• 30 Aug 2009

          Cracking The carbon conundrum

          Peter Smith

          This week one of my clients asked if we could help them organise something to help them ‘make carbon more relevant’ as, although they are enjoying a lot of interest in what they do, which is a carbon–offset labelling service, they have been noticing an underlying comment from a lot of their customers that ‘Too many people out there just don’t get it.’

          That’s an interesting thought.

          Although Al Gore’s documentary An Inconvenient Truth is still seen as the Bible of the Low-Carbon industry, well over half the population in the first world, and a far greater proportion outside it, just don’t seem to be taking the issues that seriously.

          To illustrate that point –  my own local community is amazingly apathetic to proposals to dump millions of tons of waste in a disused brickworks less than a mile from the local school over the next thirty years.

          The chairman of the Laybrook Action Group, who works tirelessly to prevent it going forward, cites many reasons why it shouldn’t be there. But none of them are proven science, or hard fact, so it’s easier for the local population to accept instead the assurances of the developers and local government authorities that all will be well.

          What does that say about the effectiveness of the Carbon movement at persuading the wider public not just of the benefits of its case, but its importance for the planet?

          There can be few less attractive, environmentally damaging, carbon-wasting and anti-social activities in your backyard than a general waste landfill, yet our local community is lying supine and unaware of the implications for their health and the local environment, yet alone the planet as a whole.

          And this is the Carbon Conundrum. There is some science which suggests that the rate of climate change has been accelerated by man’s activities, but that is not unequivocal – there is enough counter-argument to spread doubt among the un-informed

          As one friend pointed out over dinner last night the planet’s climate is quite changeable without any intervention on our part – just 20,000 years ago, a second in geological terms,  the place where I am writing this today was covered by hundreds of metres of ice, and no-one’s history books show cavemen driving around in cars.

          The industry needs to market itself a lot more effectively to catch the public consciousness, or like my local brickworks, could turn from a thriving business to being buried under a pile of landfill.

        • 22 Aug 2009

          SaaS isn't always the answer - even for small business

          Peter Smith

          We’re having some building work done, and while we were selecting the builders I got talking to the owners of the firm over a coffee. Inevitably we talked about IT, and they told me their SaaS horror story.

          These two guys run a small building firm that specialises in domestic extensions, small builds and refurbs. They employ 15 people and have a very sound reputation. Last year, when the clouds of recession started to gather, they lost quite a bit of business, but heard that another local builder seemed to be winning a lot.

          So they called a selection of the customers who had chosen not to go with them and asked why.

          Was it price? No.

          Was it reputation? No.

          Was it personal? No.

          They finally found out it was because these other guys had put in a slick piece of sotware that produced estimates and project plans, showed the costs and when they were going to be billed and used pretty bar charts to show the customer how the different elements of the plan would come together. They were also able to demonstrate how they had used this in past projects.

          It gave the impression that the builder was very organised and transparent, so customers felt confident they would get a good build and wouldn’t get ripped off. It gave these guys a significant competitive advantage.

          So my guys decided that this was the way to go. They looked around the web for a fairly simple project management system, and after many evenings trawling through online demos, they finally signed up to a ‘simple, easy to use, project management and costing system – complete with ‘comprehensive online help’ and in their own words, ‘entered a whole new world of confusion’.

          To cut a long story short, a year later, having tried three different systems and wasted countless days trying to master them, they went back to building estimates on Excel, billing in Word, and handing everything over to the book-keeper at the end of a month to find out how much profit they made.

          As a business process, theirs is about the simplest – They produce a customer estimate based on time and materials, add a markup for handling, do the work and send out the bill. They’re also a bright couple of guys, regularly use PCs and  financially astute. But this whole experience left them confused, exasperated and totally negative about software’s ability to help them streamline their business.

          Given that the whole point about SaaS is that it nurtures the customer along the journey, this suggests that all three companies failed dismally, despite having a willing customer.

          So, curious to know more,  I asked them for the names of the vendors, which they gave me, and decided to check them out.

          All three had great websites.

          All three looked as though they had all the bells and whistles the customer needs.

          Two of them had a series of on-line demos and how to’s.

          They all had big numbers plastered over the website to call for sales – In the US.

          And guess what?Just one of them had a helpdesk, which for the frst ten minutes you listened played music, told me how much they valued my custom, and that the call would incur a charge of 50p a minute.

          Who are they kidding?

          From the customer perspective, the journey these vendors took them on was not to a good place. The ‘first ‘S’ was there, but the ‘aaS’ was missing.

          Of course this is a challenge to the vendor. If you sell to the general public, you are inevitably going to sell to some numpties, but you are also  going to have to find a way of supporting them effectively, in their terms,  or the sale value will be a couple of months at best.

          My builders are astute, and although they readily admit they’re not IT savvy, they don’t see why they should pay £5 to hang on and listen to crap music.

          In theory, the company that can crack this one will really be made for life, but there’s an interesting sting in the tail of this tale.

          I introduced them to one of our clients – a small software developer working in FileMaker – who has built a great system for time-based professionals, that also builds estimates for time and materials, as well as doing the billing. This however is not sold at SaaS prices, it had a price ticket to them of £ 10,000, but the developer set up a lease deal, so the builders pay just £ 350 a month for three years and it’s fully deductible.

          Yes it’s more expensive, but within the cost they’ve been trained to use it, the developer has customised the look of all the outputs with their logos and typefaces, he’s available for help calls, and the builders reckon they’ll now get Saturdays off instead of losing them to paperwork. Good result all round.

          And the moral ? If you’re selling to SMBs don’t devalue your product just to get a sale – Acquiring lots of unhappy customers is bad business – in any arena.

          Which does raise another question – Is the SaaS model so restrictive, that software companies would be better focused on selling specialist solutions in vertical markets?

          As ever, all opinions welcomed

        • 18 Aug 2009

          SaaS Grasping the marketing conundrum

          Peter Smith

          The SaaS model fundamentally changes the sales process from that of selling a license and associated services, to an ongoing relationship where the vendor takes the customer on a (hopefully) never-ending journey.

          That’s a big ask for any business whose sales, production and marketing models are all geared up to an eventual big ticket, but it’s almost as much of a challenge to the new entrants who have SaaS in their genes.

          Even though their approach tends to be less all-embracing, they too have to tackle the serious issues of delivering a service, to a consistently high level of customer satisfaction and making a profit out of it.

          Apart from the onus of achieving 24×7 customer satisfaction, the SaaS model hosts a bucketload of pitfalls in terms of the business’ ability to forecast revenue, ‘lock in” customers, and ensure the funding flow for future R&D.

          Hardly surprising that CFOs and resellers aren’t exactly falling over themselves, to dump their predictable income in favour of a voyage into the unknown.

          But how predictable is that income? And for how long?

          The recession has seen software sales fall off a cliff in most geographies, and the arrival of more and more hosted solutions, albeit offering limited functionality, is giving organizations a hitherto unknown degree of choice as to how they solve their business problems.

          For the industry this represents a dichotomy – on the one hand it is being asked to secure revenue for the next quarter’s results, on the other, market forces suggest you should turn around the software behemoth, with its established channels, pricing policies and customer base, and go after new markets with a leaner, slicker product, with less predictable revenue and far less definable markets.

          Can the two co-exist? Have any of you successfully achieved it? Is it even crossing the marketing department’s radar, or is the focus still on short-term lead generation?

          All opinions welcomed…

        • 16 Aug 2009

          So Apple brings us one step closer

          Peter Smith

          A lot of people are convinced that the cloud is a good thing – I’m a firm believer that as a way of cutting down the costs of computing, it has a lot going for it.  As a technician I’m also delighted to see the news in today’s Sunday Times that Apple is about to launch a tablet that will be a bit of an iPhone on steroids

          http://technology.timesonline.co.uk/tol/news/tech_and_web/personal_tech/article6796735.ece

          Apple is making major strides in moving us along the road first foreseen by people like Isaac Asimov where ultimately the PC and Laptop as we know them will be as out of date as the typewriter is today. Instead we’ll all use very thin devices that communicate with the Internet and all our data, programmes and functionality will be stored in ‘The Cloud’. THis is not news to the SaaS community, but the rest of the world has yet to see beyond the convenience.

          From the perspective of carrying everything around, the cloud, thin devices and better access will be a good thing, as anyone who regularly uses an iPhone close to a hot spot will agree. The flipside is that every aspect of your life, what you watch, listen to, write, put on Twitter, etc, will be accessible to anyone with the ability to navigate around ‘The Cloud’ without you knowing it.

          While some of this access will be legal – if not legitimate – think Prevention of Terrorism, or PATRIOT Act, some will be criminal – ID fraud being an obvious one. Some will be benevolent, such as analysis of health trends, some will be purely malevolent.

          Right now we don’t have even an inkling of the potential changes that this will bring to our society, but, unlike Hollywood, here at Hot To Trot we’re not in the Armageddon camp, although we do think it is critically important for the companies that are making this all happen to bear in mind their Social Responsibility for the data they manage onbehalf of their customers.

          From what we’ve seen across much of the industry this is one of those thorny problems that everyone knows about but hopes someone else will pick up and deal with. From the perspective of our clients, we feel this is a key aspect of their marketing that needs not just to be addressed and stated openly, but form a bedrock of the way they bring their solutions to market.

          Do you have the same checks and balances?

        • 14 Aug 2009

          How open are you really to change?

          Peter Smith

          Unless you are one of a very small minority of people in business today the answer is probably ‘not a lot’. We’ve seen this for a long time outside the IT industry, which is well-known for being one of change’s greatest proponents, but increasingly that apathetic approach to the future is beginning to invade the way that companies within the industry  look at the future.

          The drivers behind this change can be summed up in two letters – IP.

          Not Intellectual Property, but Internet Protocol, and specifically the way that companies like Microsoft and Google are leading us all headlong away from the world we know, where your computer has all its applications and data resident upon it, and into the brave new world of ‘The Cloud’.

          While the potential benefits of this are many and varied, a lot of Tier 2 software vendors, ISVs, PBX manufacturers and VARS, are facing fundamental changes in their business models, which have the potential to dramatically change their incomes, perhaps to the point of obliteration.

          As an example, we have just finished an extensive consultancy project with a US-based ISV that makes some very cool systems. These, in a true ‘Single View of the Truth’ approach, all hook together to deliver very powerful functionality to their users, but as with any company-wide system bring the need for training, integration and a fair bit of hand-holding while staff get their head around them.

          Once installed the benefits are huge – most of their customers report at least a 25% productivity boost, but right now no-one is buying big applications, so their pipeline is minimal, and when they do go to market they are getting significant pushback from customers, not because they don’t see the benefits,but because they don’t want to commit to anything and would rather try and get along with what they already have.

          Quite correctly the client realised that this was a one-way street to closure, so asked us to build them a new marketing model.

          Given the state, and direction,  of the software market we looked at SaaS, and the techies enthused about how easily they could split the software elephant down into lots of micro-applications, each delivered by SaaS, so that customers don’t end up with a big outlay. It would need R&D, but not a huge amount, and they could realistically start launching micro-applications into the market by Q1 2010.

          It has all the elements of a great plan – the company is well-known and has great media presence, so lots of opportunities for news interest to keep the website and PR buzzy; It would be delivering a pipeline of very useful and user-friendly tools that would have very wide applications across a number of verticals that would be continually hitting the market, and the potential to rebuild revenue over a 12 month period.

          Sadly, the bottom line is that while everyone else in the company agreed individually with the plan, no-one on the board wanted to leave the liferaft of what they knew and commit to change.

          While we advisers, with a truckful of marketing and business experience from CEO downwards, could see the writing on the wall, the client’s board just didn’t want to accept that their current business model has been thrown into the wilderness by the recession, and ain’t going to come back in the foreseeable future, if at all.

          Net result? They’ve decided to redouble their sales efforts to their existing, and pretty saturated market, which they’ve already done twice in the last year with no success, even though every sale they’ve tried to close in the last 12 months has failed because the companies don’t want to commit to either a large CapEx or ongoing OpeX to the same net level under a lease deal.

          One of our team summed it up very well “The board haven’t been on the front line for a few years. Instead they are reliant on reports and feedback, so its easy to blame the staff below them. The reality is that they are more afraid of implementing change, because to do so is a tacit admission that they aren’t getting it right. They’d almost rather have the company go tits up, and blame it on the market.”

          Which raises an interesting thought to ponder over the weekend –  How easily do we fall into the trap of blaming everything on the market, when being truly open to change could make the difference between growth and stagnation?