Bashing (capex) myths

Just got out of a client engagement in logistics vertical.  Had to bash up a lot of myths the founders were living with that brutally shaved off 20% of their Cap-Ex budget (pricked some vendor egos in the process!).  Now that I am 3 years into the business, there is lot less guilt after puncturing egos.  Gotten so much used to it now.  After all, reality often is daunting and folks recognize it eventually.  That’s where I get the guts to blog about it.  Future clients will know I mean business and nothing but business. I could share some of my observations here.

 

1. Value your capital – There’s bad news on liquidity. But it’s a fact. The world has 5 + billion of us now and there is not enough capital to go around.  Buy just what you need and stretch the buck. 

 

2. No spray paint, duct tape innovation – Use the recession to bring about low cost, radical innovation than the incremental ones.  When even the leaders in your industry screech to a halt, you’ve got to close in and catch up.  Be up to speed.  Learn how to drive straight with little gas.  Nobody has the luxury of losing way that yields a detour.

 

3. Don’t buy to build, just fill a gap – Look for functionality gaps in the products offered by the established big vendors (bulk cargo handlers here).  Make out a simple, straight forward solution at an affordable price that fixes 70% of the client problem, if not all of it.  In lean times, people stretch the buck and make do.  That’s the stuff the big vendors fear.  (It’s also likely that they will soon come around to buy you out!  So now you know what to build 🙂

 

4. Buy the core ecosystem – Remember this when you go shopping for solutions. Big vendors often standardize their product and buy customized applications from partner ecosystems and add it in.  Worse, they charge a premium for that hybrid. Recently a bird from Oracle tried to push her ERP cookie cutter Accounting and HR application to my client minus their core industry (logistics) application.  Being a capex item, I got called into the negotiations (I got them the series A and B investor!). Upon asking why would they not provide the core, the bird pointed to their partner ecosystem.  Now why would I buy the cookie cutter from her and then go integrate my core app with it, incurring further cost of system integration? I would rather do it other way round and ask the core system vendor to give us the bells and whistles. The bird said their customer list is so diverse that it is difficult to build separate vertical for such a disparate set.  I had a look at the cost, sat down with her to piece it out.  She knew she had lost us.

 

Life is a lot easy if you drill everything deep.  Never settle for what looks easy or what shows up first.  Badger everything and everybody down. The times are so bad and if they act up, just let go off them.  Be merciless.  When they recover their sanity, they’ll come back.  And if they don’t, you’ll soon be staring at their obituary (bankruptcy). 

 

[Just called the client up to check if everything works alright before signing off this post.  Amen, all’s well 😉 ]

 

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