By Trygve Dahl, PhD, P.E.
Co-Founder and Senior VP Business Development & Technology, Intelliquip
If you follow technology markets, you find an interesting trend. Eight of the software industry’s 10 highest value acquisitions in first quarter 2016 occurred in the “niche” software segment. This means investors recognize the great value of companies that produce automation solutions for very specific sets of customers.
Why are niche-driven technology innovators such hot targets? I believe it’s because they deliver greater value to their customers. Their intimate market knowledge results in software that not only serves their clients well – it actually provides the type of best-in-class customer service that their clients need to drive sales in a world where even B2B has gone online.
I will admit to a decided bias in this regard. Our team at Intelliquip creates technology solutions based on Artificial Intelligence* or more specifically expert systems, for a distinct niche we call the fluid handling equipment industry. This means we provide front-end sales automation solutions to manufacturers of pumps, valves, compressors, motors, filters, actuators seals, turbines, chillers, couplings, fans, gear, and heat exchangers.
As niche specialists, we uniquely apply rich knowledge of fluid handling products and the engineering required to select, configure, price and quote them. We know flow, head, viscosity, performance curves and test tolerances as well as our customers.
Our intense focus on our domain means we dramatically accelerate the speed of implementation. Our products provide fully integrated solutions out of the box, and they can be connected to enterprise resource planning (ERP), customer relationship management (CRM) and business intelligence (BI) systems. Our clients acquire custom solutions at a lower price, with less risk and with the capacity to offer a high-value purchasing experience to their own customers.
My colleagues and I literally grew up designing pumps and pumping systems for market leaders like Ingersoll Dresser Pumps and Flowtronex PSI. We understand our niche because we stood in their shoes as engineers, marketers, salesmen and CEOs.
In my case, I was inspired to create a pump selector nearly 25 years ago because I saw how tedious and laborious the process was for application engineers tasked with selecting, configuring and quoting pumping systems. I understood the high costs of errors or, even more common, the opportunities lost when quoting an acceptable – but not the optimal – product.
We now apply more than a century’s worth of hard-earned knowledge to our work, and our clients see us as partners, not just vendors. They know we wake up every day thinking about how to help them overcome challenges and seize opportunities through technology.
So, if we offer the most robust solutions at the most affordable price, why doesn’t everyone in our market buy from us? One of the more common reasons is that many fluid handling equipment manufacturers today are part of large, complex multi-product international companies. In these situations, decisions about front-end software may not be made by application engineers and sales staff. Instead, they are driven by a centralized technology officer who may have different objectives from the actual front-line users.
These technology leaders face tough decisions. For many reasons, including technical support, they may gravitate to enterprise-wide generic selection and configuration systems or systems built by their own team. Grappling with risk and liability issues, they may opt for generic solutions made available by well- known horizontal vendors such as SalesForce, SAP, Oracle or Microsoft. So, for reasons of uniformity, standardization and perceived risk-reduction, they may unintentionally sacrifice performance and a feature rich customer-centric approach. These realities remind me of an old adage I learned early in my career, “No one was ever fired for choosing IBM.”
I believe the facts demonstrate that our software delivers significantly greater functionality and cost-savings over the product lifetime compared to generic software or in-house custom coding. Our focus on a niche actually affords technology decision-makers the best of both worlds – less risk, more rewards, faster implementations and lower lifetime costs.
Further, web based portals are transforming the B2B world just as they have forever altered the consumer market. Competitive advantage can be lost or won based upon the responsiveness and intuitiveness of customer portals. We can significantly strengthen our client’s market position and brand with our new Customer Facing Apps that offer the calculation engines embedded in our flagship Power User Applications, but are presented through a simple, customer-friendly experience that also fosters automatic collaboration, generates leads and tracks real-time analytics.
Finally, we also boost the timeliness and accuracy of in-house business intelligence with systems that capture data the moment it’s entered – not when busy sales people get around to writing reports six weeks after the fact.
Individual business units will thrive with tools that appeal to their ultimate customers, drive sales and are built by specialists who deeply understand their core business. Maybe soon I will hear a new old adage, “No one was ever fired for picking Intelliquip.”
*Editor’s Note: We use the definition of Artificial Intelligence as a platform or solution that appears to be intelligent and can often exceed the performance of humans.