Last week I read a couple of articles about how Farm Management Software (FMS) has failed to deliver success. The software category has been around for more than a decade, and lots of money has been invested, yet not a single sustainable business has emerged. So, “it’s time to call it”, they say. Naturally, I take issue with a few of the arguments presented.
If you are in any way involved in strategic positioning in the agriculture industry, you should read these articles. This is important stuff to get right.
The main article is authored by Janette Barnard: It’s time to call it. It says VCs invested like crazy in farm management software because they were desperate to conquer a winner-takes-all market. But 10 years in, nothing was achieved.
Then Shane Thomas picked up on this in his weekly newsletter. In short, Shane beats himself up for ever, having thought farm management was a winner-takes-all market. This view confused me – I am a relative newcomer to agtech, and I had missed that the farm management software was assumed to become the “data platform” of the agriculture industry… but now that I understand this, the pieces fall into place. So let me tell a short story… the way I see it.
The rise and fall of platform business
The concept of “platform business” started coming together in the 2010s. This is when topics like IoT, big data, and cloud storage merged and became the foundation for new business models, typically including the word “platform”. The general idea was that all analytics-based work would waste more than 80% of the time on cleaning up and preparing data sets. Once the analytics task at hand was done, the data would be discarded. With the platforms, the data could be always prepared, combined and aggregated to the right place and easily available for any analytics.
In 2016, Gartner published their first report on the topic of the platform business. It was a long time ago, but the report still exists: Winning in the platform game. They drove the message hard, claiming that the platform role would be a winner-takes-all battle. Most executives at the time seemed to agree. And several big corporations were already investing heavily in their bids for this attractive role. GE with Predix. Siemens with Mindsphere. And many others, both from incumbents and startups. I know this because I did it too, with Veracity at DNV.
By 2018, it was clear that this would be hard. Winner-takes-all positions don’t come easy. Two important things happened:
- Customers didn’t play ball. In short, their response was: “What’s this platform really doing? We don’t get it”.
- The cloud service providers (read: Microsoft) saw the threat and concluded they didn’t want a winner-takes-all player between their cloud offering and their customers. Naturally.
2018 was entertaining. It became obvious that these new entrants didn’t have the tech-savvy leadership that Microsoft did. The data platforms were mostly tech projects coming out of non-tech corporations, so they were easy prey for Microsoft. Hilarious as it may seem, Microsoft did this exercise so well that you’d see one after another doing press releases about being in Microsoft’s pocket:
July 2018: GE signs largest Microsoft contract ever.
Soon after the Microsoft “partnership” deal, GE shut down their Predix efforts after several billion dollars were invested. The big question mark for all the data platforms was to identify the layer of service the platform business could offer which wasn’t already handled by either the cloud provider or the customer. Since then, the data platforms have gone through a sobering process. They are no longer pitching platform features to their customers; instead, they focus on solving real customer problems. Make no mistake, though, in the background; the platform logic is still very much alive.
Farm Management Software 1.0
Returning to the agriculture industry, the Gartner report apparently reached its audience here too, and I guess most players decided that farm management software was the right vehicle to maneuver the data platform into place. This then explains why the first farm management software focused on integrating machinery data (IoT) from various machines into one central storage and analytics platform – the mantra was “we need the data”.
As the story goes, industries refuse to learn from each other, so we see the same mistakes again. 3 years after the joke was getting boring, we got this news:
November 2021: Bayer enters the competition to pay Microsoft more money.
That press release clarifies one thing only: Bayer isn’t winning anything.
Data platforms and farm management software are not the same things. Data platforms are coming, it just takes longer than anticipated. It’s a hard problem. But when they emerge from the ashes, they will indeed have winner-takes-all potential.
On the other hand, farm management software is fragmented (FMS) and can only win niche by niche. FMS today is focused on making daily management tasks at the farm easier – hence the name farm management software! It is focused on farmer needs rather than a desire for data. I have written more about what FMS is in an earlier blog post.
Call it quits if you like. I am doubling down on both data platforms and farm management software.
