March 2009


I’ve been following this company dimdim for sometime now and it is getting better and better. I wrote a post earlier where I was suggesting that they should position themselves as a Live eLearning Platform with the features that they have. They have gone a step further by providing integration with Moodle, an Open Source Learning Management System. Moodle and dimdim dancing together will be irresistable. The reviews that I read about dimdim’s integration with moodle are also excellent.

I also see a number of projects displayed in sites like rent-a-coder, getafreelancer etc. where the requirements are integration of Moodle and Dimdim, Moodle+Dimdim+Joomla etc. There definitely seems to be a active community that has been positioning Dimdim pretty well. I would love to hear and write about the initiatives that dimdim has been taking with respect to their positioning.

Essentially, at this rate dimdim would become a necessary backbone of any unified communication strategy of enterprises.

Advertisements

Selling a product or a service becomes very challenging when the forces of commoditization are at play. It essentially boils down to cost play and the ones with a lower cost most likely will win the race.  I would like to take the IT services industry as an example.  I have written a post in my company blog and it can be viewed by clicking here

Though marketing and sales are pursuing common objectives, the thread remains that they don’t get along well with each other. It necessarily needs to be aligned and have to progress forward if the organization has to grow. I have listed some of the steps that can be taken towards aligning these two functions in my company blog. You can read that by clicking here.

There have been various industry reports that keeps suggesting that most companies will move towards SaaS as the customers want them more than the willingness of ISVs to offer their product as SaaS. But then, not many are offering SaaS and the possible reasons why they aren’t offering is what is covered in this post.

  • Most enterprise software vendors don’t want to move their offering to SaaS as the sales cycle is too long and the buyers aren’t going to get convinced easily on the service levels
  • Entry barriers for the software vendor is quite high, and some statistics that I pulled from the web suggest the same. They are as follows: It takes 1.6x longer to get liquid; it needs 3.65 x more capital, it takes 1.75x more revenue to hit profitability
  • Every time a vendor adds a customer, it costs them more cash that quarter that is a result of the customer acquisition, because of huge infrastructure investments. When you are looking at huge number of customers and the cash requirement multiplies accordingly
  • Sales and marketing expenses are too high for them to acquire customers and service levels also need to be on the dot to retain them. Only then, they would ever achieve profitability
  • SaaS business is an investor’s nightmare for liquidity takes much longer than expected and the risks are multi-fold in comparison to license revenue business models. Additionally, even if you grow at xx% tending towards hundred quarter-on-quarter, it still doesn’t give you the profitability as your infrastructure expenses also grow along with it
  • It is less likely to prove to your investors that your customers will achieve profitability; you will be able to retain close to 100% of the customers that you acquire; and your market isn’t saturated
  • Movement from on-premise model to on-demand model is all the more complicated, for most companies that contemplate that are already profitable and they wouldn’t want to risk the high-cost entry into SaaS
  • If you are looking at going the IPO route, then the revenues that you need to garner will be far higher to support that move and the best possible route that SaaS companies will look at will be the acquisition route. This effectively means that the buyers are going to be even more wary in them opting for a SaaS solution

Considering all of this and the fact that they have to look at the feasibility of offering SaaS, it is going to be really hard for an ISV to move the SaaS way.

I have been having a number of discussions with some business incubators and the companies that have been incubated by them. General feeling in this community is that they don’t need marketing and they are not at a stage where they have to look at marketing. Their model is, let the technology evolve and then we will hire a PR and Advertising agency and go for a big-bang launch.

I wrote this post in my company’s blog and you can read it by clicking here

Some pointers on the situation:

  • No salary hikes for the next couple of years
  • Companies are revisiting their variable pay components, where 50% of it would be linked to the organizations’ performance as opposed to individual’s performances
  • The word ‘subsidy’ is considered bad in their lexicon now
  • Subsidy in transportation has got to go; one cannot look at 8 hour work-days and should be prepared for longer hours
  • Subsidy in food goes out as well
  • Consider yourself lucky if you are still on the job and pray to god that you will continue in your job for the next couple of years
  • All low performing employees and the fresh recruits, you better watch out for alternate careers
  • Mandate has been send to many TLs, PLs and above in the organization that they need to reduce the workforce by at least 15% q-o-q. Essentially by the end of the first year, you will have close to about 40% to 50% of the employees out of your organization
  • This is a completely market driven and market dependent industry segment; margins will come under huge pressures because of the discounting and leveraging that these companies would have done keeping in mind their future earnings
  • There is an ecosystem of dependency on this industry and each of it will come under heavy pressure due to this fall-off. Existing suppliers and vendors to these firms will have to take a cut in their business as well as margins.  Realty sector will be under huge pressure as the occupancy level will decrease. Financial insititutions will have to play the role of adopting a win-win solution. 
  • Employee dependent ecosystem will be real-estate, automobiles, financial services, and lifestyle services
  • This can well be a blessing in disguise that this country was looking forward to, for far too many talents are burried in these organizations doing dead-end and run-of-the-mill jobs. This is time for them to reflect and positively contribute to innovation and new business models than providing arbitrage services to the not-so-intelligent customers in the developed economies.
  • Outsourcing really has been the boon and bane of India, for it deprived the intelligent ones from contributing to the society in a more meaningful way
  • The sheen is getting lost on this segment; they are not able to run the gravy train continuously as the market realities are governing their growth and projections

Guess I covered quite  a few and if I can think of anything else, will contribute in subsequent posts.

B2B Marketing Essentials

B2B Marketing Essentials

This is the paper that I wrote along with my colleague Satish and it is available as a free download. All you have to do is just click on the above image. Let me know what you think of the paper.

Next Page »