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April 2012

Pigs Don’t Fly – But What About Elephant’s in the Cloud?

Flying pigMy apologies being a bit late getting a blog posting out this week.  I have been busy pulling together several demos of software partner apps from the Autodesk Exchange Apps store to present at Autodesk’s upcoming Technical Academy (in Dallas in just over one week).  My doing software partner app demos in front of what could be near two hundred “professional” demo jocks and jockettes (all Application Engineers working for Autodesk and Autodesk Authorized Resellers) has me scrambling to not look foolish.  Though I am pretty good showing off AutoCAD (if I may say so myself), showing off software partner apps for Autodesk Inventor, Revit and Civil 3D, products I seldom touch, and all in one 90 minute class, is a real handful.  I may even demo a software partner app for Autodesk Maya – a too cool and entertaining partner app and demo that has me speaking into my computer microphone with a character then lip synching in near real time. But I’ve never touched Maya before – and of course that means I have a bit of thrashing in front of me as I learn Maya basics.

Of course I need to show the Application Engineers a few partner Cloud and Mobile apps too. 

See my problem? 

All this has me writing my weekly blog entry on a Friday evening.  Lucky for me I have a great team “hand feeding” me this cool – and in most cases free to our customers - software partner technology! 

The Opportunity to Dance in the Cloud

The design and engineering software (and now web services) industry is still grappling with how to best leverage the Cloud – from the basics of what you can do with Cloud technology to what the future ”killer web services” will be for design and engineering customers. Yes this is already old hat in some industries – consumer, ERP, and more – but graphics and processor heavy design and engineering are coming late to this party.

Because of the historically “heavy” nature of design and engineering software solutions, the elephants are not of one mind – which is a direct reflection of their customers being unsure too.  Some of the elephants get it and some say they get it – but not all have fully embraced the Cloud (something about the inertia of large organizations).

This is understandable when there is a major industry shift – not along just one axis – like price performance – but along two axis at the same time – price performance and collaboration (how designs are communicated and shared).

Confusing things are industry pundits who at one time where thought leaders – but many of which are also less then sure the role of the Cloud will play.  They give elephants plenty of excuses to wait or move slow – or for some of the elephant’s employee’s to drag their feet while others are pursuing dramatic change.

Have no doubt, the Cloud creates a once in a decade (or so) great opportunity for small start-up software developers to innovate – and position themselves for acquisition by an elephant struggling with the difficulty of driving change from within.  There is no faster way for an elephant to accelerate change within their organization then to bring in new people, new thinking, and new approaches through acquisition.  Are you pursuing this once in a decade technology shift (PC in 1977, Internet in 1995, and now the Cloud in say 2007) – or are you still investing most of your time, money and efforts in desktop solutions?  There is nothing wrong with desktop solutions - but it’s not where the big opportunity is to create big value in a short period of time (whatever you think of Facebook’s recent purchase of Instagram for near a billion dollars, even if Instagram created ten million dollars of value in their two years of existence, that’s a lot of value creation in a short time).

FlyingelephantUnsure?  I have two boys in University.  Should I advise them to pursue a career in desktop software – or in Cloud and Mobile based solutions?  Where would you advise your children (if you have them) to pursue a career?   

Have you noticed the Cloud and Mobile based technologies Autodesk has acquired in just the last year?  Horizontal Systems, Instructables, Pixlr, and more.

Lots of opportunities for innovative software developers to create, and monetize, great value by dancing with the elephants(s) in the Cloud. 


Sales Channels – And Can the Elephant Help? (Part 2 – Marketing Driven Sales a la the Web)

So in my last blog posting we looked at Selling Driven Sales – where sales growth comes primarily from increasing investments in Selling – including “Direct 1 to 1” and Indirect 1 to 1 (Value Added Resellers).  Selling Driven Sales typically being products with prices north of US$ 3,000 - where one can make money with high cost high touch one on one sales (yes this price point varies by country – and can be quite lower in the BRICs). Now let’s take a look at Marketing Driven Sales – where sales growth comes primarily from increased marketing investments – and where products typically sell for well under US$ 1,000.  [What happens to products that sell in the “no man’s land of US$ 1,000 to US$ 3,000, that’s a story for another day]. Marketing Driven Sales mostly being products where customers sell themselves by reading marketing and social/community information (Word of Mouth).

  • Direct 1 to Many (your web site)
  • Many to Many (app store)

 Marketing Driven Sales

 Direct 1 to Many (Your Web Site)

Long ago in what feels like a faraway place, they called Marketing Driven Sales was primarily about advertising – whether in a magazine, on TV or US Mail.  Today it’s all about the Web. One markets ones solutions direct to users through mass emails, web banners (ads), Google Ad Words, and “working” the Social and Community sites (Forums, Blogs, Facebook and the sort; modern “Word of Mouth”).  You get the customer to your website where they can learn in just a few minutes if you have a solution to their problem.  Needs to be a quick, easy and obvious problem – and a quick, easy, and obvious solution. You have a one paragraph read to hook them, maybe another ten minute read to close them – with links for the still unsure to Social and Community web sites that praise your solution (more Word of Mouth) - and they purchase.  Though this was the prominent Marketing Driven Sales method for software companies to take low priced apps to market for the last 15 years – as of late its fading as users increasingly look to “app stores” first.  More on app stores in a minute.  How can the elephant help you develop your Direct 1 to Many sales through your web site?  Many elephants have on-line “third party solution catalogs” their customers browse looking for solutions – and search engines frequently find too.  For small software companies with a handful of employees, getting a few new customer leads per week through the low or no cost elephant software solutions catalog is cheap and easy marketing.  For a large software developer, that needs hundreds of new customer leads per week to feed their Marketing Driven Sales pipeline, these elephant software solutions catalogs “don’t move the marketing needle” – so are more “on their own” driving prospect traffic to their web site.

Direct Many to Many (app store)

Direct Many to Many sales are unique to the web and really unique to industry leading elephants that can create huge customer traffic – folks like Amazon, Apple’s App Store, Google’s Android Marketplace, and eBay.  Like the aforementioned Direct 1 to Many Marketing Driven Sales model, this is about products that can be sold quickly through a short description and maybe a wee bit of Social/Community support.  App store Marketing Driven Sales have a unique advantage over Direct 1 to Many  Marketing Driven Sales in that the “host” is taking some responsibility (explicit or implicit) for the trustworthiness of you – the solution developer. Some prospects that are just not comfortable buying from you directly through your web site – will be quite comfortable purchasing through a host app store – a store they have used several times already with good success.  If the elephant you are or considering supporting has an app store – you also have much easier access to their customers - potentially very large numbers of their customers (why all those developers have apps in Apple’s App Store).  This is also potentially a more qualified audience then you can find through web banner advertising – and lower cost than Google’s Ad Words.  An elephant’s app store gives you the ability to leverage the customer’s trust in the elephant to get a prospect to make that first “leap of faith” purchase from you.  So if your elephant has an apps store, and your solutions can be sold through marketing, use it. 

On a side note, even if you have pricier more complex 1 on 1 Direct and Indirect Sales Driven Sales, you can still use the elephant’s app store to identify new customers by giving away a free or low cost app that only your targeted customers would find useful.  What is a better way to start a 1 on 1 discussion with a potential new customer then right after they had a delightful experience with your useful, simple and free or low cost app they just found and downloaded on impulse from the elephant’s app store? For 1 on 1 Selling Driven Sales, app stores turn cold calls into warm calls.

More Reading…

Phil Morettini just published a great article on “Creating a Distribution Channel Where One Doesn’t Exist” on his “Morettini on Management” blog.   Fits right in with developing a go to market strategy when you have a Selling Driven Sales business model.  I see a lot of new software developers viewing developing a sales channel as a bit archaic – but for a whole class of solutions that require 1 on 1 selling of more complex pricier solutions, a sales channel is a powerful tool.  Autodesk built its business on sales channels – which continues to be a large valuable source of revenue, customer service and delight, and long term competitive advantage.  


Sales Channels – And Can the Elephant Help?

First…

A quick “advertisement”…

My team at Autodesk is running our every other year “DevCamp” this June.  There is both an AEC and Manufacturing focused DevCamp in Boston and Portland (respectively).  These are opportunities for software developers to learn about Autodesk technologies and business strategy in an up close, casual and personal environment direct from Autodesk software engineers and senior decision makers.  Most of the classes are technical in nature, range from beginner to advanced software development, and includes several “getting started” classes on Cloud and Mobile app development.  I will be teaching three “Dancing with the Elephant” classes at the DevCamps too.  Learn more- and join me at “Camp” – here.

Back to Our Topic of the Day

One can write a book on Sales strategies (and some have) – which is not what I am going to do today.  I do want to ask a few questions and provide you a few possible answers to help you develop your sales channels – your go to market strategy.

Two Key Questions

What is it that makes a sales prospect decide to become your customer?

What is the typical cost of getting a customer to make that decision to purchase?

The first question gets to the heart of your sales strategy – and the second question either solidifies or questions your answer to the first question.

Let’s take a look at four ways you might be considering taking your solutions to market:

  • Direct 1 to 1
  • Indirect 1 to 1 (Value Added Resellers)
  • Direct 1 to Many (your web site)
  • Many to Many (app store)

Before we jump into looking at these four ways to take your solution to market, we need a baseline understanding of sales driven by Selling versus Marketing activities.

Does that sound confusing? Aren’t all sales driven by Selling? No they are not.

Selling Driven SalesSales Selling

Products like an Oracle database, ERP system, or CAD system are primarily “sold”.  They require heavy investments in sales personnel – up to 40% of revenue is spent paying your sales people.  Over several weeks or months, sales people educate your target customers on the benefits of your solution and convince customers to invest in your solution.  For reference, most Autodesk revenue today is “sold” (though with some recent success developing a consumer marketing driven business) – whether by VARs or Autodesk Sales Reps.

Marketing Driven Sales

Products that sell through marketing include TurboTax, Quicken, Microsoft Office, and your web browser. Marketing Sale There is very little investment by the software developer in selling – as selling is primarily taking orders and delivering product driven by their marketing activities.  These products are sold through marketing – with up to 50% of revenue spent on marketing – implementing demand creation activities.  Companies like Intuit - with TurboTax and Quicken – have very small order taking sales teams – and very large marketing teams and budgets.  Almost all products sold through the web – not to be confused with web sites that are just “order entry” portals - are marketing driven – be it products for sale through Amazon, Apple’s App Store, Google’s Android Marketplace, eBay and Autodesk’s new Autodesk Exchange Apps store.  Today a marketing driven sale also means a heavy investment in social media – having Bloggers, Tweeters and Facebook authors as part of your marketing team.

Of course some companies have different product lines – some of which go to market be selling and others my marketing.  Autodesk has this today with desktop products being sold – and several Mobile apps sales driven by marketing.

Now we'll group the four sales channels by whether they support Selling or Marketing driven Sales:

Selling Driven Sales

  • Direct 1 to 1
  • Indirect 1 to 1 (Value Added Resellers)

Marketing Driven sales

  • Direct 1 to Many (your web site)
  • Many to Many (app store)

So now lets get sales channel specific by asking a few more questions to start sorting out what sales channels will be most important to your success, and whether the Elephant can help you develop them.

Direct 1 to 1

Complex solution that takes weeks of training to get started – and several months to get proficient using?  Solution that takes detailed needs analysis before implementing – and then extensive configuration before use?  High cost solution (over US$ 10k) that requires detailed ROI analysis and several levels of management review and approval?  A solution that takes a number of customer touches over several months to develop and close the first sale – at a cost of sale of several thousand dollars? 

If this sounds like your technology, your go to market strategy is “selling” (versus marketing).  You clearly need to see if you can engage with the Elephant’s direct sales team (if they have one) – and develop a deep understanding of how the Elephant sells, how their sales people are compensated, and what they are incented to sell (and not sell).  Maybe you can engage and leverage the Elephant’s direct sales force – but some chance you cannot (such as your targeting a small narrow niche market the Elephant knows little about) – and are on your own.  The sooner you figure this out – whether you can or cannot leverage the Elephant’s direct sales force – the better.     

Indirect 1 to 1 (VARs)

Solution that takes some training – a few days to a week or two?  Solution that can be sold in a few weeks to a month or two?  Solution that costs over US$ 3k but under US$10k (in the developed world)?  If yes, just like Direct 1 to 1, your go to market strategy is “selling” (versus marketing).  Solution that can be purchased by a customer front line manager – not requiring detailed ROI analysis and several layers of management review and approval?  And… key… solution that is to a “large enough” market that a regional VAR has plenty of sales opportunity “nearby”?  What is a large enough market to interest a VAR?  Assume the VAR has one sales rep and one application engineer that spends a good part of their time selling and supporting your solution which - in the US - would be a cost of sales to the VAR of maybe US$ 300k per year.  To cover a VARs $300k per year cost of sales, would take near US$ 1 million per year in sales of your solution.  Is your market – say in a medium sized city of about two million people like Omaha, Nebraska -   large enough for a VAR to cover their investment in selling your solution?  I fondly talk to software partners I work with about this “Omaha, Nebraska test”. J

If this sounds like a fit for your solution, it’s time to find out if and how you can engage with the Elephant’s VARs (assuming they have VARs).  At Autodesk, we have an extensive VAR sales channel that is highly developed and worldwide.  It’s how most of our solutions are sold.  Many Autodesk VARs carry solutions from Autodesk software partners and there are a number of ways for software partners to connect with Autodesk VARs – from participate in the annual One Team Conference sales partner kick-off meeting to my team providing one on one introductions between Autodesk software partners and sales partners.  That said, developing a VAR sales channel will take a year or two to get started – and a few more years to get fully performing.  It takes patience and commitment – as well as aggressive recruiting.  Over the years, I have seen many partners try to develop a VAR sales channel and fail.  Some because they didn’t invest long enough or aggressively enough – and others because their solution wasn’t a good fit (being honest about answering the questions that indicate if their solution is a good fit for a VAR sales channel). Over the years I have seen several Autodesk software partners succeed developing a VAR sales channel, and retire young.

That’s enough for today…

In my next post, we’ll continue this discussion with a look at the questions to ask to determine if your solution is a good fit for the primarily web enabled “Direct 1 to Many” and/or “Many to Many” sales channels.


Get Out of the Elephant’s Box

First… a quick one… why you are important to elephants… see http://www.fastcodesign.com/1669122/innovation-blindspot-even-your-best-ideas-will-fail-if-you-overlook-the-ecosystem

A recent experience during Autodesk's annual sales kick-off conference – One Team Conference (OTC) -inspired this post – about how too often software partners limit themselves to just what the elephant offers them.

So what benefits does the elephant offer you - a valued software partner?  Listing in a partner web catalog?  Invitation to exhibit at their user conference?  Maybe a place in their app store?  Software for use in development?  Are you thinking “it’s not enough, I need more opportunities; the elephant is holding me back!”?

You are right.  It’s not enough.  So are you sitting there waiting for the elephant to change – staying inside their box - or are you going to climb out of that box and take control?

BoxA real life example… from just a few weeks ago...

A few Autodesk software partners were invited to participate in the annual sales kick-off – OTC – with their own “table top”.  There was only room for eighteen software partners to get a table top – so most software partners were “out in the cold” (they could attend – but didn’t get an official presence). 

The responses to this situation by a number of Autodesk software partners included –

“I wasn’t invited to have a table top at OTC and am not happy about it.  The elephant stepped on me again.”  

“I was invited to have a tabletop at OTC – but am too busy to man it – so though I am attending OTC, I am taking a pass on the tabletop.  It was interesting learning where Autodesk is headed – which I’ll share with the team when I get home.”

“I was invited to have a table top at OTC – but am too busy – so I had one of my local sales people man it.  They barely talked to anyone – and suggest not bothering in the future.”

“I was invited to have a table top at OTC, recognized it was a great opportunity to close several new sales partners from overseas by showing them Autodesk HQ sees me as important, lined up meeting with several potential sales partners from across Asia and Europe, and closed three of them at OTC.”

“I was invited to have a table top at OTC, recognized it was a great opportunity to engage decision makers at Autodesk that might consider acquiring my company in the future, booked times to meet these key Autodesk employees at my table top where I had great discussions with them, caught up with several of my international sales partners I had also pre- booked times to stop by my table top, attended several Autodesk strategy sessions, and am now all set to leverage Autodesk to grow my business and maybe get acquired!”

“I wasn’t invited to have a table top at OTC, didn’t know they were going to have these this year, booked a suite in the conference hotel, I invited all my current and targeted sales partners to stop by and have a few drinks in, closed two new sales partners from overseas – and all for just the cost of a suite for one night and several dozen drinks.  Saved me from having to take a three week flight around the world!”

So now that you have heard six different ways Autodesk partners did or didn’t take advantage of Autodesk’s annual sales conference. Which of the above would have been (or was!) you?

OTC is just one of several large scale events Autodesk holds where customers, sales managers, application engineers, and others from across a country - or around the world - come together to learn and share.  Every one of these events is an opportunity for a software partner to save time and money by meeting numerous Autodesk customers, staff and sales partners at one location in just a few days.  Saving weeks of travel time – and many thousands of dollars on flights and hotels.

Every elephant has several large scale events each year – just like Autodesk does – that can be leveraged by small companies on tight budgets to reach out to sales resources around the world – to further their sales and strategic objectives.  You aren’t limited to what the elephant explicitly offers you.  You are only limited by your own imagination on how you can take advantage of the elephant’s activities. 

And of course you need to plan and do your homework well before these large scale events take place.  “Just showing up” without doing your homework (developing an event, booking meetings, confirming meetings and so on), “hoping” you’ll run into the right people, is as good as not showing up at all.

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The above is a sales oriented examples of people thinking - or not thinking - outside the elephant’s box.  This same “outside the elephant’s box” approach can also be used to reach and influence the elephant’s engineering teams, product management, marketing, senior executives, and more.  Your limits are your expectations and imagination.