Business Strategy for Software Executives
November 28, 2005
Finding Success with Hybrid Models
Software vendors should deploy a hybrid model in order to ensure a successful transition to on-demand pricing.
By Timothy Campbell, Steelwedge Software
Venture capitalists and pundits are bullish about the potential of the on-demand model; in fact, many VCs now require that a company have an on-demand model before they consider making any investment in the company. As a result, CEOs are scrambling to develop an on demand model strategy to complement their traditional license model.
A pure on-demand model can be extraordinarily taxing, particularly during the first three to four years of a software company’s go-to-market phase. This is because time-to-cash is significantly longer in the on demand model, leading to higher cash burn rate issues. With the size of investment rounds from VCs getting smaller, such models become very difficult to sustain.
As a result, it is almost an imperative that software companies pursue a hybrid strategy, going to market with both on demand and license models, which provide the broader market access and appeal of the on demand model, while also delivering on the operational benefits of the license model.
After having been CEO or general manager of three on demand companies, I have learned something about what it takes to drive the hybrid strategy until a company reaches critical mass.
Taking Aim at India’s Success
India holds a strong lead as an offshoring destination. But dozens of other countries want a piece of the BPO pie. K. Yatish Rajawat outlines the new initiatives offered by several nations to attract new offshoring contracts in this week’s post to the SandHill.com Blog on Offshoring.
Back to the B2B Basics
Positioning of enterprise software products requires a thorough understanding of customers, competition and channel. Lawson Abinanti runs through the marketing basics in this week’s post to the Sales and Marketing topic of the SandHill.com Blog.
Share your insight on the software business. Email email@example.com with your submissions to the SandHill.com Blog.
Get Ready for Software 2006
Join 2,500 of your fellow software executives at Software 2006, April 4-5 at the Santa Clara Convention Center. An impressive set of industry leaders tops the sponsor list, including Microsoft, Oracle, SAP, Symantec, EMC and TCS. Register now to qualify for the Early Bird discount and bring 2 colleagues at no extra charge. Find out more at www.software2006.com.
Learn Strategy from Global Giants
The world’s biggest companies are fighting complexity — and winning. Read what your company can learn about focusing on productivity and leveraging assets in Strategy in an Era of Global Giants from The McKinsey Quarterly.
A new arrangement with The McKinsey Quarterly means readers can access premium stories about issues impacting software business strategy via SandHill.com. Readers simply complete a one-time, free registration on McKinsey’s site to access the article.
Don’t miss last week’s article from The Quarterly, Transforming Sales & Service — how to differentiate service levels by segmenting customers according to their interaction requirements. Read more on our Insight page.
Poll: NT Servers Up
IDC says third quarter server
market growth hit 8.1 percent — exceeding
analyst expectations. For the first time, Windows NT accounted for
more server shipments than any other operating system. What does
this server growth mean
for software makers?
Last week, SandHill.com visitors speculated about whether what Q3
earnings mean for year-end performance of software companies.
More at SandHill.com:
America's response to offshoring? Automation.
CoMeT Solutions receives $3.5 million.
SAP acquires retail solutions vendor Khimetrics.
Charles Mauzy named president of Digital Railroad.
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