A Growing Industry in a Sagging Economy?
The search for “why” continues
These days it is difficult to escape any business event without discussions centered on the struggling economy. In nearly all cases, it revolves around how business revenues have been negatively impacted, or specific industries are in trouble. The story is all too common. I can certainly empathize, as I have many friends and family members being hit by the recession. But for reasons I have yet to put my finger on, the economy has had no negative effect on my company. In fact, I’m beginning to suspect that it may actually be helping.
To say we are somewhat surprised is an understatement. Although we enjoyed a nearly 30% increase in revenue during 2008, forecasts for 2009 were less favorable. We had expected anywhere from a 20% decrease to, in a best case scenario, revenues remaining flat. Those expectations have all proven false – growth continues at a 25% clip.
Don’t get me wrong, the economy is still the number one topic of conversation at our office, but the questions asked are different:
- Why have we been spared from the revenue crisis so many others are experiencing? Can this growth continue?
- What did we do right?
- Is there more we could be doing?
For any business at anytime, these are all valid questions that need to be answered. Like any small company, detailed market research for us is not an option, so speculation and assumptions can come into play. It is all based upon experience, market knowledge and some factual data, but it is still nothing more than logical guesswork. The overall answers to our questions fell into two categories; company-related and industry-related.
Company-Related
Naturally, we initially migrated towards internal reasons for our continued and surprising growth. Was there something unique about our company, our product and/or our customer base that held the answers? Two rationales surfaced repeatedly – Target Market & Pricing Structure.
Our Business Process Management (BPM) system is specifically priced for and targeted towards small to medium sized business (SMB). It is the core to our business model and application development.
As BPM technology continues to filter down from the Fortune 1000 firms to small and medium sized organizations, this assumption holds some merit. Our growth could be simply tied to an increased number of prospects. More and more SMB’s are in pursuit of workflow automation (WFA). So, you combine an increased number of prospects with an affordable pricing structure – one that SMB’s or even departments of large corporate can easily justify and stay within budget constraints – and you may have an answer.
This is a legitimate explanation, but unlikely to be the driving force. Given current economic conditions, I struggle believing an increased number in target market can compute to a continued 25% revenue increase. Furthermore, no marketing research ever lists pricing as the number one reason for a purchase. Attractive pricing can help in making a purchase decision, but it is not going to magically create sales opportunities (at least not with business systems/software).
Industry-Related
It started to make sense to look for reasoning less company-related and widen our scope to external factors. Was it possible we are the benefactors of an industry immune to a poor economy? The BPM industry as a whole has continued to grow, partially based on the market growth alluded to above. Industry-related publications and conversations with colleagues support this data.
This agreed-upon assumption merely led to more questions. Why would companies continue to invest in BPM and WFA systems during a poor economy? While most organizations have freezes on software purchases, why does BPM/WFA keep selling?
When you factor in the unemployment rate, we can assume companies have fewer personnel for the same tasks. Streamlining operations and increasing overall efficiency may have become a real requirement, not just a buzz word and business cliché. Maybe the silver lining to our economic crisis is an epiphany, a realization of just how out of shape our organizations truly are. Could the answer have finally hit us?
Our hypothesis moved to the idea that, perhaps, inefficient and overweight companies will not survive in this or the new economy. Companies simply must fine tune their processes. The lesson just may be that the economy is teaching us that now is a perfect time to do this, and BPM systems are the perfect tool for the job.
What do you think?
So, which category was our salvation? Did our business model or chosen industry save us? It was probably a little of both. Sure pricing and target markets can have some effect. However, recognition of the need to automate and become more efficient is the most likely factor of growth for BPM providers. But, as I said, this is mostly speculation. So I ask you…. why do sales of BPM systems continue to increase, even in these times? Let me know what you think. Your input would be most appreciated.