I have spent most of my career working at, and analysing mega-vendors. Portfolios, markets, pricing maneuvers, customer leverage, acquisitions, suites, sales enablements, alignments and realignments, ‘strategic’ customers, MQ positions, rebrandings, integrations, platforms and UX harmonisations and decisions that impact millions of users, and might shift share prices. It continues to fascinate me, and I still enjoy working with and analysing large vendors, but over the last couple of years, I have developed a new respect, fondness and curiosity for the niche vendor that does one relatively small but important thing very, very well. I’ve spent most of my career arguing that suite always wins. I’ve become less convinced recently.
Take the example of organizational charting and modelling. Most HR tech vendors can do it half-decently, but if you want to really model out an re-organization with several scenarios, keep it hush-hush, figure out how things might look post merger or disposal, mash up with external stuff, actually display a chart for more than 3 layers, or shock, print out an org chart, then you end up buying a specialist vendor.
I used to to think that specialist workforce reporting / analytics vendors shouldn’t really exist, especially in the cloud, because most of the data was in the enterprise vendors’ stack; they would have massive benchmarking scale and they typically own powerful reporting/analytics tools. Yet I see specialist workforce analytics vendors being more successful than ever. There are specialist vendors doing great business ‘just’ focusing on getting gender gap analysis done properly. I got that so wrong.
I see exactly the same in AI/ML. I expected the big vendors would hire armies of ML PhDs, and because they had the data, they would dominate the niche vendors before they really got going. They hired armies of ML PhDs, but the compelling suite wide capabilities remain largely in powerpoint. Whether it is learning management, recruitment, feedback, internal mobility, niche vendors that do AI/ML for a single use case are succeeding, where broader efforts from most of the large vendors seem to fall flat in real usage. The innovative work in bias detection is coming from the niches, not the suites. It will be the same with VR too.
I thought that niche tools for performance management and feedback would vanish. Turns out I was wrong there too. The VC funding into new PM solutions is remarkable. I’ve seen many large enterprise buyers go with these niche solutions, even though they run the suite products.
With the cloud and modern UX technologies, I never expected that vendors offering experience layers over existing core functionality would thrive. But they are, big time.
Very few enterprise vendors have got chatbots to actually work in the wild. They have cool demos. The chatbots that work are built by niche vendors for very specific use cases, for instance in helping candidates ask questions doing the recruitment process. Recruiting tech is probably the most suite-resistant zone of HR Tech.
I see a new wave of vendors targeting the SME space in new innovative ways. I see them competing and winning against the “big” suites.
I should really know this stuff, heck every village in Germany has three pharmacies, 14 hairdressers, two tanning studios, and a time and attendance vendor.
I have a couple of theories why I think niche vendors will continue to thrive, and some suggestions on how end-users should work in a world with suites and niche vendors. I guess I need to write more about integration, and what niche vendors need to do to succeed. It will involve some long winded metaphors. I should write more about M&A too. Perhaps in the next post.