May 4, 2009 Prepared for  SIIA Software Summit San Francisco  Tim Clark, Partner 349 First St., Suite A Los Altos, CA 9402...
FactPoint Background <ul><li>Help clients identify and address early adopter market opportunities. Founded in 1992.  </li>...
Agenda: Inside the Buyer’s Head <ul><li>Introductions </li></ul><ul><li>Doom and gloom  </li></ul><ul><li>Six things  NOT ...
Audience background <ul><li>On-premise  </li></ul><ul><li>On-demand/SaaS  </li></ul><ul><li>Hardware appliance </li></ul><...
What’s inside the buyer’s head?  <ul><li>“ They’re  DISORIENTED ” </li></ul><ul><li>--William Soward, CEO, Adaptive Planni...
Survey Overview <ul><li>Performance and Planning Poll is conducted quarterly </li></ul><ul><ul><li>Current poll -- Februar...
It’s Bad, and Will Get Worse Before It Gets Better <ul><li>A total of 86% say conditions are worse now than they were 6 mo...
Companies’ Performance Will Suffer High Degree of Uncertainty How would you characterize the current level of economic unc...
Goldman Sachs sees global IT spending down 9%
Six things  NOT  in the Buyer’s Head
“ I want to add a new software vendor today.”  <ul><li>Memo to ISVs 1:  Offer multiple modules of functionality.  </li></u...
“ I hope it takes at least six months to get new software into production.”  <ul><li>Memo to ISV 1 : Shorten time to value...
“ I want another information silo with my application data.”  <ul><li>Memo to ISVs:  Buyers want to integrate new software...
“ Show me a pretty UI. Skip the financial stuff.”  <ul><li>Top 5 Global Pharmaceutical </li></ul><ul><li>Total: Summary of...
GROUNDWORK Overview
“ We want to fill out your entire software suite.”   <ul><li>“ We already have several components of your enterprise softw...
“ We’re planning to hire a dozen PhDs to help us come up with a new algorithm for managing our supply chain.”  <ul><li>Mem...
10 Thoughts Inside the Buyer’s Head
Money woes Our non-personnel  budget got killed Layoffs always hit IT first Getting capital spending  approved is tough.
Greater demands Business requires us  to enable new  revenue sources With fewer people to do the work, we’re trying to aut...
Virtualize more? … but it saves money. We’ve virtualized  servers, but I’m not ready to virtualize mission-critical applic...
Make it simple, social   Make my life simpler, not more complex.  Yes, we support social networking, but nobody has figure...
I want a life At the end of the day, I just want to tuck my kids in bed.
Lessons on selling in a recession
Play the budget angles <ul><li>Operating expense vs. Capital expense  </li></ul><ul><li>SaaS vs. On-premise  </li></ul><ul...
Sprinkle a little  Green  on it <ul><li>Web meetings:  Adobe, Cisco Webex, GoToMeeting </li></ul><ul><li>Power management ...
Open source’s appeal: It’s not only about cost <ul><li>For customers, access to code eases integration issues. </li></ul><...
Choices: Sell software any way the buyer wants it <ul><li>On-premise  </li></ul><ul><li>On-demand/SaaS </li></ul><ul><li>H...
Don’t sell what the software does. Sell what the software enables your customers to do.  <ul><li>Example : Quantivo, Marke...
Have a story on Cloud Computing   A chance for  hardware vendors  to sell new equipment  Buzzword Enterprise  computing’s ...
Inside the Buyer’s Head   <ul><li>Thanks </li></ul>Tim Clark, Partner [email_address] +1 650-233-1748
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Inside The Buyers Head Tim Clark May 4

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Transcript of "Inside The Buyers Head Tim Clark May 4"

  1. 1. May 4, 2009 Prepared for SIIA Software Summit San Francisco Tim Clark, Partner 349 First St., Suite A Los Altos, CA 94022 www.factpoint.com +1-650-233-1748 Copyright 2009 The FactPoint Group Inside the Buyer’s Head
  2. 2. FactPoint Background <ul><li>Help clients identify and address early adopter market opportunities. Founded in 1992. </li></ul><ul><li>Acquired by Jupiter Research in March 2000; spun-out in July 2001. </li></ul><ul><li>Custom research, not reports. </li></ul><ul><li>Methodology: In-depth phone interviews with target customers. </li></ul><ul><li>Reference accounts: Adobe, Oracle, NEC America, SonicWALL, SugarCRM, Groundwork Open Source, KACE, UnivaUD, Socialtext, Unisfair, rPath, Palamida. </li></ul><ul><li>Project types: </li></ul><ul><ul><li>Identify new opportunities </li></ul></ul><ul><ul><li>Accelerate sales </li></ul></ul><ul><ul><li>Segment markets </li></ul></ul><ul><ul><li>Strategic market entry </li></ul></ul><ul><ul><li>Competitive positioning </li></ul></ul>
  3. 3. Agenda: Inside the Buyer’s Head <ul><li>Introductions </li></ul><ul><li>Doom and gloom </li></ul><ul><li>Six things NOT in the Buyer’s Head </li></ul><ul><li>10 Thoughts Inside the Buyer’s Head </li></ul><ul><li>Lessons on Selling in a Recession </li></ul><ul><li>Q&A </li></ul>
  4. 4. Audience background <ul><li>On-premise </li></ul><ul><li>On-demand/SaaS </li></ul><ul><li>Hardware appliance </li></ul><ul><li>Virtual appliance </li></ul><ul><li>Open source </li></ul><ul><li>Multiple modes </li></ul><ul><li>Other </li></ul>
  5. 5. What’s inside the buyer’s head? <ul><li>“ They’re DISORIENTED ” </li></ul><ul><li>--William Soward, CEO, Adaptive Planning, March 2009 </li></ul>
  6. 6. Survey Overview <ul><li>Performance and Planning Poll is conducted quarterly </li></ul><ul><ul><li>Current poll -- February 2009 </li></ul></ul><ul><ul><li>Prior poll -- October 2008 </li></ul></ul><ul><li>Managed by Adaptive Planning and the BPM Forum </li></ul><ul><li>Gathers input on key economic indicators </li></ul><ul><li>Solicits feedback on planning processes </li></ul><ul><li>Participants are financial professionals from companies of all sizes in over 20 industries </li></ul>
  7. 7. It’s Bad, and Will Get Worse Before It Gets Better <ul><li>A total of 86% say conditions are worse now than they were 6 months ago </li></ul>Current Conditions How would you describe the current economic conditions in your industry vs. 6 months ago? Much Better Better Much Worse 12% 29% Same Worse 57% 2% 0% <ul><li>For enterprise companies (>$500M), a full 73% expect worse conditions </li></ul><ul><li>Significant deterioration vs. last quarter, when just 27% expected worse conditions in 6 months </li></ul>Future Expectations Compared to today, how do you expect conditions in your industry will be in 6 months? Much Better Better Much Worse 42% 3% Same Worse 40% 15% 0%
  8. 8. Companies’ Performance Will Suffer High Degree of Uncertainty How would you characterize the current level of economic uncertainty facing your business? Low Medium High Very High 5% 33% 39% 23% <ul><li>For enterprise respondents (>$500M), a full 72% report “high” or “very high” uncertainty </li></ul>More Challenges Ahead What do you expect for your company in 6 months versus now? <ul><li>51% expect lower revenues (vs. 43% last quarter) </li></ul><ul><li>48% expect decreased capital spending (vs. 44%) </li></ul><ul><li>52% expect decreases in headcount (vs. 43%) </li></ul><ul><li>61% expect erosion of profit margins (vs. 46%) </li></ul>
  9. 9. Goldman Sachs sees global IT spending down 9%
  10. 10. Six things NOT in the Buyer’s Head
  11. 11. “ I want to add a new software vendor today.” <ul><li>Memo to ISVs 1: Offer multiple modules of functionality. </li></ul><ul><li>Memo to ISVs 2: Add value to existing applications. In an M&A environment, some ISVs will be dropped. </li></ul><ul><li>ORACLE!! </li></ul>
  12. 12. “ I hope it takes at least six months to get new software into production.” <ul><li>Memo to ISV 1 : Shorten time to value—avoid long implementations. </li></ul><ul><li>Memo to ISV 2 : Improve specific business processes that cause customer pain. </li></ul><ul><li>Memo to ISV 3 : Prove your concept—quickly. QuickStart packages lower risk (and costs) for your customer and you . </li></ul>
  13. 13. “ I want another information silo with my application data.” <ul><li>Memo to ISVs: Buyers want to integrate new software with what they already own. </li></ul><ul><li>Example: Integration is a challenge for SaaS providers. </li></ul>
  14. 14. “ Show me a pretty UI. Skip the financial stuff.” <ul><li>Top 5 Global Pharmaceutical </li></ul><ul><li>Total: Summary of Savings </li></ul><ul><li>One-year hardware purchases avoided: $ 201,656 </li></ul><ul><li>Annual ancillary costs to run hardware $ 806,624 </li></ul><ul><li>First-year software licenses savings $ 280,000 </li></ul><ul><li>Software maintenance (after year 1) $ 42,000 </li></ul><ul><li>Annual time saved processing results $ 42,000 </li></ul><ul><li>Annual FDA compliance savings $ 2,055 </li></ul><ul><li>Annual quality improvements/savings $ 2,433,050 </li></ul><ul><li>__________ </li></ul><ul><li>First-year savings $ 3,765,385 </li></ul><ul><li>Annual savings [1] $ 3,325,729 </li></ul><ul><li>[1] After the first year, annual savings drop because the savings on “hardware purchases avoided” is a one-time savings of $201,656 and because software licenses ($280,000) are a one-time expense, replaced after year 1 by software maintenance fees of 15% of original licensing. </li></ul>
  15. 15. GROUNDWORK Overview
  16. 16. “ We want to fill out your entire software suite.” <ul><li>“ We already have several components of your enterprise software and we want the rest.” </li></ul><ul><li>Memo to ISVs: Focus on specific needs. Buyers want software to solve a problem. </li></ul>
  17. 17. “ We’re planning to hire a dozen PhDs to help us come up with a new algorithm for managing our supply chain.” <ul><li>Memo to ISVs: Buyers are looking to leverage proven “best practices” in their industry. They want expertise built into the software to avoid developing that expertise on their own. </li></ul><ul><li>Example: ITM Software (acquired by BMC 2008) </li></ul><ul><li>Requirements for a Vendor Management Solution </li></ul><ul><li>“ Institutionalize leading practices with a business process solution.” </li></ul><ul><li>(http://factpoint.com/Vendor-Management-for-Banks.pdf) </li></ul>
  18. 18. 10 Thoughts Inside the Buyer’s Head
  19. 19. Money woes Our non-personnel budget got killed Layoffs always hit IT first Getting capital spending approved is tough.
  20. 20. Greater demands Business requires us to enable new revenue sources With fewer people to do the work, we’re trying to automate business processes.
  21. 21. Virtualize more? … but it saves money. We’ve virtualized servers, but I’m not ready to virtualize mission-critical applications…
  22. 22. Make it simple, social Make my life simpler, not more complex. Yes, we support social networking, but nobody has figured out how to make it strategic.
  23. 23. I want a life At the end of the day, I just want to tuck my kids in bed.
  24. 24. Lessons on selling in a recession
  25. 25. Play the budget angles <ul><li>Operating expense vs. Capital expense </li></ul><ul><li>SaaS vs. On-premise </li></ul><ul><li>Offer/arrange long-term financing for on-premise software. </li></ul>
  26. 26. Sprinkle a little Green on it <ul><li>Web meetings: Adobe, Cisco Webex, GoToMeeting </li></ul><ul><li>Power management software: Cassatt </li></ul><ul><li>Automated systems management: KACE </li></ul><ul><li>Digitize paper processes: SpringCM on Accounts Payable </li></ul><ul><li>Telework: Secure remote access and workflow—SonicWALL, Adobe </li></ul><ul><li>How telecommuting </li></ul><ul><li>pleases workers… </li></ul><ul><li>More flexibility </li></ul><ul><li>Less stress </li></ul><ul><li>Work-life balance </li></ul><ul><li>Control of time </li></ul><ul><li>Lower commute costs </li></ul><ul><li>More time at home </li></ul><ul><li>… and employers too </li></ul><ul><li>Lower absenteeism </li></ul><ul><li>Higher productivity </li></ul><ul><li>Better job satisfaction </li></ul><ul><li>Higher retention rates </li></ul><ul><li>Lower training costs </li></ul><ul><li>Easier recruitment </li></ul><ul><li>SonicWALL, 2008 </li></ul>
  27. 27. Open source’s appeal: It’s not only about cost <ul><li>For customers, access to code eases integration issues. </li></ul><ul><li>Some see code access as an insurance policy against an ISV going out of business. </li></ul><ul><li>For ISVs, leveraging community-based support can limit costs. </li></ul>
  28. 28. Choices: Sell software any way the buyer wants it <ul><li>On-premise </li></ul><ul><li>On-demand/SaaS </li></ul><ul><li>Hosted by third party </li></ul><ul><li>Hardware appliance </li></ul><ul><li>Virtual appliance </li></ul><ul><li>Open source software </li></ul>
  29. 29. Don’t sell what the software does. Sell what the software enables your customers to do. <ul><li>Example : Quantivo, Market Basket Analysis </li></ul><ul><li>What Quantivo software does for: </li></ul><ul><ul><li>Buyers and merchandisers </li></ul></ul><ul><ul><li>Retail marketers: Advertising, marketing and promotions </li></ul></ul><ul><ul><li>Retail store operations: Where to locate new stores </li></ul></ul>
  30. 30. Have a story on Cloud Computing A chance for hardware vendors to sell new equipment Buzzword Enterprise computing’s future
  31. 31. Inside the Buyer’s Head <ul><li>Thanks </li></ul>Tim Clark, Partner [email_address] +1 650-233-1748
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