Thursday, April 20, 2006

 

Setting up a software business model

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.

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