MPE Loyalty in a Commodity World
Readers of this blog know that I was once on the other side of the IT commerce equation, managing systems and teams for a number of firms including Circuit City. My time at Circuit City has an amusing lesson about customer lock-in and customer loyalty from IT buyers.
Circus City (my pet name for that particular open-air asylum) hired me due to an unnatural expertise I had with Hewlett Packard’s MPE operating system (now on HP’s chopping block). Shortly after I arrived, a senior IT exec questioned a budget request of mine for some MPE software, explaining that the MPE systems were “going away soon.”
I decided to ask for guidance on the matter. My boss, a gentle and good-natured chap named Tom Rogers, smiled knowingly, and reached into his desk draw, removing an envelope. In it was a memo saying that a request to purchase some MPE software should be rejected because the MPE computers were “going away soon.”
That memo was dated almost ten years earlier.
I was at Circuit City for seven years myself, and now it is ten years after my departure. And this week, I had an opportunity to chat with a former co-worker at Circuit City, who still works in their IT department. She said the MPE systems were still there (despite HP’s planned obsolescence program) and performing pretty much the same work as before I arrived.
Do the math. MPE has been in use at Circuit City for about 20 years, with no plans of retirement despite a pending lack of support from HP.
Silicon Strategies Marketing is conducting primary research on the nature of loyalty in IT markets. The Circuit City story is an interesting illustration of the dichotomous nature of IT buyer loyalty - despite many attempts over many years to kill off MPE, Circuit City continues to use it for critical applications.
The question is “why?” Despite being a former MPE bigot, I can attest that there are many better, more flexible, and less expensive alternatives than MPE. Circuit City is not unaware of these as they have, at one time or another, employed OS/400, every commercial UNIX available, and are rolling out Linux to their cash registers. (they even used VersaDOS for ages, though this is their shameful family secret)
In the IT market, customer loyalty and vendor lock-in are the mirrors of a good marriage and an abusive one. Buyers are loyal to a vendor either because they perceive the long-term commitment is fulfilling (the marital equivalents being love, family, trust, and great sex), or because they exhibit co-dependency symptoms, like a wife that won’t leave a cheating and physically abusive husband.
Silicon Strategies is preparing a whitepaper that will explore this dichotomy in detail. The takeaway of this research is that it is critically important to understand which form of CxO loyalty is more profitable. Is nurturing a healthy marriage better for a vendor, or does Computer Associates have it right by holding the shotgun wedding equivalent of a buyer relationship? Or is the right approach a mixture of both (”Yes Ma, he beats me but he’s good to the kids.”).
The more vexing question is how does a technology firm, that commonly competes on price/performance/features, create lasting loyalty in those bastions of hard-nosed business businesspeople known as CIOs? Surprisingly, CIO’s demonstrate vendor loyalty all the time, and with little regard to the details of features/benefits minutia. Taping CIO loyalty is a key to creating barriers to competitors and ensuring stable, long-term revenues without excessive sales and marketing efforts.
Stay tuned. We will have a lot more to say on this subject as our research continues.
