Software distribution processes

Here's a couple of things I have come up with regarding the setting up of a software business model. Think of them as building blocks - processes that need to be in place before the model is going to work. If you haven't thought of even one of them, then you don't have a business model.

a) Sales process. The method by which potential customers are approached and sold on your offering. It could be direct sales, channel sales, email, viral marketing, whatever. How are you going to do it and what resources are you going to put in place to make it happen?

b) Ordering process. The methods by which sales are converted into orders. Is it web? Is it telesales? Is it an order taker? Does it go through a distributor or intermediate of some sort? How?

c) Customer management process. Once you have the customer, how do you keep them as customers? Where do you store their information? What are the touch points? How do you know when they need to be approached again? Do you have a CRM system, or a subscriptions management system? Are you going to outsource this to a credit management company?

d) Fulfillment process. How do you fulfil the customer need? What operations need to be carried out to ensure that the customer is provided the service or product that they requested? Will you use web based deployment, or CDs? How will authentication and security be carried out?

e) Financial process. What mechanism will be in place to register sales and report on profitability? What will the interface look like with the ERP system?

f) Support process. If the customer has a question, an issue or a complaint, who can they go to? Do you have online support or teleservices in place, or maybe a technician in-house? Will the product itself call home?

These are 6 key components that need to be answered if you want to set up a business model to support software. What is interesting is that I doubt if it is too much different from the sale of physical products, apart perhaps from a different fulfillment process. Everything else might look quite similar.

A software strategy note from CNET today. Companies like Microsoft and Oracle are spreading their wings to take control of the entire "stack" - everything from business apps to middleware to databases to management software to operating systems. The aim is to become a single vendor of choice for enterprises, and it seems to be a sign of growing forces of consolidation in the market. The article provides a matrix of coverage for the top players and also identifies risks and opportunities for smaller software players.

Here are some useful tips from Eric Sink on the thorny subject of pricing. He covers, in a very accessible style, issues such as market positioning, understanding customer value, costing and high-volume vs low-volume considerations. He has some warnings about pricing something too low or creating temporary prices. I particularly like the simple 3 tier pricing model outlined: basic, regular and premium.

There's a great line in the entry: "If nobody is complaining about your price, then it is probably too low. The trick is to tune your pricing until the volume of the whining is just right."

I've just found some interesting articles on Wikipedia that I need to keep an eye on.

Software Deployment. I particularly like the way each activity is broken down into a set of operations.

SaaS - Software as a Service: Oooh! It's just ASP's with a different name! Well, actually it talks about "net native" applications, which (I assume) refer to applications built specifically for internet usage. But how they differ I do not know.

And there's a ton of different types of software distribution forms mentioned, each fascinating in their own right: Abandonware, Crippleware, Adware, Baitware, Beerware, Careware, Demoware, Donateware, Freeware, Greenware, Guiltware, Hostageware, Loyaltyware, Malware, Nagware, Postcardware, Hostageware, Shareware, Shovelware, Spyware, Vaporware.

I might come back to some of these a bit later. Some are obviously a bit facetious, but some also potentially are worth exploring in a lot more detail.

This blog gives one assessment of the way things will go in the future regarding successful software models. Essentially, the view given is that open source will dominate, and when people buy into the value being provided by open source, they will elect to upgrade to a premium subscription to avail of extra features, support and services.

This McKinsey article (registration required) tackles the issue of improving the quality of embedded software. While it is primarily focused on software development and testing there are a few graphs showing the importance of embedded software to the automotive industry.

This EETimes article contains some frightening stuff about buggy embedded processors, everthing from pacemaker problems to sprinklers going AWOL and people getting locked into their cars. People have even died as a result of embedded programming bugs. This issue is not going to go away!

"Some pacemakers have stimulated hearts to beat at rates of 190 beats a minute, prompting companies to provide software updates delivered to the implanted devices using capacitive coupling." That's where we're going.

Hollywood is starting to take steps to download new movies into people's homes, but it's softly softly - they don't want to be as badly burned as the music industry has been.

"The downloaded movies would still come with several restrictions that underscore the difficulty of the new digital world for Hollywood studios. To keep from competing directly with large retailers like Wal-Mart, both sites for now are only allowing the movies people buy through downloads to be stored on PCs or on devices like the game player Xbox outfitted with certain Microsoft (MSFT) software. Movies can't be "burned" or copied onto disks that can be played on other devices, such DVD players."