This is Part 2 of an Antarctica-biz-strategy piece I'm running here because I think these issues are pretty ubiquitous; Part 1 is about Business Intelligence, so called. This piece talks about how tough it is to sell software these days, and why, and a marketing idea we've cooked up to try to remove the risk from buying software, which I think ought to work well beyond our patch of turf. (Warning: kind of corporate, but I think a lot of people are facing the same issues.)
So here's the problem: you're a startup software company that made it out of the 1999 maelstrom and is still around, and is getting some traction and is paying the bills, and now you'd like to step on the gas and try to grow the business. The problem is that right now, nobody wants to buy software: we're seeing amazingly small contracts get kicked right up to the CEO then past the CEO to the Board, and run into resistance there. It's not just us: everyone in the business is telling tales of contracts and pilots and evaluations being pushed off into the next quarter, and then the quarter after that. My CEO is always grumbling about how his #1 competitor is NDI: “No Decision, Inc.” Assuming you really think your product is going to pay for itself, how do you get it in the door?
Reduce Risk · The elephant in the room that nobody wants to talk about is risk. During the boom, a lot of us frittered away big bucks on technology that didn't really work that well, or it turned out we didn't need, and maybe it worked well and we needed it but that didn't save us from a terrible cash-flow crunch when the NASDAQ tanked. So we're all really careful about putting pen to paper when there are numbers on the paper.
So here's our strategy for selling software in the era of risk-avoidance: we'll be talking it up at the company website, but I helped cook it up and I think it might play well in a lot of places, not just where we're doing business.
Step 1: Is There an Opportunity? · We come on-site and you tell us where your information hole is biggest and blackest. We go away with a dump of some of your data. Within two weeks, we come back with a Visual Net prototype built around that data, we run through it, and we take an initial finding on whether there's an opportunity here and whether it's big enough to be interesting.
Then you decide whether it's worth putting more work and a little money into. If not, we kiss good-bye and you haven't spent anything.
Step 2: Refine the Focus · First of all, you pay us a modest consulting charge to cover our costs on Step 1.
Then, we work together to shake down and refine the Visual Net prototype, to get something closer to production quality. Also, we work through the business case, so that we have a really good quantitative handle on how this thing is going to pay for itself. (There are really only two ways: reduced costs and/or increased revenues.)
If the numbers don't come up interesting enough, or the refined prototype isn't convincing your decision-makers, once again it's time to kiss goodbye, we all have better things to do.
Step 3: Alpha Testing · Once again, you start step 3 with another moderate payment to cover our consulting costs (if you end up really buying the software, we'll credit all these nickels and dimes).
Then we roll out the refined prototype to whoever you think ought to be testing it. You can take it inside your firewall, or we'll host it if that works better. The testing process really has to be controlled by you, although we have some experience in this area and can help with advice.
If the users hate it, or senior management has decided to impose a capital-spending freeze, or one of our salesguys has a psychotic episode and comes to a key meeting wearing a chihuahua, once again we disengage and part friends.
Step 4: Deployment · If you liked the alpha test and it looks like we're going to do business, the next step starts with an invoice for our professional services (and hosting if we did it) for the alpha.
Here's where the heavy lifting starts. We plan how we're going to do the production deployment, we hammer out the schedules and the pricing, and we both waste some money on lawyers reviewing licenses and contracts.
Then we sign the papers and abuse the programmers till they have it all ready for production.
Step 5: Go Live · This is really the end of the story, except for that we find that it works best to hold back on the administrator/developer training until you're in production so that you have your own live installation to work with.
If there's any end-user training required, we haven't done our jobs and you shouldn't be doing business with us.
It's Fast · This whole process has three big benefits:
Will It Work? · No matter which side of the fence you're on, the software sales process is becoming increasingly dysfunctional. Furthermore, while we all acknowledge the hangover from Y2K and the bubble, we can't all give up doing capital acquisitions, much and all as we'd like to.
But I think that even when the good times return, we'll never again see the days where people would write six-figure purchase orders for technology without having had their hands on it and really REALLY convinced themselves that it's going to get the job done.
So I think we as an industry just have to work out a way to make the acquisition process more rational and cut the level of risk down to a level way lower than we've been used to in the past.
This is our run at the problem. I'll report back in a couple of quarters on how well it works.