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Why IT Buyers Don't Trust Technology Vendors

by Candyce Edelen

Finding Technology for Market Surveillance

Last year, the CFTC (Commodities, Futures and Exchange Commission) had to find or build technology to surveil the swaps market. But they ran into a host of problems in trying to find the right technology solution. In essence, they felt that vendors were not being completely honest with them. A transcript of a CFTC Technology Advisory Council meeting contains some interesting commentary by Hugh Rooney, who is in the Division of Clearing and Risk.

Hugh's team was tasked with finding a technology solution. This was a difficult task.Swap Execution Facilities (SEFs) are brand new, and swap trading workflow doesn't match that of other asset classes. So any existing solution will need to be customized to accommodate the SEF workflow. It will also need to integrate cleanly with CFTC's existing infrastructure.

Vendors Will Promise Anything…

Rooney's team had trouble finding a solution, partly because of the complexity of the functional needs, and partly because, in his opinion, the vendors were not being honest and forthright. He says "…vendors will promise you anything; there is nothing they can't do. And that's very difficult to evaluate. [They say they] can build you a system that will do that, and when the day comes, they can't." Later in his commentary, he essentially says "talk is cheap" (scroll to the bottom if you'd like to read his testimony).

Minimize Pain, Maximize Value

Any implementation of a sophisticated technology solution will need to meld cleanly with the client's existing environment - usually a complex infrastructure of in-house and third party solutions. Before they make a purchase decision, the IT team needs to be able to evaluate what it will take to integrate the new product into that environment. They need to know what limitations to expect, what workarounds to plan, and what best practices they can use to extract the most value out of the new technology. They want to minimize pain and maximize value.

Clients Need to Believe and Trust Their Vendor

As a technology vendor, your goal should be the same, and your marketing content should support those needs. But in many cases, vendors' marketing literature is virtually inscrutable. Most of the content I come across is too light in how the technology applies to business problems, is vendor-focused instead of customer-centric, and provides little insight into how the technology will fit into the client's workflow and infrastructure.

I regularly interview bank technology buyers about their buying processes. In these interviews, I hear over and over again how TRUST is a key driver for selecting one vendor over another. In many cases, the losing vendor promised more functionality, more bells and whistles, lower latency and lower price. But the buying committee went with the vendor they BELIEVED and TRUSTED.

Customer-centric Honesty Builds Trust

I've experienced this myself. When I was selling financial technology, I consistently won clients when we were transparent about how the technology worked, honest about our limitations, and enthusiastic about committing to building out the system to meet requirements where our functionality fell short. I saw many competitors try to pull the wool over a customers' eyes or sell something that didn't exist yet. In many cases, customers saw through this BS.

But let's be honest. Often, lying or stretching the truth does win sales. I've talked to many companies who had to rip out technology after a long and arduous implementation process - because it didn't perform as expected and the vendor couldn't deliver on its promises. Anyone who has gone through this painful process is likely to be very gun-shy. Which is why a transparent, honest approach is both refreshing and trust-building.

But We Need to Protect Our "Secret Sauce"

When I encourage transparency, I always hear about the need to protect intellectual property, trade secrets, or the "secret sauce" that makes a company's products unique. I don't disagree. If you've got some unique approach for how you leverage an FPGA card or get a message to pass through risk checks 30% faster than your competition, you probably need to keep that close to the vest. But most of your technology is NOT secret sauce. And generally, the information that a client needs to be able to understand and trust you has nothing to do with your trade secrets. They need to trust that your team knows what they're doing, has experience, and can deliver on company promises.

So How Can You Be More Transparent In Your Content Marketing Without Giving Away All Your Secrets?

Here are three suggestions:

Answer your customers' common questions in your blog

Every vendor gets a consistent set of questions during sales meetings. Some are business oriented, and some are technical. So be customer-centric and answer the questions - even those that might place you in a poor light. You get to control the conversation in your blog, so you can be transparent, but also steer the reader to the more important issues. Here's a great TEDx Talk on this topic. While the discussion in the video is targeted more at a B2C audience, the strategy applies just as much to a financial technology provider.

Write about use cases with specific implementation problems

Prepare customer-centric use cases that tell stories about implementation problems and how clients worked around them. Show where problems can occur and explain the best practices that can help ensure a client's success. You don't need to name your customers in these use cases. Anonymous use cases that are HONEST and TRANSPARENT are very valuable for future customers and can also help retain existing customers.

Create videos talking about implementation approaches

Interview your implementation team about what approaches have worked with recent customers. Again, you don't need to disclose your client's name to make this a helpful video. But make it specific to a particular situation and keep it very brief. It's better to do five 5-minute videos than one that lasts 25-minutes.

I'll bet you have several other ideas. So please share in the comment section ("Speak Your Mind").

Mr. Rooney's Testimony

In case you're interested, here is the full quote from Hugh Rooney. This is a transcript of a live meeting, so ignore the grammar issues.

MR. HUGH ROONEY: I would like to say that, Greg, I was very sensitive to your comments about vendors because internally we are dealing with the same sort of thing. It hit home with me with our risk surveillance for swaps. And we are having a very difficult time melding our technology with what is available from vendors. And vendors will promise you anything, there is nothing they can't do. And that's very difficult to evaluate.

We can build you a system that will do that and when the day comes they can't. And I'll certainly express your concerns, all yours, but I'm very sensitive to the one about use of vendors and having it integrate with the technology you already have on board. Which I'm not going to talk about today, but the CFTC system for risk surveillance, we are having a difficult time in the swaps world bringing a product that will help us do what we do in the futures.

It's very challenging and very difficult worlds and vendors are promising. And sometimes their promise is very cheap and sometimes there is no way you guys can have that. This is very productive and I like hearing this. Like I say, we will bring back your concerns.

CHAIRMAN SCOTT O'MALIA: Any further thoughts?

Hugh, this is a vendor conference, by the way, so when you exit, good luck. (the event was held at the FIA conference in Chicago - October 30, 2012.) pp. 217-218