Wednesday, September 10, 2008

The Top Trends in the Software Industry

It's after Labor Day, so we're in full swing now. Aside from hitting the phones and banging out emails, blog posts and podcasts, the event and trade show fall season is filling up my calendar. Good networking isn't hard to find, that's for sure. I posted earlier about the AMA's Mobile Marketing event. Now I'd like to share my notes from last Friday morning's Potomac Tech Wire's event on The Future of Software held at the Ritz in Tysons.

There were two panels- one, software company executives and the other, venture capitalists. I'll list the panelists for each and bullet the main talking points.

Panel One-

Andre Boivert, Chairman, Zenoss and Infobright

Todd Bramblett, CEO, LeverPoint

Greg Gershman, VP Search and Engineering, Odeo

Barg Upender, President, Intridea

Panel Two-

Carter Griffin, Partner, Updata Partners

Harry Gruner, General Partner, JMI Equity

Don Rainey, General Partner, Grotech Ventures

Janet Yang, principal, Novak Biddle Venture Partners

Paul Sherman was the charming moderator, as usual for PTW sponsored events, for both panels.

The panels had a lot to say about the relative strengths and weaknesses of the SaaS versus the traditional enterprise software package, the open source model versus the proprietary model, the ad-supported versus paid license model, and how each kind fits into the needs of different customers. The software market is fracturing and how that affects how companies buy and how VC's make investments. Today's software market is different than in the past because:
  • Users are sophisticated now. They know about the downside of the traditional software and want better interfaces, slicker graphics, better speed, easier implementation, etc.
  • Users are buying software. They are not being sold. Buyers across the enterprise are educated on quality and functionality.
The old big fat Fortune 500 software sale is dying. Spending is fractured as departments, offices buy their own CRM packages without say so from the corporate IT department

Coding used to be difficult. As software development packages get easier to use (Ruby on Rails as an example) there is a lower barrier to entry for new software companies. The time to value for the customer becomes more of a differentiator. That requires domain expertise. And a focus on execution.

New software has a hard time differentiating itself- it has to focus on vertical, or niche, markets and show a deep understanding of that market. Don't bother trying to differentiate. Focus on intangible assets. For example:
  • the old sales model for software was extremely labor intensive
  • the new open source model keeps the sales cost low
  • users try it for free, then pay for additional levels of sophistication
  • aim to convert 1% of downloads
  • users only contact company when they've reached the point of conviction and are ready to pay
Execution is key- can you ramp up users quickly and do you have the ability to scale

What models are working, given the commoditization of software?
  • buyers are out of the control of the IT departments
  • cloud computing/SaaS allow software companies to sell directly to operational units at a low price point ($25-50k) without IT department involvement
  • the SaaS model is a small (1-2%) of the whole market but is growing fast
  • especially fast penetration of the SMB market
How are open source software and SaaS interacting?
  • open source is allowing sophisticated developers to execute custom projects quickly and cheaper
  • SaaS is bringing turnkey, easy to use and implement applications to organizations that have had the resources in the past- "the local church group using Google Calendar"
  • startups can have huge scale from day one- from a investing perspective cloud computing plus SaaS equals low initial capital expenditures to get alpha and beta versions built
  • the middle area is getting squeezed
Were these guys (and gals) full of crap? Are you a software marketer or salesperson- are you seeing these trends?

Bears Fight Song

Oh, and the Bears beat the Colts Sunday night. For those of you who need to brush up on the Bear's fight sung by a opera tenor.

Bear down, Chicago Bears, make every play clear the way to victory;
Bear down, Chicago Bears, put up a fight with a might so fearlessly.
We'll never forget the way you thrilled the nation with your T-formation.
Bear down, Chicago Bears, and let them know why you're wearing the crown.
You're the pride and joy of Illinois, Chicago Bears, bear down.

Tuesday, September 09, 2008

Notes from AMA Mobile Marketing Event

I attended an interesting and informative event at NPR's office last Thursday night on mobile marketing put together by the DC chapter of the American Marketing Association. I've talked a lot about mobile marketing on this blog over the years.

Just my two cents: it's been a long time coming, but I think the promise of (at least non-Location Based Services (LBS)) mobile marketing is at hand.

The event had a strong, experienced panel who confirmed a lot of what I already knew about marketing on mobile devices but had a lot of new compelling information. Here are the panelists:

DP Venkatesh, CEO, mPortal

Mary Gramaglia, Director of Sales, Sybase 365

Michael Lieberman, Mobile Integration Director, Hyperfactory

Demian Perry, Product Manager Content Development and Mobile Operations, NPR

Chris Parandian, Founder, Tin Can Communications

(Thanks to the ever-charming Old Town Alexandria resident, Limor Shafman, for moderating the panel!!)

The topics of discussion ranged from extremely tactical to very high level. Here are some of the takeaways...

  1. Mobile marketing is a unique medium due to the intimate and individual nature of the interaction. People don't share phones so their handheld is an extension of the person and his/her personality. When marketing through mobile, that relationship must be respected.
  2. Ask for help. Mobile marketing is complex and cannot be planned in a silo without reference to your other branding, marketing and PR efforts. Like all media, mobile marketing has strengths and weaknesses- plan for both. Mobile is digital and can be tracked like any digital campaign. But be sure mobile targets your audience and make sure your message is relevant for that audience.
  3. Don't distract, annoy, bore, confuse or attempt to hold your audience hostage.
  4. Mobile marketing is about engagement rather than reach. Always include a call to action to further interact with you. Mobile marketing is, at its core, a social medium, akin to social networking. Give people a chance to participate and express themselves. Don't blast a brand message to 100,000 people.
  5. Go to the Mobile Marketing Association and read their marketing guidelines.

Do you think the panel left anything out? Should marketers think about mobile marketing in a different way? Or ignore it?

Backlash Against Green Hype Machine?

I don't have any idea when or if a backlash against the current green orthodoxy will start but two articles on caught my eye. Neither article dismisses or denies the problems that the green movement addresses, but they both poke holes in the fear mongering and simplistic solutions offered to the public. As an agency serving clients with a green message, this is something to keep on the radar screen.

It's Time To Turn Down the Heat
By Gregg Easterbrook
Artificial climate change is real; even skeptics now call the danger scientifically proven. But Friedman, Al Gore, James Hansen of NASA, and others present climate change as some kind of super-ultra emergency. Global warming is a problem, one that must be managed via greenhouse-gas restrictions and a weaning away from fossil fuels. But in a world of poverty, disease, dictatorships, terrorism, nuclear proliferation, lack of girls' education, and more than 1 billion people without cleaning drinking water or electricity—climate change barely makes the Problem Top 10. Besides, the solution can't be a panicked pullback from the present economic system, though perhaps that system can be amended over the long term. Economic growth is needed to allow the world to afford environmental protection. At least for the next few decades, headlong resource consumption will be necessary to generate the capital that will pay for a clean-energy infrastructure.

Rusted Roots
By James E. McWilliams
...One issue frequently overlooked in the rush to embrace organic agriculture is the prevalence of excess arsenic, lead, cadmium, nickel, mercury, copper, and zinc in organic soil. Soil ecologists and environmentalists—and, to some extent, the concerned public—have known for more than a century that the synthetic pesticides of conventional farming leave heavy metals in the ground. But the fact that you'll find the same toxins in organic soil has been something of a dirty little secret.

Nothing ever continues in a straight line forever, so I'm sure that an eventual rise in measured criticism will cause the Greens, as a political and cultural group, to lose the current hollowed status they currently hold. These two articles might be a couple of the early data points that support that view.

What do you think? Am I completely off my rocker?