Transcript L02 Software Vendor Business

The Software Vendor Business Environment
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The Software Vendor’s Business
• Make money from
– Providing software and related services
• Software
– Must satisfy a need or a want in a market that is
• Big enough
• Is willing to pay enough
to pay the costs + re-invest + profit
– Licensed (not sold) + maintenance
• Bulk discounts
• Negotiable prices
– Follow-on revenues are key
• Maintenance, Upgrades, Consulting, New related products, ...
• Software is quite “sticky”
– Cost of acquisition
– Need to ensure sold software is used
» Not “shelfware”
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Software Releases
• Releases are the lifeblood of the software
vendor company.
– Must get an initial release of a new product
out the door.
• Must support and maintain that release.
• Must market and sell it
– Must get new feature releases out the door on
a regular schedule
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Software Vendor Structure
Shareholders
Board of Directors
Executive Team
Chief Executive
Marketing
•
Sales
Client Services
Software Development
Finance/Administration
Shareholders
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–
–
–
Owners of the company.
All profit and value increase accrue to them
They elect the Board
True for publicly traded or privately traded companies
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Software Vendor Structure
Shareholders
Board of Directors
Executive Team
Chief Executive
Marketing
•
Sales
Client Services
Software Development
Finance/Administration
Board of Directors
–
–
–
–
Represent the shareholder’s interests
They appoint the officers of the company
Will advise the CEO
Responsible for company acting lawfully
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Software Vendor Structure
Shareholders
Board of Directors
Executive Team
Chief Executive
Marketing
•
Sales
Client Services
Software Development
Finance/Administration
Chief Executive Officer
– Appointed by the Board
– In charge of running the company day-to-day
• By coordinating the activities of the Executive Team
– Commits to financial targets (revenue growth / profitability)
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Software Vendor Structure
Shareholders
Board of Directors
Executive Team
Chief Executive
Marketing
Sales
Client Services
Software Development
Finance/Administration
• Executive Team
–
–
–
–
VP’s and “C-Level” officers hired and assembled by the CEO
In charge of running the company day-to-day
Meet regularly to coordinate activities and to set strategy
Functional responsibilities + corporate responsibilities
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Marketing
Marketing
Product Management
Marketing Communications
Business Development
• Product Management
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–
Defining what products/services the company will sell at what price
Preparing collateral materials for partners and sales
Coordinate the release activities
Key area
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Marketing
Marketing
Product Management
Marketing Communications
Business Development
• Marcomm
– Communicating with the external world
– Advertising, press releases, - generate “buzz”
– Experts not at product (see prod mgmt) but at knowing how to reach
people with a message
– Lead generation to feed sales pipeline
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Marketing
Marketing
Product Management
Marketing Communications
Business Development
• BusDev
–
–
–
–
Developing new business opportunities
New channels to market
New geographies
New partnerships
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Shareholders
Board of Directors
Executive Team
Chief Executive
Marketing
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Sales
Client Services
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Software Development
Finance/Administration
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Sales
• Responsible for achieving the revenue number.
• Sales models:
– High-level direct sales
• Identify decision makers with budget, chase them down, negotiate terms,
close
– Dialing-for-dollars
• Dial out to big lists assembled by marketing
– Channel sales
• Sell indirectly via other organizations
• Paid via base + commission
– May not be profit based
– Therefore need strong sales management
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Sales Process
• Sales “pipeline” or “funnel”,
E.G.,
–
–
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Leads
Qualified opportunities
Short-listed
In negotiations
Close
• Sales management maintains pipeline
– Attaches estimated close date, sale value, and probability of close to
predict future revenues
– Keeps the pipeline filled
• Uses a CRM system
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Shareholders
Board of Directors
Executive Team
Chief Executive
Marketing
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Sales
Client Services
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Software Development
Finance/Administration
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Client Services
• Pre-sales support
– Technical help for the sales group
– Implementation project planning pre-sales
• Onboarding / Implementation
– Ensuring a customer starts using the software
• Account Management
– Ensuring customers are happy
– Mining to see if they need additional software/services
• Customer Support
– Help desk
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Shareholders
Board of Directors
Executive Team
Chief Executive
Marketing
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Sales
Client Services
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Software Development
Finance/Administration
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Finance & Admin
•
•
The mechanics of establishing and reporting against budgets
Spending controls
– Purchase requisitions. Purchase orders, signing limits, ...
•
•
Taxes
Financing
– Leasing arrangements
– Cash management
– Investments
•
Funding
– IPO’s
– Private investments
– Investor relations
•
Administration
– Human resources
– Office management
– Internal IT
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Shareholders
Board of Directors
Executive Team
Chief Executive
Marketing
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Sales
Client Services
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Software Development
Finance/Administration
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