The Folly of Software Vendors and Services

 
Things happen in cycles, it seems, and when you’ve been in an industry as long as I have, you see repeat patterns. So, I guess it’s no real surprise to see WCM vendor, Sitecore, announcing today that it is acquiring one of its services partners, Hedgehog.

On the surface, it’s a strange move for Sitecore, which in the past, has championed the idea of not competing with its implementation partner channels. But these are new times, with a new executive team, and Sitecore is need of revenue growth. Rumors in the marketplace say that Sitecore isn’t adding new customers and is running out of existing customers to convert to subscription. It’s the obvious move. Even Mark Frost, CEO of Sitecore, said in their press release that the acquisition “supports Sitecore’s revenue growth.”

“Sitecore’s success has been built hand-in-hand with our dedicated partners. The addition of Hedgehog strengthens this community and supports Sitecore’s revenue growth, as well as the growth of our partners,” said Mark Frost, CEO of Sitecore. “With Hedgehog, we add a team that brings an innovative culture and critical front-line implementation expertise that increases our ability to scale in the key areas of services, training, and support. These new resources will improve our ability to help customers accelerate their digital transformation, maximize their Sitecore investments, and realize the full potential of important Sitecore features, such as advanced personalization.”

Of course, there’s also some nice language about how it will help partners too, but we’ve all seen this movie before. I wrote about this in 2015, when Ektron flamed-out and was sold for dirt cheap to a PE, and merged with Episerver.  Back then, while struggling for revenue, Ektron decided to build a services business, and while doing so, cannibalized their partner channel. Sitecore is about to go down that same, very slippery slope. It will start with reassurances and platitudes about how this will help customers and partners alike, but soon, sales will get services quotas, and before long, they’ll be stealing services deals from their partners, and partners will flee the program. This will start the inevitable downward spiral, as partners will take their customers with them to other platforms. This is what happened to Ektron. This is what will happen to Sitecore.

So, if you are a Sitecore partner, beware. Smart Sitecore partners will start looking for a plan B. Crownpeak would love to talk to any of you looking for a program that you can build your business on, and won’t compete with you for services dollars.

Come check out what a native SaaS CMS looks like here.

What about Sitecore customers? Is this a good thing for you? Not really. While I respect Hedgehog’s capabilities, the fundamental problem with most vendor professional services teams is that they think only about their own technology, not the ecosystem of solutions they must also integrate into. When you are a hammer, everything is a nail, and as a captive services team, they are  now incentivized to recommend only Sitecore’s solutions—like their underwhelming commerce product or their train wreck of an email solution—for everything; not necessarily the best option for the client’s needs. Net-net, beware and be skeptical about how a vendor’s services team approaches your solution and question their approach.

History is fond of repeating itself; sometimes it even rhymes. Those who don’t learn from the past are doomed to repeat it. I’ll be watching with a bag of popcorn.


DARREN GUARNACCIA

Darren has been working in the marketing technology world since the original dot-com boom. He is recognized for developing winning customer engagement strategies that help build successful, happy customers. He is currently Crownpeak’s Chief Product Officer, where he leads a multiproduct portfolio of teams to deliver products that solve customer problems in a way they love. Before joining Crownpeak, Darren has worked in various product, marketing and strategy roles. Most notably, he was executive vice president at Sitecore where he helped established the martech platform category and helped Sitecore scale from startup to a respected, enterprise brand. He's a champion of building experiences customers actually want, and building product teams that believe in a greater mission of helping their customers achieve their desired outcomes.