Friday, February 17, 2006
Other considerations
Some more take-aways from Cusomano's book: To sell into enterprises, software companies need to pay more attention to the "Whole Product Solution" - solid reliability, ease of use for new adopters, and strong documentation and technical support. This is a big overhead, but the findings are that a software company has many more ways of being successful with enterprise customers than if they are selling to a mass market. The bottom-line I get from this is that if you are selling to businesses, you need to consider yourself something other than a pure products company.
Gaining recurring revenues through subscriptions etc is also highly recommended in the book. While product sales can fluctuate wildly, revenues through recurring business can keep a company afloat in lean times. Plus, there are strategies in place to encourage customers to continue to pay for upgrades, e.g. backwards compatibility but not forward compatibility. A word of caution though: if a company is not innovating with new product sales, the recurring revenues will eventually decline. Both are intimately related to each other.
Geoff Moore, whose book I have but not yet read, talks about the different types of customers in the tech/software industry. Just because you have done well with early adopters is no guarantee that your products will appeal to the mainstream. This is known as "The Chasm".
Some more reading recommendations I will try to follow up on: "Inside Intuit: How the Makers of Quicken Beat Microsoft and Revolutionized an Entire Industry", by Suzanne Taylor. Interesting because Intuit was in competition directly with Microsoft, and yet managed to survive to this day. Another one is "Information Rules: A Strategic Guide to the Network Economy" by Carl Shapiro and Hal Varian. I'm beginning to find there is plenty of reading material around!
As an aside, here is an interesting article from John Thompson, CEO of Symantec. It helps to underscore the issue of security as a fundamental one for the software industry.
Gaining recurring revenues through subscriptions etc is also highly recommended in the book. While product sales can fluctuate wildly, revenues through recurring business can keep a company afloat in lean times. Plus, there are strategies in place to encourage customers to continue to pay for upgrades, e.g. backwards compatibility but not forward compatibility. A word of caution though: if a company is not innovating with new product sales, the recurring revenues will eventually decline. Both are intimately related to each other.
Geoff Moore, whose book I have but not yet read, talks about the different types of customers in the tech/software industry. Just because you have done well with early adopters is no guarantee that your products will appeal to the mainstream. This is known as "The Chasm".
Some more reading recommendations I will try to follow up on: "Inside Intuit: How the Makers of Quicken Beat Microsoft and Revolutionized an Entire Industry", by Suzanne Taylor. Interesting because Intuit was in competition directly with Microsoft, and yet managed to survive to this day. Another one is "Information Rules: A Strategic Guide to the Network Economy" by Carl Shapiro and Hal Varian. I'm beginning to find there is plenty of reading material around!
As an aside, here is an interesting article from John Thompson, CEO of Symantec. It helps to underscore the issue of security as a fundamental one for the software industry.
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