Peer Review: Casebook No. 48 - Iomega

ABSTRACT
The marketing minds behind the remaking of Iomega are applying similar rebranding methods to a most unglamorous arena, enterprise integration. The market is heating up, so Saga Software must stake ground before Oracle and IBM step in with deeper pockets--while unshackling itself from its former German parent.
Can Middleware Ever Be Sexy?
No matter how clogged a journalist's emailbox gets, the volume of snail mail seems never to wane. FedEx packs vie for attention with Priority Mail envelopes and UPS boxes, a hodgepodge of cardboard constructions yelling, "Look at me!" Journalists are always inundated with press releases and media kits, but nowhere is that fact more true than in the sphere of technology reporting--where, as inflated stock prices continue to aptly demonstrate, appearance is everything. The people at Saga Software know this. And they are not going to let it deter them.
Saga's latest public relations shipment, heralding the launch of its new software, and its attendant marketing and advertising campaign, will not get lost in the shuffle. In fact, the roughly 2 ft. sq. box, weighing almost 10 pounds, wouldn't come close to fitting in a mailbox, let alone become obscured by the other guys' press materials. Inside, journalists found a bright yellow fleece pullover, a purple velvet wizard's hat trimmed with silver moons and stars, a magic wand and a luxurious and imposing cloth-bound box decorated with sparkles. That graft rates among the classiest trappings ever given by a software company to its news releases and corporate background material. Saga is a company out to make a splash.
"Even with highly complex tech products, you've got to break through the clutter," says Timothy Hill, Saga's vp of worldwide marketing and international operations. Hill should know. Five years ago, as vp of worldwide marketing and sales at Iomega, he and partner-in-crime Michael Collins, now Saga's vp of worldwide corporate marketing, successfully built seemingly mundane storage tech into a funky status symbol and household name. Iomega's marketing tactics combined an irreverent ad campaign with a no-holds-barred
conference and trade show mentality.
But Iomega's Zip drives are consumer products, and tangible objects to boot. Now, Hill and Collins have a more formidable challenge: Saga Software, a spinoff of the European company Software AG (now known as Saga Systems), hopes to become the leader in enterprise application integration. Still awake? It's not exactly a company tailor-made for glamour.
Yet if enterprise integration--also known as middleware, software allowing various databases, programs and systems to communicate--isn't as readily marketable as, say, a tangerine iMac, it's nevertheless a growing field. As e-commerce continues to mature and explode, the market is about to become a lot more interesting. "Companies are opening up their systems and exchanging data across them, becoming much better connected with their partners and customers," says Eric Brown, research director at Forrester Research, Cambridge, Mass. "As a trend, that to me is very exciting. If an application isn't fundamentally about connecting other applications, then it isn't worth anything."
In other words, the present moment appears be a once-in-a-lifetime opportunity to develop and nurture a brand presence in a market that, while still relatively low profile, is about to become mission critical. Boston's Aberdeen Group expects the enterprise integration category to amount to a $1.2 billion market during the 1999-2000 period. And a Forrester report states, "30 percent of an entire IT budget is spent on building, maintaining and supporting application integration."
Large players like IBM and Oracle have middleware divisions, and a host of smaller companies, such as CrossWorlds Software, Vitria Technology and Tibco Software all vie for marketshare. "This is not a mature market, so sizing and penetration aren't necessarily key yet," says Brown. "There are 'legacy' integration companies like IBM...but there's something fundamentally different about those, which are pre-Internet era."
The battle is still in having a better product and strategy--and communicating such advantages to the right targets. "It's more about do you have the right strategy and the right skills, as opposed to have you scooped up the right share. A year from now, vendors that have laid some solid stakes in the ground will be in a defensible position. [Today] most companies have 35, 100 customers. Everybody's in start-up mode," Brown says.
Coincidentally, that's just how Tim Hill describes Saga, despite the company's 25-year history as a wing of a German parent. "We have 900 employees," says Hill, "but we're energized like a startup. A $250 million startup." Hill and Michael Collins joined Saga in 1997, when the company was still known as Software AG Americas.
The company was founded in 1973 as a distributor for the products of Germany's Software AG. In March 1997 the outfit spun off as an independent company. The idea was for Saga Software to concentrate on middleware--or as it prefers to say now, enterprise integration--and for Software AG to focus on Internet systems. Each firm would help market and sell the others' products in specified and separate regions worldwide.
Faced with building his new offshoot, Saga CEO Dan Gillis, with whom Hill had worked at Falcon Microsystems, brought Hill and Collins on board. "We were the Iomega brand and product brain trust. Dan was looking for us to replicate the re-branding, restructuring, and repositioning [we did at Iomega]," says Hill. Not only was Saga an unknown entity but also its parent had little awareness. "The company historically was a subsidiary of a German parent that still doesn't have very good recognition," Hill says.
Hill and Collins' mission was to invigorate and reinvent Saga as the leader of the burgeoning enterprise integration market. The basic idea was to offer a total solution, including products, services and support, to all of its customers' data and information sharing needs. Enterprise integration, says Saga's corporate primer, "has become one of the biggest problems facing companies today and the problem will only grow tougher as organizations become more complex, stretching the limits of their information systems."
The company's goal is simple: beat competitors to market with both a solution and its brand messaging.
The first step was to overhaul Saga's marketing operations. "We went through a total and complete restructuring from a marketing and sales perspective, nationally and internationally--product marketing, corporate marketing, business marketing, how we went to market on the sales side," Hill says. When he and Collins arrived, Saga's marketing departments "weren't focused on P & L, driving product plans, cradle to grave marketing," Hill recalls. "We blew that organization out, then brought on people who had managed a half- billiondollar product line at IBM, GE and others. Michael did a similar thing, started over."
The company had no one focused on market development with respect to M&A activity or strategic partnerships. Hill changed that quickly. "We had complete organizational, structural changes. Now you've got a company that is product and market driven," he says. Saga's marketing structure now follows a more classic pattern, consisting of five departments: product marketing, advertising, marketing services, corporate communications and channel marketing.
"We moved [Saga's marketing operations] from being a very reactive tactical team to being more offensive and strategic," says Collins, likening the pair's preliminary steps at Saga to what a new coach at a pro football team does: "They often don't blow up the entire team, but they make a quick assessment about where they will need strengths." Among the new hires were several members of Iomega's marketing team, including Dan Shirra, now Saga's director of channel marketing, and Scott Kempema, now Saga's director of marketing communications. Kempema, formerly an account supervisor at Iomega's ad agency Euro RSCG/DSW Partners in Salt Lake City, had worked closely with Hill and Collins on the Iomega account. "We had a theme or rallying cry to dominate no matter where we were," Kempema says of their work together.
With the team in place, the next major goal was to "focus on building brand and awareness while creating demand," says Collins. He and Hill suggest the central tactics remain essentially the same no matter what you're marketing or who you're trying to reach--in other words, the strategies that worked at Iomega can, with a little tweaking, prove successful at a business-to-business company like Saga. "We know we're not marketing $199 Zip drives, but the fundamentals apply," Collins says. "Just apply your tactics differently," Hill agrees. "Ideas can be replicated, with innovative implementation, and still dominate." His mantra? "Go in, and dominate, or just don't go in."
Fundamentally, the duo's strategy relies on visibility. Hence the elaborate media kit. Whether it's a trade show, an analyst conference, or even an internal sales meeting, the idea is to do it bigger and with more creativity and originality. "We deliver things that catch people off guard," Hill says. He tells a story of a recent EAI show hosted by "a major IT analyst firm," at which, in defiance of the rules, Saga hired a band to promote an off-site party, held at Disney World. "We had a very successful party," he laughs, "much to the chagrin of the conservative conference organizers." The result? At first, Saga was banned from next year's show. But the firm, claims Hill, has since softened and is allowing the software company to return. The lesson? "When in doubt, break all the rules."
Still, creating a ruckus obviously goes only so far. Remember how CrossWorlds, a Saga competitor, created a sensation last year by running ads that featured its CEO in a low-cut black dress. The company later slipped in its follow-through, and the buzz has faded. CrossWorlds would not return phone calls seeking comment.
Beyond initial hype, success demands a coordinated and highly strategic marketing message--and, of course, you have to have a product. Saga's product offerings include Sagagallery, a series of data management solutions of which the most well-known title is Adabas. Saga's first middleware product, launched in 1997, was EntireX , which is now part of the Sagavista suite.
Sagavista, released in late September, is Saga's new calling card, and, the company hopes, its ticket to big-league success. It is also the first package to primarily be Saga technology, not that of former parent Software AG. So Saga is currently channeling the bulk of its energy behind Sagavista, for which it has set aside an advertising budget of $5 million over the next six months. That amount may be a small sum, but it's not insignificant for a company that, for a quarter of a century as part of Software AG, had never run a single ad campaign until last fall. (Saga would not disclose its total marketing budget for Sagavista.)
Sagavista, just released at press time, was greeted optimistically by analysts, who nevertheless cautioned that this still-nascent market is wide open and that blue chip companies like Oracle have yet to up their ante. "The Sagavista product is a good, strong offering in a busy, crowded market," says Forrester's Brown. "The guys at Saga haven't invented application integration, though as a service organization they have developed expertise along the way. They're knowledgeable about the dirty business of connecting They've also demonstrated some insight as to what this means to business--that just to integrate old processes is not what integration is about. It's about expression of new business strategy. Saga understands that."
"Saga, like a handful of other companies, had the foresight to see that the world was rapidly moving toward application integration as an important focal point for application development activities," says Stephen Hendrick, vp of application development tools at IDC. That momentum has been largely brought to light by the Internet, he says. "There's a good alignment between the kinds of tools and technology [Saga offers] and the particular needs of the marketplace." Those needs are primarily gaining the means to communicate and share data among complex webs of software--including packaged and custom applications--from a wide array of providers.
Still, the current crop of EAI products are "just the tip of the iceberg," Hendrick says. And titans like Oracle have deep pockets. "The big guys have yet to fire their guns. IBM does not have a tool that looks specifically like what some of the early entrants have done. IBM has had capability in this area for quite a long time, but is one of these companies that builds terrific technology but doesn't often shoot their mouth off about what they've got." In coming months and years, Hendrick expects to hear from IBM, Oracle and packaged application vendors like PeopleSoft. "You'll see a lot of activity in this space from vendors that come from many different domains within the software industry," he says.
Saga's branding and product advertising push will go a long way toward imprinting the company's name on the collective IT imagination. But when the mammoth tech companies enter the field for real, all the exuberance in the world may not be enough to stand up against massive marketing budgets, sales forces and partnership networks. Saga does, however, have the added benefit of a strong international presence, and close ties with its former parent company. Saga has sales affiliates in 20 countries and international sales made up 18 percent of its total revenues in 1998, according to the company.
The flipside of its relationship with Software AG, however, may mean a vulnerability. The two companies are still inter-dependent even if Saga has begun to distance itself in both product development and marketing. On Oct. 6, for example, the two firms renewed their distribution relationship but with some important changes. No longer are the two firms restricted by region or exclusivity terms. Saga will be able to market Sagavista and other products outside the Americas and Software AG will be able, after June 2000, to market its Internet software, including Bolero and EntireX, in North America.
In a sense, the two companies will be competing in the same markets, sometimes with the same products. Some observers suggest they may merge to more swiftly compete globally. Even on a basic level, media reports today, more than two years after the split, still confuse Saga Software with its former parent.
So staking ground is an urgent imperative. Hill and Collins launched their efforts with a branding campaign at the end of 1998, integrating all of Saga's marketing under the tagline "Free your information." An abbreviated version, "f.y.i," appears on all the company's marketing communications. A new campaign, launched in early October, is product-specific, supporting Sagavista. The ads center on the concept, "the fairy tale has come true," that Sagavista is the simple answer to enterprise integration prayers.
In a bold step, Saga launched a TV campaign that will run on cable channels like CNNfn and CNBC. "After Y2K, what will the next challenge be [for executives]?" asks Hill. "Enterprise integration. That's the nucleus of the campaign." In addition to the TV spots, the campaign includes a print component: four fractional ads followed by full-page ads, running in business and trade magazines.
Saga's entire marketing strategy is contingent on reaching two groups of customers: the C-level, chief officers like CEOs and CFOs, and the "M-level," or more tech savvy IT decision-makers like MIS managers. "You can't just throw speeds and feeds at a senior executive. What they want to know is, 'what is your technology going to do for me in my environment to save me time and money?'" Hill says.
A dual-pronged strategy extends through all of Saga's marketing, including its web site. C-level execs get a business solution measure and MIS management gets a more technical message. "We totally revamped the way we went to market with collateral and presence on the web," says Hill. "The business executive can find out what Saga has to offer and can do for him, but also the technologist can drill down just as deep and even solve some technical problems right on the web."
For the hard-core technology execs, Saga has also planned a 32-city roadshow during November and December, featuring live and webcast product demos and seminars.
With all their energy and plans, can Hill and Collins turn Saga into an enterprise integration powerhouse? All indicators suggest they are in the right place at the right time. But success hinges on customer satisfaction with Sagavista and its successors--and on cutting through a noisy market to show off happy customers. "Marketing will make a huge difference right now," IDC's Hendrick says. "There's still tons of opportunity." MC
Hillary Rosner is a New York-based writer. Email her at hillaryr@yahoo.com.
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Iomega: the Players
Michael Collins: "We are charged with making every dollar we invest in telling Saga's story look like we invested five dollars," says Michael Collins, vice president of corporate marketing. Collins, who was Hill's other half as senior director of worldwide corporate marketing at Iomega, has compared the task of building Saga a winning marketing team to that of building a winning football team. "My attitude is to get the best people I can to do the best job they can with the best results they can produce--then respect and reward them," he says. "Everybody on my corporate marketing team lives by that credo."
Scott Kempema: For Scott Kempema, marketing is all about telling a compelling story. "People love great stories, and they pay attention to them if they are told with crisp words, interesting visuals--and, where appropriate, emotionally charged, well-composed music," says Kempema, marketing communications director. "And when that combo lives up to the strategy it all makes sense to the customer." Kempema, who went to Saga from ad agency Euro RSCG/DSW Partners in Salt Lake City, is responsible for advertising, events and Saga's web site. Last November, he implemented the company's first-ever branding campaign, repositioning the company as a future market leader in enterprise integration and featuring the tagline "Free your information." "My attitude," says Kempema, "is put as much energy as you can into everything."
Tim Hill: Timothy L. Hill, Saga's vice president of worldwide marketing and international operations, has set himself a three-pronged challenge: "Positioning Saga as a leader in the growing enterprise integration market space; creating awareness and demand for Saga products; making sure that Saga products are aimed at the right market segment, and supported with best-of-class sales tools." Hill, who previously headed up marketing and sales at Iomega, is known for his attention-getting antics like a recent sales video that featured his entire marketing team rocking out on a trampoline. Hill refuses to let the underlying unhipness of enterprise markets sway his commitment to making a name for Saga and having a blast doing it. "I'm blessed with a very talented group of marketing professionals, who are willing to take risks to make a company stand out in a conservative marketplace," he says.
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Iomega: Chronology
1973: Software AG America founded as the North American sales arm of Germany-based Software AG.
1997: Based in Reston, Va., Software AG America is spun off from its European parent through an equity partnership with Thayer Capital Partners. Dan Gillis becomes CEO and hires Timothy Hill and Michael Collins away from Iomega. As vp of corporate and worldwide marketing respectively, Collins and Hill are charged with overhauling staid brand and product marketing. They're idea: Rename the company Saga Software. The company's first middleware product, EntireX is introduced.
Fall 1998: After restructuring Saga's marketing operations, Hill, Collins and their team set to the task of launching the company's first ever branding initiative. A new corporate logo is unveiled as well as ads featuring the tagline: "Free your information."
Fall 1999: Saga releases the first major product of its new era, Sagavista, a suite of enterprise application integration products. Of course, that means more marketing. A second campaign hits airwaves and mags. The $5 million ad effort is the company's largest ever. The spots are set to run over a six-month period, touting Sagavista's "magical powers" that can bring a fairy tale ending to thorny software integration dilemmas. The media buy includes cable on the likes of CNNfn and CNBC.
The future?
Since Hill and Collins hail from Iomega, their task is to make middleware not sound like snoozeville. Unlike Zip drives, crafting a fun message is trickery because Saga's products aren't so tangible.
Yet they don't plan to alienate hard-core techies. A 32-city road tour is planned.
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Iomega - Output: Once Upon a Product
"Jack and the Enterprise," reads the cover of a whimsically drawn book in the first of four fractional ads in Saga's product campaign for its new enterprise application integration suite, Sagavista. "The story of one little CIO with one big integration problem," says the copy.
Other ads continue with a drawing of "The Princess and the Pea and the SAP," which bears the text, "A tall tale of fully-integrated legacy, custom, packaged, and ERP applications." The next panel: "The Little Enterprise that Could," ends with the line, "And the CIO lived happily ever after in the land of the integrated enterprise."
And finally comes "The Tortoise, the Hare, and the Fastest Route to Absolute Enterprise Integration" with the tagline: "The fairy tale has come true. Sagavista is here."
Saga Software's ambitious new $5 million, in-house campaign combines print and TV ads that the company hopes, over the next six months, will drive its message home to IT execs and staffers who purchase and use middleware, and the CXOs who drive a company's decision making.
The concept: companies are stymied by technological barriers to information-sharing across all their disparate software applications. Sagavista comes to the rescue, enabling free information flow across platforms, applications and databases. So marketing paints it as a magical, fairy-tale ending.
The print campaign, which also features a series of full-page ads, is running in Forbes, Business Week and The Wall Street Journal, as well as IT publications like CIO and EAI Journal. The second phase of the campaign will target readers of trade books including InfoWorld, Computerworld, Executive Edge, Network Computing and Government Computer News. These ads continue the fairy-tale theme, but present a much sleeker image, featuring black and white photos shot by Richard Corman (of milk-mustache, "Got Milk?" fame).
"We're trying to create interest among audiences that would normally turn their heads away from us," says Scott Kempema, Saga's director of marketing communications. "We have a legacy of existing products, but people have not said, 'What's fresh from this company?' People are now saying, 'The Sagavista product, what's going on with that?'"
The ads, along with a revamped web site, coordinated public relations efforts and heavy conference and trade show participation, "revolve around an integrated approach," says Kempema, that began with Saga's "Free your information" branding campaign last fall.
That top-to-bottom effort introduced a new corporate ID, complete with a name change (the company was previously known as Software AG Americas) and a new logo with an "F.Y.I." tag.
"The campaign you see now is product specific--this is how we're going to free your information," says Kempema.
TV spots, running on CNBC, CNNfn and Bloomberg TV, center on a CEO who was confronted with a massive "enterprise integration problem." As a result, "supply-chain management systems ground to a halt." Then, the company gets hold of Sagavista to integrates its apps. "And they all lived happily ever after," goes the voiceover, "on the mainframe, UNIX and NT. The fairy tale has come true. Sagavista is here." --HR