In the wake of the first dot-com bubble bursting twenty years ago, Forbes published an excellent piece called “The Undead.” It profiled some struggling enterprise software vendors sitting on large piles of cash because they IPO’d at pumped-up valuations just before the 2001 crash. Most of them did end up burning through the rest of their cash and getting sold off, though it took a while for some of them to depart the marketplace.
A new generation of zombies
I won’t opine here about whether we’re living through another tech bubble, but as a martech evaluation firm, at Real Story Group, we do see quite a few “zombie” vendors: not quite dead, but not fully alive either. As a tech customer and martech leader, you’ll want to be on the alert for zombies in your portfolio.
Two decades later, the situation has changed a bit. I see a new generation of undead tools and vendors, less because they bulge with IPO cash, but rather because they’ve aged to a point where they subsist off profitable maintenance streams (usually supporting legacy systems in environments where customers cannot easily switch out) while keeping R&D to a minimum. In some cases, cloud-based delivery models help sustain younger zombies because they can more readily marginalize their expenses relative to revenues.
This potentially becomes an important consideration because major industry analyst firms typically lag in their vendor assessments and can stamp an imprimatur of vitality to an otherwise declining player. Consider the case of the Interwoven content management suite—one of Forbes’s “undead” in 2002. Forrester and Gartner lauded the firm for more than a decade, even as licensees labored under mountains of technical debt. Most of the Interwoven portfolio still wheezes away at OpenText, its fourth domicile in ten years.
Senior living options
OpenText itself is a kind of multi-tiered senior community for aging software platforms. It purchases older solutions, sets them up with independent apartments, then transitions them through assisted living, hospice care, and on to what the tech community quaintly calls “sunsetting.”
OpenText is not alone. This business model has also attracted the likes of Verint and Upland in the martech/customer experience space. Typically these roll-up vendors will have one or two home-grown platforms, but mostly they purchase older toolsets on the cheap, cobble them into “solution bundles,” limit future development to bug fixes and centralize back-office functions.
This model is great for investors, and in some cases, you, the licensee as well. Any high-functioning community needs to deal with aging members. Just understand that — despite what a sales rep may tell you — their platform is not going to innovate substantially and will increasingly struggle to integrate with newer parts of your stack. At best, you sustain very good support.
Some zombies carry on solo. Consider the former IBM martech portfolio now gamely trying to survive at Acoustic and HCL. Or Sitecore’s flagship “Experience Platform” web content management system, which has been given a three-year prognosis. These are platforms you leave, not license afresh.
Meanwhile, some open source projects subsist on an “age-in-place” strategy, where their communities keep them alive, albeit not very active in the world.
And what about younger zombies? They’re out there, sometimes with structural problems hidden behind venture-boosted coffers. Tell-tale signs include declining volumes of new licensees, reduced headcounts, and higher-than-average churn rates. Even in the vibrant customer data platform market, where RSG evaluates nearly three-dozen platforms, some vendors have plateaued. Note Upland recently acquired CDP vendor BlueVenn. You’ll see more in the next few years.
In nearly all cases, though, the vendor tends not to disappear entirely, and this gives you time, typically measured in years, to adapt and respond.
What you should do
Most martech zombies aren’t lethal and are unlikely to eat your stack. Though left unaddressed, they can create an increasing drain on your resources—and staff morale.
When you identify a zombie, you typically need not rush to the exits, but you do need a replacement plan for the long run. One key consideration is where the solution fits in your “Martech Mall.” If it’s a boutique solution, perhaps adequate support (if you can get it) is all you need right now while you focus martech innovation on more vibrant platforms.
On the other hand, for an anchor platform in your martech mall, you’ll want to make active plans to replace any zombie. And under no circumstance should you license a zombie platform for a new implementation. What’s been your experience? Let’s discuss on LinkedIn.
Real Story on MarTech is presented through a partnership between MarTech and Real Story Group, a vendor-agnostic research and advisory organization that helps enterprises make better marketing technology stack and platform selection decisions. Opinions expressed in this article are those of the guest author and not necessarily MarTech. Staff authors are listed here.