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ATS Market Basics II

(February 04, 2004) - Several repeated patterns dominate the behavior of the ATS market. Often, success in small markets causes growing vendors to greedily eye the Enterprise market with its (supposedly) larger budgets and higher price points. Inevitably, new entrants to the enterprise play, armed with success in smaller accounts, emerge to underbid existing players. Solidly profitable ATS vendors with rock solid businesses seem to lose their minds as they contemplate the Enterprise marketplace.

Since Recruiting practice varies widely between organizations, there is a level of play that demands customization (but is rarely priced to support it). If the market is like a mountain with fewer but higher priced accounts at the top, you could be excused for imagining that there is a point of profitability somewhere. Since smaller companies are willing to rely on standardized tools (to some extent), you would be equally justified in imagining that the flaw in Enterprise software rest on a willingness to customize.

But, you'd be wrong in both cases.

Nevertheless, new entrants flock, like ants to the honey, from secure mid-market niches into the Enterprise space. Over the years, we've seen plenty of vendors ramp up, close deals,  crash and burn while old-timers like WebHire and Peoplesoft sit securely serving aging accounts that can not afford a fly-by-night operation. It's a if the new players were sent by the divinity to keep prices artificially low.

If you're following so far, you might think that it's a big deal that customers are being delivered inadequate tools by surprisingly small firms. Well, that's not exactly the case. While the major vendors were somewhat surprised by the degree to which last year was dismal (no significant vendor closed more than seven or ten new deals in the year), the fact that a relative unknown walked away with a ton more deals was not a repudiation.

By buying the lowball vendor's product (this year it was Recruitmax), customers are not saying that they don't want the additional features and functions. Rather, they are saying that they'd prefer to engineer their own customization. Doing so gives them longer lasting control over budget resources in this bottom line environment. Budget control equals protection against further downsizing and the ability to help make next quarter's numbers. In other words, customers are not yet comfortable enough to buy the whole ball of wax from BrassRing, Deploy, Hire or Recruitsoft.

By keeping their options open, customers are betting that they can take the inexpensive approach and set aside a large chunk of money to do the real work.

John Sumser

Previous Articles on the ATS Market Basics Series:
     ATS Market Basics
     ATS Market Basics II
     ATS Market Basics III
     ATS Market Basics IV
     ATS Market Basics V
     ATS Market Basics VI
     ATS Market Basics VII
     ATS Market Basics VIII
     ATS Market Basics IX
     ATS Market Basics X
     ATS Market Basics XI
     ATS Market Basics XII
     ATS Market Basics XIII

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Copyright © 2013 interbiznet. All rights reserved.
Materials written by John Sumser © TwoColorHat. All Rights Reserved.
Mill Valley, CA 94941

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