SOFTWARE SOLUTIONS: Sustain Financial Investments

Identifying a customer segment is critical to succeed in software solutions

selling. The next step is to formulate a plan to counter the challenges faced in

these segments. It is also important to have the financial power to sustain the

business till the investment starts paying.

Alot has been said and written about how soft ware resellers should upscale

to solutions providing rather than box-pushing. This has led people to wonder

what sets a software solution partner apart from any other software reseller in

the market. After all, don’t they all address the same customer segment with

the same bunch of products?

But there is a differentiator. A solution provider is conscious about

targeting the right customer. There are two distinct markets that he addresses.

The issues and challenges faced in both these segments are different and the

treatment for these issues are also different.

The first market is the enterprise space, which characteristically has over

1,000 machines. The second segment is the small and medium business space, which

can be categorized as having over 50 machines.

CHALLENGES IN ENTERPRISE BUSINESS



Most large software vendors like Microsoft, Oracle, IBM, Computer Associates

and Veritas have realized the potential of the enterprise business buyers and

approach these users directly. However, most of these vendors do not bill

directly and follow a partner model.

In retrospect, the partner’s margins in this space are going down,

especially since he is merely doing demand fulfillment. While this cannot be

avoided, a partner should look beyond these limitations to see how he can

provide more value-addition.

This can be in the form of implementation of software licenses or post-sales

services. Customers these days are aware of the importance of these services and

are ready to pay for it.

Principals too are ready to give better margins if the partner is ready to

take care of all the post-implementation issues. This is because they can then

concentrate on brand-building exercises and demand creation.

CUSTOMIZE AND IMPLEMENT



Many big enterprise customers have data centers, which require data to be

protected from outside and inside threats. They have some backup and security

solution already in place and are looking out to upgrade their existing systems

to keep up with the time.

This is where partners focusing on specific technologies like backup and

security come into the picture. They can offer customized solutions for

messaging, hosting, web publishing, infrastructure management. This can be

addition to the core ERP software that the company must have implemented.

There are a couple of challenges for partners who want to offer specialized

solutions and services. The first is to compete with big players like Wipro, HP

or IBM Global who offer complete solution including hardware, software,

infrastructure management and helpdesk.

RETAINING EXPERTS



The next challenge is to retain the technical staff. Often qualified and

certified personnel from the partner’s organization take up jobs with the

principals and even bigger solutions provider.

This means that the partner has to invest once more in training and

certifying another employee, which is a time and resource-intensive exercise.

And also, a partner needs to have a minimum number of certified personnel to bag

an order. In short, he cannot afford, not to train and certify his team. After

all, good technical and implementation skills are the key to get into an

account.

DO NOT OVER-COMMIT



Tardiness is another pitfall that partners should avoid. Partners tend to

over-commit and take up projects without having the right resources in place. It

pays to say no if one can’t keep his commitment. A partner needs to do a good

job in executing the first project on time. If he fails to do a good job, he

will not only lose the client, but his reputation as a solutions provider as

well.

FOCUSING ON SMB



The SMB market is opening up with growing awareness about IT and its

cost-effective deployment. These customers typically have fewer resources, but

look for best.

Most principals do not have the reach to address this market directly and

need partners to sell their products and technologies and support them.

The biggest challenge in this space is to develop and implement specific

offerings which will improve productivity of a particular industry, like

pharmaceutical, banking or courier, in a cost-effective manner. Some software

partners have a good solution for this segment, but do not have the reach and

the marketing muscle. Others have the reach but do not have good

product/solution to sell.

Very few partners have managed to have a good mix of salable products and

good market reach. Some successful partners may join hands with other solution

providers, rather than striving to make it on their individual strengths.

However, several things have to be kept in mind while adopting this strategy.

Each of the partners should have a different core competency to avoid clashes.

Also the revenue-sharing and service model should be well established.

COMMON PROBLEMS



One common issue faced in India, specifically in the SMB space, is that

people are unwilling to pay for software services, unless they are very sure of

the returns. The best way to circumvent this problem is to get customer

references from the same industry. This will convince them about the product and

how it can help them in their business.

Collection of outstanding dues in the SMB is another big challenge. Normally,

the payment cycle for software licenses is 30 days, which invariably gets

delayed. The software partners have to use a mix of persuasion and pressure in

order to avoid losing the customer and ensure that there is no bad debt either.

When it comes to services and implementation, a major part of the payment

comes after satisfactory completion of the project. ‘Satisfactory’ is a

relative term and the software partner needs to define the deliverables well in

advance in his contract.

IN A NUTSHELL



The software partner has to first decide which space to address. Then have a

plan to counter the challenges faced in either of the space and also have the

financial power to sustain the business till the investment starts paying.

Efficiency in operational tasks is important to ensure that profits keep on

increasing. One thing is sure, if you have a good plan in place and confidence

to back it up, there are many financial institutions ready to offer finance.

Ujwal Andhari is Director,

Softcell Technologies