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Why Your Competitors Probably Don’t Matter

August 24, 2017 - Business Psychology -
By: Chris Riley

Competitors are not necessarily the same thing as competition. Competitors are vendors that have a product with feature parity with your product. Competition is anything that could be chosen in lieu of your product.

Companies spend a lot of time scrutinizing their competitors, which is an important exercise to define your portion of the market, support your roadmap, and keep you on your toes. But what we normally think of as a competitor is often not competition—And for those of you who say you have no competitors, you probably have a lot of competition, because competitors often are not what threaten your product’s adoption.

Your prospects will always make a decision when it comes to choosing your product over something else. But what they choose is often baffling. Instead of competing products, prospects will often choose the following alternatives:

  1. Habit
  2. New approach
  3. Nothing at all

Habit

Your offering needs to sufficiently prove that it can do the job better than the old approach. Often the old approach is home-cooked and clunky, but, it is also “free.” It does not require setup, it’s already entrenched, it does not require any new purchases, and the expenses are already realized. Because of this, the new solution needs to radically improve a process, increase productivity, reduce cost, or reduce effort. Incremental improvements do not motivate change from habit because adding new processes and tools is disruptive. “New” takes time to adjust to and set up. “New” can often cause cascade effects like having to change other tools or processes in the organization. The additional changes are a hidden cost and impact the overall return on investment of purchasing anything. The habit may not be perfect, but it can be good enough. The risk of this type of competition is that it quickly forces you into the pricing conversation, and it ends up being a price/value calculation, which can quickly diminish the long-term prospects of your offering.

An example of this can be found in the public records market. Government agencies generally procure public records requests via PDF form—or fax! While there are solutions on the market to make it easier to manage, respond, and report on public records, records officers are not apt to jump on them. The vendors of these solutions look to each other as competition, but the real competition is getting their prospects to take action and adopt something new.

New approach

Maybe your offering is not the only way to skin the cat. This is likely true. In technical fields like DevOps where the target market is crafty, finding new ways to solve problems or improve development environments is a fun challenge, and not that hard. Currently, VMWare’s biggest threat, in my opinion, is software containers. VMWare is looking at Microsoft’s Hyper-V product as a direct competitor to their hypervisor. But, in reality, people are avoiding VMs altogether. And the biggest threat to Docker, a software container company, is serverless code.

Nothing at all

In the case of a prospect looking at technology where they currently do not have an existing process (habit) or tool, they may decide to do nothing. Using the DevOps market as an example, DevOps is a highly fragmented market, and a lot of the tooling that is showing up is nice to have. From the vendor point of view, it might seem necessary, but for the prospect, they can do without it, and have. So you are working to convince them that it is necessary, or will be necessary, or that the benefits are so great that they can’t miss out.

… But open source

In all technical markets, and some industrial markets, Open Source Software (OSS) has become so advanced and well-maintained that it is a suitable solution to a lot of problems. It’s very easy to adopt, and likely has a massive community for support. In the DevOps market, OSS is almost always a part of any tool selection process. In industrial, it’s far less common, but it is increasing, even with pure-play open source packages that have no commercial entity behind them.

In the case of commercial open source, what is interesting is that most of the time the greatest competition for the commercial entity behind the open source project is the project itself. MongoDB, Jenkins (CloudBees), and RedHat, Ansible, etc., for example, spend most of their time converting community users to paid customers.

When competitors matter

There is one simple litmus test to know when competitors really matter—Do they come up in prospect conversations? If you have a sales call, or other way of collecting data from prospects, and the prospect either casually or directly reports that they are comparing your solution to a competitor’s, then they are a threat. If they come up frequently, you should start considering more competitive marketing campaigns, or rip-and-replace strategies for the entrenched player.

The takeaway

Looking at your competitors puts a fire in your belly and helps guide your roadmap. Competitors often help in broader market education, and in more clearly defining market segments. And often, your competitors aren’t actually a threat to your customer acquisition. Habits, alternative approaches, and doing nothing at all are just as much a threat to most companies as any vendor can be.


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Chris Riley (@HoardingInfo) is a technologist who has spent 12 years helping organizations transition from traditional development practices to a modern set of culture, processes and tooling. In addition to being a research analyst, he is an O’Reilly author, regular speaker, and subject matter expert in the areas of DevOps strategy and culture. Chris believes the biggest challenges faced in the tech market are not tools, but rather people and planning.