Friday, December 19, 2008

What will help drive the success of the Software as a Service Model

As the Software as a Service model grows and more companies roll out products for the market, two needs will need to be addressed. Where can the consumer find the different services and how can I communicate across platforms?

Today in order to find services for my business, I have to do random searches and seek out the platforms that can help drive my business. There isn’t a place where I can go to learn about multiple service offerings that can make my business more successful. A consultative selling environment for multiple services will significantly increase the growth of the Software as a Service model. Businesses will be looking for a central destination where they can learn and purchase services that touch every aspect of their business. This aggregation platform will be a highly effective way for Software as a Service providers to expand their market reach. By aggregating services, you are creating “The Business in Box” which becomes very appealing to the channel. No longer do they have to go out to multiple providers to sell services, they have one solution that offers multiple products. As the channel adopts the aggregation platform, further market reach is obtained which should drive greater exposure and far greater sales.

With the market growth will come a need for the services to communicate between platforms. Businesses will want their CRM trading data with their digital marketing solution as they budget their marketing programs through their financial application. A middleware product that can exchange data across platforms will greatly increase the migration to Software as a Service. Not only will the service offerings greatly increase productivity, but the sharing of data will create a better managed environment which will drive greater efficiency. Salesforce.com is moving in this direction with their App Exchange program, but a broader solution is needed for services that are not associated with Salesforce. There are a number of great solutions out there that target one aspect of your business. A middleware product that creates a more robust solution across individual platforms will greatly increase the adoption of the Software as A Service model.

There are a great many models being explored today in the Software as a Service market, but I believe these will create the greatest impact. In the end, it is how meaningful the improvement is to the user experience that will create the biggest wave in growth.

Saturday, April 12, 2008

Site Design for Your Customer

Hopefully everyone has heard the adage “know your customers”. This saying predates the Internet but it especially applies to companies that utilize the web as a major component to their business. Let’s face it, the Internet created a marketplace that now allows consumers easy access to goods and services that were either very hard or impossible to find before the ‘90s. Everyone has heard of major online retailers, or e-tailers: eBay, Amazon, J.Crew, and Dell. For Joe and Jane consumer these retail sites, plus entertainment and banking fulfill 99% of their web needs.

However, many companies are utilizing the web to streamline interactions within their supply chain. These companies are the “man behind the man” or “woman behind the woman” or “woman behind the man” (I’ll stop now; I think you get the point). They are the manufacturers and distributors for the retailers we all know.

Yeah everyone wants their home page to be sexy and cool. For a large number of sites the objective is to provide wholesalers and distributors easy order and account management. It’s the productivity gains along with the timeliness and accuracy of processing the orders that provides the true ROI.

Many times these sites do not provide an optimal experience and this is a problem that is usually overlooked because it appears that all the orders are being placed. However, in reality the true reason the order was placed is because of the sheer will of individuals that place the order on the other end of the site. Do you really want the success of your business to be outside of your control? Yeah the order went through but maybe the employee on the other end really wanted to restock three SKUs not one.

To overcome this site design problem, first you need to determine if the site is for wholesalers or retail customers. If your site needs to serve both the wholesale and retail consumer, make sure you provide each “customer” with a site that fulfills their needs. Designing a site for wholesalers is completely different then creating a site for retail consumers. Making this separation will provide design clarity.

Second, start a dialog with the actual users on the other end of the site. Find out what they like and dislike about the site. Also, make sure not to overlook the physical location from where they access the site. You don’t want the site to rely on audio cues if the end users are accessing the site from a noise shop floor. Creating this dialog with your users can be achieved through numerous methodologies (surveys, field inspections, ethnographic studies, etc). Sometimes you can tease this information out via a few phone calls, but most of the time it requires a more scientific approach.

These simple principles will drive orders increase, efficiencies for you and your customers, and many times, build goodwill for your company.

Ty Allen
VP Product Development
Odigo

Tuesday, April 1, 2008

How do B2B Marketers take advantage of Social Networks?

Up to now, Social networks have predominantly focused on bringing consumers together in a social community. Social networks give people the ability to congregate around common needs, interests and lifestyles. It’s the closest thing to truly building a village of friends and support. So, where does this leave B2B marketers? Isn’t one of the greatest social verticals, business and customers? How can the B2B market get involved in Social Networking?

One way marketers can work with Social Networking sites is to get involved in the community. Social Networks are a great place to grow word of mouth, business development, PR, collaboration, and product feedback. One great benefit of these sites is the ability to create a two-way dialog. Jack Morton Worldwide concluded that word of mouth is the #1 influence on business purchase decisions and is best leveraged through face-to-face marketing efforts. B2B marketing can be limited and expensive. It's only natural that B2B marketers gravitate toward engaging their audience via an online community, keeping the people most important to them involved in relevant discussions. To be most effective, pick the Social Networking sites that best fit your product and service and join the communities. Expose your product and services to the community by opening up dialogues, writing blogs, and entrenching yourself in the community. Marketers should take the opportunity to create their own content for these sites. They should embrace negative comments about their brand, product, services, employees, business practices, etc., that is discovered on social networking sites. By honestly addressing each piece of negative content, explaining the steps being taken to fix or to improve, and doing so in a sensitive, factual, and non-promotional way, marketers can accomplish three important things: 1) they call their side of the story to the attention of their target community, 2) they demonstrate that they are human and are deserving of forgiveness and trust, and 3) they add neutral-to-positive content to the sites that contain negative criticism.(IProspect) Forrester Research sums it up neatly when it states, “To thrive in an era of Social Computing, companies must abandon top-down management and communication tactics, weave communities into their products and services, use employees and partners as marketers, and become part of a living fabric of brand loyalists.” As you build more content around your product and services, the greater exposure and awareness you will generate.

Branding is a key component to successful marketing strategies, but it can be expensive. An effective way to build brand is through Social Networks. MarketCharts conducted research and found that brands Adidas and Electronic Arts, which have run campaigns on MySpace, attributed more than 70% of their marketing return on investment to the "Momentum Effect" - a metric coined by Marketing Evolution to quantify the impact of a brand within a social network, going beyond traditional advertising impressions to encompass the "pass-along" power of consumer-to-consumer communication. The best way to drive this appeal is to create content that is interactive, awards prizes, and that is compelling. Use newsletters to keep content fresh and up to date. Create a reason for people to want to come back. This will drive people to spend more time in your social space where your objective is to drive brand.

Another growing trend in Social Networking is “applications” that provide a number of different ways to further communicate, participate, and enjoy the social networking scene. So, why can’t marketing applications be written that bring professionals and businesses together? Applications that can spotlight ideas, build brand, and further link the business community. How exciting would it be to create a brand application that gets adopted by many and provides marketers greater exposure and branding with every use. Somebody out there is developing these applications and they will be affective tool for marketers in the years to come.

In Summary, for Business-2-Business marketers to be effective they have to stay ahead of the trends. According to the Direct Marketing Association, by 2008 online marketing efforts will be the dominant media for business-to-business initiatives. Think about that: traditional direct mail, industry print, and events and promotions will take a back seat to more efficient and sophisticated online efforts. With the number of people using Social Networking sites, marketers in the B2B space are going to have to develop ways to take advantage of these communities. Online marketing is where dollars will be spent and discovering ways to capitalize on Social Networks will be large part of the strategy.

Saturday, March 29, 2008

Time to Sell SaaS and Managed Services

Technology Resellers need to change their thinking…


"This coming 'services wave' will be very disruptive…Services designed to scale to tens or hundreds of millions will dramatically change the nature and cost of solutions deliverable to enterprises or small businesses.”
--From an internal memo from Bill Gates, Microsoft Chairman, October 30, 2005


The Software as a Service (SaaS) and Managed Service Provider (MSP) movement is gaining customer attention and its adoption rate is increasing, forcing retailers, distributors and resellers (collectively referred to as “Resellers”) to determine how this new software delivery model will affect their business.


While SaaS and MSPs won't cut traditional “Resellers” out of the distribution chain, providers will need to adjust their sales, assortments and distribution platforms to take the greatest advantage of these emerging service platforms. This document explains the need for “Resellers” consider the introduction of said services in order to best serve the demands of their Small Business and SoHo customers.


It’s important to understand how far-reaching SaaS and managed services are. Many industry observers believe that SaaS will only appeal to small and medium-sized businesses (SMBs) that lack the money to afford traditional, on-premise enterprise applications or the staff to keep those applications up and running. They also believe that SaaS will only be adopted by larger enterprises to address non-mission-critical needs such as worker productivity and collaboration. Odigo Marketing believes these assumptions are wrong. Research indicates that business of all sizes are evaluating outsourced services as a fundamental component of their business infrastructure.

U.S. Reseller software sales on the decline / The need to adopt a SaaS and MSP Strategy to service the growing SMB / SoHo customer segment.

The continued growth of SaaS and MSP offerings will result in a significant decline in traditional software sales and the greatest impact will be felt by those “Resellers” that rely on traditional software sales as their primary source of revenue in the category. According to market research firm NPD, “U.S. retail software sales fell a year over year adjusted 12% in January 2008”.

In August, 2007, Gartner Group analysts conclude SaaS and MSP offerings are far more lucrative over traditional hard drive based software solutions: “Ease of use, rapid deployment, limited upfront investment in capital and staffing, plus a reduction in software management responsibility all make SaaS a desirable alternative to many on-premises solutions, and they will continue to act as drivers of growth.”


With a down trending economy, it’s reasonable to assume a spike in formation of small business and independent business contractors. Enterprise lay-offs continue to increase. Large enterprises will continue to seek outsourced labor to better manage operational overhead. Organizations of all sizes will continue the trend towards decentralization and smaller workgroups in order to leverage lower infrastructure costs and cut expenses.
Forrester estimates there are 28.6 million small businesses in the United States and expects double digit growth every year over the next five years.


Later on, we will share info supporting the overwhelming majority of Small & SoHo businesses procure their technology solutions through channels and “Resellers”. SaaS and MSP offerings will not replace all internal applications within these organizations but will represent an affordable, scalable option to more effectively run their business. Key Benefits are summarized below:

· Much easier to install & configure
· Easier to manage because of web/GUI based configuration interface
· Significant cost savings through reduced onsite management and maintenance
· Better customer service & productivity; virtual access with an online connection
· Scalable with continual stream of upgrades and service enhancements at low or NO cost
· Online and Offline access through the usage of a Smart Client


“SaaS adoption is highest in applications that support simplified, common business processes or large, distributed virtual workforce teams.” Sharon Metz, Gartner Research Director

A Shift in the Sales Support Model

Those Resellers offering Value Add Services such as Installation & Repair Support, will need to modify their view of future revenue opportunities. The focus should be on demonstrating how the customer can fully utilize SaaS and MSP offerings rather than how they can simply get it up and running. This means that traditional software salespeople who are accustomed to selling the technical features of software products to the IT or application development team within a customer organization must now focus their sales efforts on convincing the business decision maker that a solution can meet their needs.

Key SaaS and MSP Categories

SaaS and MSP offerings do not cover the entire spectrum of technology solutions however they are replacing core business applications previously found on hard drive based software. Key growth categories in which SaaS and MSP offerings are achieving significant market share include:

· CRM (customer relationship management)
· Digital Marketing (e-mail, text, SMS, Voice Mail, etc)
· Telecommunications (VoIP / Hosted IP)
· Web-Hosting / Web Site Management
· Payroll, Benefits and HR Applications
· Business Analytics and Surveys
· Intranet and Virtual Office Networking
· Web Marketing / Search Word Optimization
· Group Collaboration / Conferencing / Messaging
· eLearning
· Data Backup and Management


Revenue Stream beyond the initial transaction

Software as a Service and Managed Services are typically purchased on a subscription basis. Services can be purchased on monthly, quarterly, annually or greater basis. This flexibility affords the adoption of these services in those companies with the even smallest operating budgets. Scalable growth and expansion of the subscriber base offer even more sources of income to those Resellers adopting these solutions within their portfolio.

Technology solution resellers gain immediate benefit in offering their customers these services in a variety of ways. The most obvious is recurring revenue beyond the point of originating purchase. There are also complimentary hardware sales associated with the adoption of some services which offer immediate revenue recognition at the point of purchase.

For those Resellers that offer selection and convenience to their customers, the adoption of a robust SaaS and MSP assortment is critical to ongoing success in the technology realm. There is no inventory investment so the Gross Margin gained on these transactions represents the highest GMROI in the industry. Distribution can still be driven in-store (via Kiosk or Online Interface), through web-properties, call centers and outbound sales activities with Web-empowered sales associates.

In very simple terms, given the ever eroding margins in technology hardware and software categories, quite often in the single digits, a collective revenue share contribution equaling $10 million dollars from the reselling of SaaS / MSP offerings equates to the equivalent of a $100 million hardware / software vendor offering 10% gross margin on their products. If 20% of your technology revenues shift towards SaaS and MSP services, you will realize a 100% net gain in gross margin income.


With lower costs of access, expanding global presence in connectivity and the continued adoption of SaaS and MSP solutions by leading software developers such as Microsoft, Oracle, EMC, Cisco, Intuit and more, your Company will need to adopt a solid distribution and marketing strategy within this space or must wholly reconsider whether continued presence in offering technology solutions is justifiable.


Trends and Industry Statistics:


· A 2007 McKinsey & Co. survey found that 61% of North American CIOs intend to adopt one or more SaaS applications over the next year, compared with 38% in 2005.

· A Harris Study indicated that Small Business purchasing patterns include investments in the following business areas (percentage of respondents):
­ Marketing 75%
­ Sales 68%
­ Technology 61%
­ Web Site and Online Services 57%


· SoHo and Very Small Business owners source 58% of their technology purchases through the Retail channel and 27% via the Direct / Vendor Channel.

· “SMBs are a substantial market for channel partners as most technology products and brands that SMBs buy are based on recommendations from the channel,” says Avinash Arun, New York-based research analyst.

· According to Saugatuck Technology Inc., the percentage of SMB businesses with one or more SaaS applications in place rose from 9% in 2006 to 27% in 2007.

· According to Gartner Inc., the global SaaS market is expected to grow to $19.3 billion by 2011, tripling in size from the $6.3 billion it was in 2006. IDC predicts SaaS will be worth $10.7 billion by 2009.


ROI Assessment and Gross Margin Example in a “service over product” business model:


SaaS and Managed Services are not only designed to be scalable, easy to implement and low maintenance, they also offer lower aggregate end-user cost over traditional hardware-based solutions. For the reseller, the introduction of SaaS and Managed Services will likely lower your top line revenues however, their introduction will yield lower inventory costs as higher gross margins to your bottom line.

We conducted a side by side comparison to determine the cost savings associated with a purchase of a 5 user PBX bundle vs. the adoption of a 5 user Hosted PBX bundle over a five year period of time. We broke down costs into Capital Expenditures, Other Non-Recurring Expenditures, Recurring Expenditures and Total Expenditures. The results further validated the case for Hosted Services as a more profitable venture. The summary concluded:

Customer Costs: $29,478.40 for Hosted PBX vs $35,255.00 for Traditional PBX or 20% over the 5 year period

Gross Margins: 55% higher yield on Hosted Service

To calculate Gross Margins, we assume 25% reseller margins on Capital Expenditures, 40% reseller margins on Non-recurring Expenditures and 20% recurring revenue on subscription services (bandwidth and monthly fees). In our model, the reseller margin on the Hosted PBX
vs a Traditional PBX bundle is 55% greater in offering the Hosted PBX. The Gross Margin contribution on the Hosted PBX bundle is $6030 vs $3900 for the Traditional PBX.


How Odigo Marketing supports the Channel’s migration towards SaaS and MSP services

Odigo Marketing is an Atlanta-based Consulting, Marketing and Development firm focused on servicing the channels with technology solutions aimed at the SoHo / SMB market segment.

We have studied emerging trends of significant value to the channel as well as the migration and consumption patterns of the small business customer. We realize resellers’ core competencies and distribution platforms are largely based upon selling tangible goods and limited support services.

We’ve aligned ourselves with 15 best in class SaaS and MSP companies and have assembled an immediate “category killer” assortment exceeding over 20 such services. We’re under contract with these Companies and viewed as critical Partners in their Channel distribution strategy.

Our collective assortment offers recurring revenues to our Channel Partner up to 40% of the service bill; quite often lasting for the life of the customer or life of the business relationship.

MyBusinessMVP

Odigo Marketing wholly recognizesthe challenges Resellers face in adopting new distribution platforms and have created a unique, industry-first aggregation portal called MyBusinessMVP. MVP serves as a simple and turn-key manner in which to extend hosted services to your SoHo / SMB customers without radically altering your operational infrastructure or IT resources.

MyBusinessMVP is a Partner-branded aggregation portal or Managed Vendor Portal (MVP) designed to educate the customer about the varies services examined, articulate the value proposition and ROI in adopting such services and facilitate an ease of purchase environment common to the Reseller Channel. MyBusinessMVP adopts an “Orbitz-like” strategy where these best in breed service offerings are assembled in a central location offering value, convenience and functionality. We offer a consultative selling experience to those Channel environments offering little or no consultative support today.

MVP features include:

· Interactive demos and tutorials
· Centralized Billing and POS integration (with customization)
· Click to Talk / Click to Chat
· Real time service experience
· Bundles and Complimentary solution sets
· Channel Exclusive discounts and promotional offers

We welcome an opportunity to further explore the explosive growth of the SaaS and MSP market and evaluate how Odigo Marketing can assist your efforts to capitalize on this evolving and dynamic business environment in the most comprehensive and cost effective manner possible.

Saturday, March 15, 2008

Measuring Good Web Site Design

The technology of creating web sites has evolved dramatically over the past fifteen years since a small team of students at the University of Illinois at Urbana-Champaign created Mosaic, the first modern web browser. However, the art and science of understanding the performance of most sites is years behind this technology.

Surprisingly, almost weekly I hear from organizations both large and small that have no plan in place to measure changes to their web site. What is most disturbing is the large amount of money that is at stake. Many organizations that generate a significant percentage of their revenues from their web site do not have basic “e-commerce” measurements in place.


So how can an organization measure good web site design?


First, you do what every high school business class is teaches:

Create objectives for your __________. (you fill in the blank)

In this case, the blank is web site. Wow, earth shattering. These objectives (a.k.a. goals), should be straight forward and they do not have to be elaborate. So many times I have seen elaborate objectives that just confuse the topic. Do not get “wrapped around the axial” on the details of objectives. Think simple and high-level.

Some examples of site objectives:

  • Provide an easy way for site visitors to purchase my goods and services.
  • Provide customers with technical support.
  • Provide customers with an easy way to submit files for printing.

As you can see these are straight forward and you do not need the Rosetta stone to interpret them.


Second, create a methodology for measuring these objectives. This again, does not need to be ├╝ber elaborate. Here are a few rules to follow:
  • Be consistent. Create a method that can be replicated. Make sure the data is consistent.
  • Data driven. Tie the measurement to a source to data.
Examples:
    • Number of sales
    • Number of users viewing support documents
    • Customer survey data
    • Usability study data
    • A/B testing data
    • Multivariable testing data
  • Trend the measurements. This will help you track you progress over time.

Finally, take a little time to track the changes to your web site. Link your site changes to these measurements, a.k.a. metrics. This will give you hard data to support a change to the site. More importantly, this will give you an indication when a changed to the site has a negative impact. Typically, managers and executives change web sites to benefit their business. Without the proper web site measurements, many changes intended to help the business does the exact opposite.


Ty Allen
VP Product Development
Odigo



Wednesday, March 5, 2008

Why Channel Development

In a sales environment, buyers are reached at different times and in different ways. The idea that direct sales is your only avenue of reaching customers, building relationships, and driving sales is no longer true. Customers can be reached through many different channels while still preserving loyalty and brand. By developing the proper channels, you can reach more customers, gain more exposure, and ultimately drive more sales.

A true channel sales program is an extension of your current sales model. You want to establish a channel program that rewards, motivates, and supports your brand. Here is a list of effective ways to build your channel program:

• Establish a competitive reseller program
a. Commissions
b. Recurring revenue
c. Bounties
d. Exclusive Offers
• Develop Channels / Recruit resellers
• Prepare the proper reseller collateral
• Create reseller kits (sales sheets, product slicks, catalogs, reseller pricing distribution part numbers, contact information, reviews, etc.),
• Manage reseller database and Partner Relationship Management (PRM) software
• Invest in market development (MDF) and Co-op funds to increase channel sell-through.
• Education programs for your products
• Sales contests and rewards
• Create a Channel Management Team

It is also important to stress quality over quantity! An effective channel program is one that is manageable. The better you are able to manage your channels, the more effective the channels will be for you. Putting together a team that can help drive the channel and support their needs is essential to your success.

As your channels grow, your sales strategy may change. Your direct focus might be more vertical or heavily defined while your channels go after a broader reach of the market. An effective channel sales program gives you the freedom to test new strategies and go after new markets. Enabling you to further grow your business.