultative selling began. Software companies still maintained “consultants” who understood their own products quite well, but much less about operations, analyzing trade-offs, best practices, etc.
Mayoras said it has taken awhile, but now he has the whole company thinking this way. In parallel, RedPrairie has now expanded well beyond WMS into a very broad supply chain execution suite, a series of retail-focused applications, and now a very interesting move into planning (see below).
That would be exactly the approach I would take, and Mayoras says the results from the strategy are clearly demonstrating themselves and making believers out of the organization. It is critically important now, with many software companies having so many different “modules” that can be combined, and yes, in some cases, still modified in many different ways – how can companies really think about those capabilities in terms of solving a specific business problem or enabling a new business or supply chain strategy?
Those skills become even more important as the focus moves from solving a single issue - say warehouse or transportation management - to a more supply chain-wide perspective. But even if the problem is more focused, you will need partners today who can understand the big picture.
RedPrairie also recently announced a very interesting move in forming a joint venture with Dr. Andre Martin, the originator back in the 1970s of the concept of Distribution Requirements Planning (DRP) when he was at Abbot Labs Canada. The new RedPrairie Collaborative Flowcasting Group combines a new hosted store-level planning and replenishment solution targeted at consumer goods companies with RedPrairie’s marketing muscle and resources. I think they are smartly launching it as a separate entity at the start so that the right focus and expertise can be applied.
Building on an initial success with Kraft, getting this solution to market well will clearly also take strong consultative skills – and I have no doubt that Mayoras will make sure that approach lasts for the long haul.
Whether it’s RedPrairie or anyone else, take a look at consultative skills a potential or your current software vendors may have. If they know how to do it right, the results can be very positive for both of you.