By Kit Craig, Channel Consulting Director
Last week I read an excellent article by Nicole Laskowski, Senior News Writer at CIO.com, about Goldman Sachs’ new consumer lending business.
The article is an interview with Goldman’s CIO, Martin Chavez, who talks about having to compete with small, agile, ‘born-in-the-cloud’ lending companies. To compete, Goldman Sachs has to play the born-in-the-cloud game, embracing cloud services and open source software to be a “fintech start-up with 147 years of experience”.
There are four profound lessons in this that IT vendors and their channel partners should be taking to heart, especially those targeting enterprise customers.
1. Messaging is key
In May, Martin Chavez will become the CFO of Goldman Sachs, one of New York’s largest investment banks. That demonstrates that Chavez is a genuine LOB exec who understands the utilisation of technology but doesn’t necessarily come from a technology background. He represents the new breed of CIO that our clients will increasingly need to target with messaging based on outcomes, not technology.
2. A new approach
To compete in the digital world and protect its traditional customer base from erosion by the upstart start-ups, Goldman Sachs has to go after non-traditional clients, which requires new ways of working. This is true for IT vendors as well as for their enterprise customers. The real competitive battle for most of vendors will not be in enterprise, but in mid-market. If vendors can’t beat their competing newcomers in the mid-market space then they will inevitably be doomed in the enterprise space. Many vendors get that, and it’s one of the key drivers behind the huge interest in growing the indirect channel route to market.
3. The who and the how
All of Chavez’s key messages are around Application Programming Interfaces (APIs). I particularly like his line, “We’re turning all of the verbs, all of the activities at Goldman Sachs, into APIs.” It’s all about software and the human interface to it. For vendors that means they must constantly be asking themselves who will use their products and how they will be used. For the channel it means linking up with application developers who are highly skilled in rapidly deploying code that exploits open source and APIs.
4. Build on existing technology
Chavez looks beyond the over-simplified examples of market disruption to see that the real advantage the disruptive competitors have is identifying clever business combinations: Netflix relies on AWS to provide streaming services; Uber relies on Google Maps. Vendors and their channel partners must be looking for extended business combinations that will drive innovation and disruption.
I’ve heard many IT vendors accused of “fighting the last war”; of struggling to embrace the new market realities. I suspect it’s more to do with how clearly they can grasp the simple and profound truths that Goldman Sachs has discovered.