Skipping IT and the CIO
Rod Boothby of Innovation Creators has a typically thoughtful entry on the changing nature of software, in particular the selling of software to large enterprises. The rise of Software as a Service has profound implications for end-users and for IT departments.
The key to selling software and making money is to follow the “KISS” principle, and also keep it cheap, and very very easy to implement. In addition, as Rod notes, sell directly to end-users, not even to business units or to departments.
Why? Because large purchases of large functionality require large amounts of justification and, typically, large lead times and large business cases. And not to mention of course, the large implementation projects that accompany such purchases. Did I mention the key word “large”?
In many ways the traditional IT organization is still thinking of huge multi-million dollar ERP projects from the 80s and 90s. And the fear of failure that those days created has transformed most CIO/CTO types into very cautious cost and risk reducers.
Avoid the CTO or CIO: Today’s enterprise CTOs and CIOs are in the job of not getting fired. Many of them do not think in terms of both business risk and rewards. They are in a cost center. So they think about cost reduction and risk mitigation. Preferably total risk elimination. Cost is budget is power, so in reality, it isn’t such a big driver for many of them. If you do talk to a CTO or CIO, ask them what percentage of they spend in the last 12 months went to a new vendor with a new product. That is how much they are focused on innovation. My guess is that on average, it will be less than 5%.
Rod’s right. In my experience, it’s probably way less than 5%. But, end user departments are increasingly sophisticated about their IT needs and in some cases about the solutions available to them. So if you can convince even a small group of business users of the value of your software, and charge them a few dollars a month, they just might be inclined to give it a try. And, if your product is good, it catches on and spreads.
That’s why one of the precepts of the new software business is viral marketing and growth. Read more about that in part 2….