The success of on demand delivery model as demonstrated largely by the success (so far) of Sales Force (http://www.salesforce.com/) shows that complex business software offerings can be made to businesses without having to ever visit the customer site. In other words, you can almost do away with the IT infrastructure in terms of man, machine resources that are traditionally required for on-premise installations. Of course, there are downsides. The biggest being the reluctance of businesses to host their data offsite.
However, sales force has started a trend that offers a viable deployment model. A model that is attracting hordes of NEW customers.
Are the cash registers ringing again for business software vendors with the new customer base that is up for grabs? Does this sound like a new growth market that ERP vendors have been looking for?
A note of caution: Sales Force offers a small piece of functionality as compared to the ERP. Does then the Sale Force model scale to the ERP world?
-amit
Saturday, July 7, 2007
Monday, June 18, 2007
Drivers of Change...
Back to the basics...
The basic fundamentals which drive all businesses are also driving this change - the search for sustainable growth. The large ERP vendors that have traditionally served the large corporations are seeing a slow down in their revenue streams. It doesnt take much analysis to say that this market segment cannot ensure sustainable growth over the next decade. New markets must be found.
Arguably, two factors are enabling the ERP vendors to offer their products to the SMB sector and thereby helping them define the new markets:
The basic fundamentals which drive all businesses are also driving this change - the search for sustainable growth. The large ERP vendors that have traditionally served the large corporations are seeing a slow down in their revenue streams. It doesnt take much analysis to say that this market segment cannot ensure sustainable growth over the next decade. New markets must be found.
Arguably, two factors are enabling the ERP vendors to offer their products to the SMB sector and thereby helping them define the new markets:
- Service Oriented Architecture (lovingly called SOA), and
- an increasing acceptance of on-demand delivery models.
The together can potentially prove to be the holy grail for the customers and the ERP vendors alike.
The race for market share [of small and medium sized businesses] is on.
For now, the target is midmarket but is small business far behind?
-amit
Saturday, June 16, 2007
Watershed decade of the 21st century...
... So many questions and so few (and disparate) answers.
The theme for small business software landscape has been - DIVERSITY. Desktop applications , homegrown software applications, excel and such dot the small business landscape. What this means is that the small business software landscape is NOT as organized or well defined as that for large corporations. For large corporations the theme has (typically) been ERP.
Rarely do small businesses have a "strategy" or even a well thought out plan for their software needs. This is understandable becasue they are busy running their day to day operations and making sure that things run smoothly. They do not have the manpower & other resources to dedicate to such analysis & planning. Forget the classic implementation for the moment. In contrast large organizations have scores of people examining every aspect of its software needs including the CIO and (implicitly) the CFO.
What are the small business people missing that large corporation are gaining upon? What can a small business do? Is this a case of missed opportunities for a small business? You bet it is...and we will show how things are changing to the advantage of a small business...and also what the software vendors must do to help the small business in this first decade of the 21st century...
-amit
The theme for small business software landscape has been - DIVERSITY. Desktop applications , homegrown software applications, excel and such dot the small business landscape. What this means is that the small business software landscape is NOT as organized or well defined as that for large corporations. For large corporations the theme has (typically) been ERP.
Rarely do small businesses have a "strategy" or even a well thought out plan for their software needs. This is understandable becasue they are busy running their day to day operations and making sure that things run smoothly. They do not have the manpower & other resources to dedicate to such analysis & planning. Forget the classic implementation for the moment. In contrast large organizations have scores of people examining every aspect of its software needs including the CIO and (implicitly) the CFO.
What are the small business people missing that large corporation are gaining upon? What can a small business do? Is this a case of missed opportunities for a small business? You bet it is...and we will show how things are changing to the advantage of a small business...and also what the software vendors must do to help the small business in this first decade of the 21st century...
-amit
Thursday, June 7, 2007
Business Fundementals...
Cash generation, growth, margin, velocity, and customers are all key parameters that determine the performance of a business. Dr. Ram Charan discusses these extensively in his book “What does the CEO want you to know” (http://www.ramcharan.com/).
All of the metrics described above are measurable and they provide a ton of information about the health of a company. The question is: Is your small businesses able to measure these accurately and derive inferences that can lead to short term and strategic benefits?
Keeping a close tab on what dollars are coming in and going out is one of key tenets of maintaining a good cash flow. Synchronizing accounts payable and receivable, identifying late paying customer and promoting and retaining profitable customers are some ways in which cash generation can be improved to healthy levels. What is the inventory position, how quickly the inventory is turning-over, are the margins too high or too low. What are the fast moving products. How are we doing with respect to customer retention? Are we acquiring new customers and increasing our market share? Or are we stagnating?
A small business must be able to answer these basic questions for itself. And this is just the tip of the iceberg...
-amit
All of the metrics described above are measurable and they provide a ton of information about the health of a company. The question is: Is your small businesses able to measure these accurately and derive inferences that can lead to short term and strategic benefits?
Keeping a close tab on what dollars are coming in and going out is one of key tenets of maintaining a good cash flow. Synchronizing accounts payable and receivable, identifying late paying customer and promoting and retaining profitable customers are some ways in which cash generation can be improved to healthy levels. What is the inventory position, how quickly the inventory is turning-over, are the margins too high or too low. What are the fast moving products. How are we doing with respect to customer retention? Are we acquiring new customers and increasing our market share? Or are we stagnating?
A small business must be able to answer these basic questions for itself. And this is just the tip of the iceberg...
-amit
Saturday, May 19, 2007
Vendor Dilema...
In the previous blog entry, I asserted that no single business (/application) software vendor dominates the SMB market. It goes without saying that the race for market share is on. Established and new vendors are trying hard to find the right business model to serve this market sector. So the interesting question at this point is:
What should a software vendor do in order to maximize their market share?
One way to approach to this will be to ask the SMB owners what they want from their business software. If any SMB owners are listenting pl pitch in. Otherwise,
In my estimation, one sure thing is that the requirements will differ across verticals and perhaps also across geographical regions (!). The other thing that is also sure is that there is functionality that is common across all SMBs.
Is this a good assumption to start? Any takers.
In the next few blog entries, I will focus on what I think is important for a SMB.
-amit
What should a software vendor do in order to maximize their market share?
One way to approach to this will be to ask the SMB owners what they want from their business software. If any SMB owners are listenting pl pitch in. Otherwise,
In my estimation, one sure thing is that the requirements will differ across verticals and perhaps also across geographical regions (!). The other thing that is also sure is that there is functionality that is common across all SMBs.
Is this a good assumption to start? Any takers.
In the next few blog entries, I will focus on what I think is important for a SMB.
-amit
Thursday, May 17, 2007
Theme: "Trends in Business Software for Small Businesses"
No single software vendor dominates the business software market for the small to medium businesses (SMBs). There are many vendors serving this market. This is in stark contrast to the same market for the large corporations. The market of large corporations is dominated by a handful of companies. This is especially so after the market consolidation initiated by Oracle.
In this blog, we discuss questions, issues surrounding the business software market for the SMB. Numerous questions come to mind:
- What would it take for a software vendor to gain entry and dominate the lucarative market of business software for SMB?
- What are the characteristics and demographics of the SMB market?
- What are the functional needs of this SMB market?
- What are the needs of a SMB owner?
- What are the pain points for a SMB owner?
- Which delivery model will be successful - desktop based, Saas, or something entirely different like the open source model?
- Which vendors will gain prominence in this market?
- What should be the game plan for new vendors entering this market?
- Should the vendor have a solution per vertical or is it possible to provide a lowest common denominator solution?
- Would the market segment be ever dominated by a few vendors or will it always be served by a fragmented set of vendors?
- ...
We invite small business owners, recognized SMB experts, and all others interested in the topic to participate and shed light on the dynamics of this multi-billion dollar market segment that is only beginning to gain prominence among the elite of the business software vendor community.
-amit
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