Technology: Software's hard sell

Software companies are now focusing their PR initiatives on consumers' business needs.

Software companies are now focusing their PR initiatives on consumers' business needs.

While attending the Vortex 2004 IT conference last month, A&R Partners president Bob Angus noticed IT managers had plenty to complain about. They aired their frustration that much of the technology they oversee, including software, often doesn't work well together. They want software companies to be more interested in providing solutions that work seamlessly, not binding their hands by forcing them to go with only one vendor. During the tech boom and the panic over Y2K, companies sucked up a lot of software, and much of that is now either antiquated or abandoned. "[Software companies] must be more responsive to companies' needs, particularly when it comes to helping integrate software from different companies," says Angus. "PR can play a role by showing how a company's software plays well with others and by giving enterprise what it wants - the ability for everything to work together. [Client] Adobe [Systems] plays on virtually all platforms. They are the Switzerland of software. That's what we're focused on." Software companies have been looking for a bit of focus lately, as the market's recovery hasn't been as robust as people had hoped. Poor earnings, tight IT budgets, continuous M&A activity, and general unrest - from Oracle's ongoing bid for PeopleSoft to the battle over open-source software - have left the software industry largely adrift. The shift towards branding But with predictions of increased IT spending, the industry is starting to see a recovery, although it's a bit fluid and lacking direction, says Albert Pang, IDC's director of enterprise applications research. Last year, the software industry grew just 3%. But during the first six months of this year, the top 50 software brands grew 10.4%, indicating that the recovery is probably benefiting market leaders. What is happening is the maturation of a consolidating industry, where brand counts more than ever, asserts Jim Finn, VP of global communications at Oracle. Brand has always been key to Oracle's success, and that has been achieved not with advertising, but PR. And at a time when there is an apparent flight to safety, communicating credibility is vital to companies that customers not only trust, but also know will be around for the long haul. "It's no longer just about the technology," says Finn. "It's about larger discussions than just new features. It's about who is a trusted and credible partner. We're an Interbrand top-25 brand. You didn't get there through advertising, but [rather] through behaving like an industry leader and providing proof points." Trust and credibility are extremely important to companies such as Red Hat, the top distributor of open-source Linux software. The open-source world has been in turmoil due to lawsuits over who owns source codes that are part of Linux, and whether distributing or using Linux is a violation of copyrights and intellectual property rights. Red Hat's PR also focuses on being a trusted partner, by pointing to the business value of using Linux, as well as Red Hat's own trusted partners - including IBM, Hewlett-Packard and Dell, explains Leigh Day, Red Hat's corporate communications director. Having partners with such strong brands helps reinforce Red Hat's brand, reassuring customers who might be intimidated by the contentious open-source market. But not every software company is a market leader such as Oracle and Red Hat. And with IT managers clutching IT dollars ever tighter, other software companies need to prove their credibility in other ways. Where many software companies have focused on ROI in the past, they must now change their tune to how they help their customers get to the next level, says John Gallant, president and editorial director of Network World, as well as a producer of Vortex. Angus agrees, pointing out that most companies aren't market leaders. So they need to not only communicate the relevance of what they do, but also the innovation of what they do. That way they can generate attention as a disruptive technology, one that changes the way customers might use the market leader's software. "There will always be companies that innovate," adds Burghardt Tenderich, North America GM for Bite Communications. "Innovators and entrepreneurs will always be there to respond quickly to market needs. The 800-pound gorillas [of the software market] don't have a monopoly on this. But those innovators have to adapt to changing environments. If your offering is undifferentiated from the market leader, you are going to lose. But you can define a marketplace that is adjacent to - or complementary to - the market leaders and really communicate how you differentiate yourself. You can look for trends the big guys haven't spotted yet. There are many ways to build a strong brand without being a market leader." Even strong brands such as Adobe are moving into new territory. Adobe is developing new software that provides a more flexible and secure way to manage information, while extending the capabilities of existing applications. Recognizing the numerous issues IT buyers face, from security threats to an increasingly mobile workforce, Adobe sees this new market as fertile ground. But the company also recognizes it is best known for desktop-publishing software and plans to extend that brand credibility into an area for which it's not as well-known, says Beth Pampaloni, director of PR and analyst relations. "It's the first time I've seen companies coming in with a bit more long-term vision," says Sharon Barclay, GM of Blanc & Otus' Boston office. "Because of the softness in the market, companies are acting like businesses, not start-ups. They have marketing plans. And the smaller software companies can effectively go after the larger leaders where they are weak, because no one is perfect. You must highlight your strengths and your niche. You need something to offer that's different. Otherwise you wouldn't be in business." So the PR challenge for companies is to instill a sense of stability and present a proven track record, says IDC's Pang. That is the only way they will continue to secure new business. Addressing customers, not rivals Dave Peterson, VP of corporate communications at software firm Mercury, says many companies' communications are focused on attacking rivals, not reaching out to their audience. Mercury is staying above the fray by differentiating itself, and telling a story about how its software and services can help customers address their pain points. "It's about looking at our customers' business issues and getting them to understand how we can help them drive change," says Peterson. "And that contributes to our efforts on thought leadership. Companies must change their press-release-of-the-day mentality." Tying the brand to actual solutions is key, adds Rhonda Shantz, GM of Porter Novelli's Bay Area offices. It's not just about features and benefits, but real solutions that help businesses move forward. Software companies would be wise to also tie those solutions to issues afflicting businesses today, such as the pain of dealing with Sarbanes-Oxley. PN often ties clients to success stories, not just in the top media markets, but also with much smaller customers, where the local press can reach the increasingly sought after small- and medium-size business market. "At this juncture, the biggest question on the minds of the users is, are they willing to take a risk in investing in new technology," says Pang. "Risk mitigation is very important. PR has to do a much better job of making clients stand out in this time of uncertainty and give concrete answers to how much value they provide." The budget gap It would certainly be nice if budgets for PR reflected how much heft communications wields when it comes to influencing IT buying decisions. But that's rarely the case. Whether it's software, hardware, or services, media and analyst coverage holds the most sway with such buyers, finds a survey by Penn, Schoen & Berland Associates and Blanc & Otus. The study interviewed nearly 150 IT buyers, such as CIOs and IT managers. Half had annual revenue over $500 million, the other half under $500 million. Fifty-eight percent said media and analyst coverage was their most important information source, followed by websites at 48%, and word of mouth at 44%. Advertising came in at 22% - behind personal experience, events, and marketing collateral. But Joshua Reynolds, SVP and director of US analyst relations at Blanc & Otus, points to a recent IDC study that shows a marketing budget disconnect. While 35.3% of IT marketing budgets goes to advertising, only 6.7% goes to PR, less than budgets for marketing support and sales tools, events, and direct marketing.

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