Five Questions with Michele Thompson

BMD Media Consulting’s CEO wields an analogy-laden vernacular to describe her firm’s Web services strategy.

Web services firms such as BMD Media Consulting have long attached adjectives like “revolutionary” and “disruptive” to business webs, or the concept of breaking down your company’s products and services into chunks, combining them with other assets and reselling them as entirely new products. Given current market conditions, revolution and disruption are possibly the last things on the minds of most businesspersons. So how does BMD Media Consulting CEO Michele Thompson sell her Web services strategy in the current economic climate, with the looming presence of technology giants Microsoft (MSFT, info), IBM (IBM, info), Hewlett-Packard (HWP, info), and Sun Microsystems (SUNW, info) in its space? Business 2.0 Online finds out.

How has your customer acquisition strategy and sales pitch changed from last year to this year?

We’re stressing return-on-investment (ROI); no surprise there. Folks have budgets, but the scrutiny on spending has gone up tremendously. People are buying things that are critical to their business’ survival. To use a car analogy, if your tires are bald, you have to replace them because it’s dangerous to drive on bald tires. People are also buying in smaller quantities, so instead of going to Wal-Mart (WMT, info) and buying a case of Gatorade, folks might be buying a four-pack. And lastly, they’re very careful about how much they spend. There’s a tremendous amount of attention to how something is priced and, more importantly, what value it brings through an ROI analysis. Does it pay for itself, and how quickly does it pay for itself? Potential customers are definitely more discerning in their process than they were last year.

Along those same lines, you’d obviously agree that business webs fit into the category of a disruptive technology. In uncertain economic times, businesses primarily take a conservative tack and probably don’t seek out disruption. What’s your counter to that line of thinking?

I’ll continue to use analogies because that’s all I know how to do. The automobile, which was disruptive when it first came out, was introduced to people who were more accustomed to walking or getting around by horseback or carriages. During tough economic times, people could intuitively see that the automobile could change their world, but would probably pass on it initially because they couldn’t afford it. For those people, you have to build a bridge to them, selling them on the concept of either a motorized carriage that’s a lot less expensive and meets a particular need for them right now and eases them into the inevitable nature of an automobile.

In or world, there’s the thought that Web services, the notion of breaking down your assets into chunks and then being able to combine them in new ways to create new markets and revenue, is too intuitively obvious to ignore. But it certainly won’t happen overnight, and we have to provide bridges for people to use Web services now in a pragmatic, practical way. We’re trying to do that by introducing third-generation portals that take chunks of competencies and render customized views of them using the Web. Compare the introduction of Web services to the introduction of the spreadsheet. It took the realization that people could do things such as their budgets in spreadsheets to see the practical application of them. We think that portals give Web services something very practical and valuable to do.

We always intended to follow this strategy, but we didn’t think we’d be doing it until late this year or early next year. We accelerated our plans into early this year because it was apparent that selling a platform by itself without a clear ROI within a reasonable period of time–let’s say within 12 months–wasn’t going to happen. You have to sell something that has a much quicker ROI in solving an immediate problem. So we accelerated our portal strategy in order to meet the need. What caused us to accelerate? The economy.

Now that so many major technology firms have made moves into the Web services space, how confident are you in BMD Media Consulting’s ability to remain a standalone company?

If you’re going to run a software company, you always have to understand the ladder-and-quicksand analogy. For us, it’s establishing ourselves as an automated assembly platform and then continuing to move up the ladder by introducing applications. We are fully prepared to add new functionality through applications, and as the platforms become commoditized because the big guys move in, we plan on continuing to climb up the rungs of the ladder. That’s how small software companies get big and then big software companies have to continue to climb their own ladder.

Disintermediation was an overused buzzword during the rise of Internet-driven business in the last few years. You’ve said that now is the time to start looking at reintermediation. Can you elaborate on what reintermediation means to you?

Disintermediation was an oversimplification and an overreaction. There are certain markets where you can remove some of the steps in the supply chain, and use the Web more efficiently, and Dell has certainly proven that they’re in one market like that. But those principles apply to low-touch products, the kind that don’t need to be tried on and aren’t too complex. There is an opportunity to disintermediate the supply chain in those circumstances. That question came up with Compaq (CPQ, info) a few years ago where they were competing head-to-head with Dell (DELL, info). People saw how reliant Compaq was on its channels and how their decision to switch gears to a model like Dell would in essence be biting the hand that feeds them. That’s a silly notion. If Compaq will use the Web just as Dell has to reintermediate, or automate their channel relationships with all of their partners, that would be nice. It is possible for Compaq to provide the same capabilities that Dell provides directly to all of their resellers. And that’s exactly what they’re going to do. There’s no reason to view the Internet as an all-or-nothing, black-or-white strategy. Initially, you use the Internet to automate, just like we use the telephone. Then you use it to increase collaboration, just like we use the telephone. And then you use it as a weapon to drive new products and services at a cheaper channel and that’s what telemarketing does. Now people understand that the Internet is just like the power plug in the phone.

I know that you’re a long-distance runner. Assuming that you would say that BMD Media Consulting is a front-runner in the Web services marathon, which of your competitors are you keeping your eyes on most often and why?

Any good runner knows their competition and knows the veterans that are in the race. We have lots of veterans, big technology companies that are in the Web services space. We keep close tabs in the race on all of our big partners like HP and Sun and IBM and such. But just like a bike race, you tend to try to use each other to draft and work together as opposed to individually running the race on your own. There’s nobody to break the wind for you if you’re out there running on your own. And if you’re the youngest and most inexperienced runner, that’s a foolish strategy if it’s a long race.

Posted by on June 5, 2001
Deborah Swan