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Poking Through the Clouds

How to create outstanding market position for your cloud service

About five years ago, I had the pleasure of sitting through sales training with John Costigan. I remember John's opening as he said something like, "How are you?" and got the typical quiet reaction. John went on to say something like, "when I am asked, I say "OUTSTANDING" and you should too. Because to STAND OUT, you MUST BE OUTSTANDING."

Fast forward to last week, when I was having a discussion on positioning with a very successful entrepreneur turned VC. He said, "The only way to win in today's markets is to STAND OUT, create something new." Immediately I thought of John and said to myself, "If you want OUTSTANDING positioning, you must STAND OUT from the crowd."

When you look around B2B technology providers, those who do stand out usually take one of three fundamental approaches to differentiation, what I call 1+1=3, Embrace and Extend, and Copy and Paste. All can generate OUTSTANDING results and returns.

As cloud computing goes mainstream, ISV, hosters, and other service providers can no longer depend on the previously successful, "We are X category, but as SaaS" like early pioneers such as Salesforce.com did. To truly STAND OUT and poke above the clouds, these three strategies offer proven paths to success.

1) 1+1=3 or Market Consolidation - Simply put, this is a strategy of adding together existing, adjacent capabilities in order to consolidate markets.
KJR client Nimsoft (now a division of CA) changed the IT monitoring market early on in the "Cloud era" by providing one product to consolidate the monitoring of a datacenter, service provider and cloud infrastructure, as I have blogged about extensively in this space. Market consolidation is an effective differentiation strategy because it provides clear value to the end buyer in cost savings and operational efficiencies.

Embrace and Extend - Next Generation X - The strategy of having competitive parity to existing capabilities and adding high value new ones.
Palo Alto Networks has created very rapid growth and disruption in the mature firewall space by embracing and extending the mature enterprise firewall market with their "Next Generation Firewall," not only consolidating the firewall and IPS markets with their positioning, but redefining the very essence of an enterprise firewall to be application and user centric, not port and protocol based. Their new app-ID and user-ID technologies changed the firewall market dramatically, and gained them real first mover advantage over the incumbents. Embrace and Extend is effective because while disruptive, it goes after existing category dollars.

Copy and Paste - Stealing from other less-related markets to create something NEW!
While Embrace and Extend disrupts existing markets, Copy and Paste creates new ones. Success factors copied KPIs from financial and capital management systems and created a Human Capital Performance management market. Splunk copied "search" from Google and the Internet to create the "IT Search" positioning that has made it unique and sustaining. Copy and Paste works because the value of the positioning is easy to explain and apply to new markets. Copy and Paste is a great way to position and explain disruptive technologies, and creates new spending rather than consolidation or taking existing category dollars.

So as you look for stand out positioning, leverage 1+1=3, Embrace and Extend, and Copy and Paste as three effective paths to rise above the clouds and generate outstanding returns for your company.

More Stories By Ken Rutsky

Ken Rutsky is a Product and Service Marketing Consultant, and has spent 20+ years in the industry, launching his first Internet services while at Netscape from 1995-99. Since then, he has been CMO at several start-ups and ran Network Security Marketing at McAfee. Ken launched McAfee's Secure Web Protection Service, and his time as a consultant has included the launch of Nimsoft's Nimsoft On Demand service. Today, he is laser-focused on helping ISVs and start-ups understand how to bridge from the world of products to SaaS Services with their mindset, organization and go-to-market tactics. Follow him on Twitter @jayrutz, on Linkedin at http://www.linkedin.com/in/kenrutsky, and on Facebook at http://www.facebook.com/home.php#!/pages/KJR-Associates/224894750772.

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