Successful Desktop Developers Failing to Make the Transition to Cloud and Mobile – Part 1 of 3: The Problem
You can skip these next few postings if you are under 40 years old… :-)
In the beginning, a long time ago, when the business was new – and the desktop with perpetual licenses was the only way – developing a software business was straight forward. The hardest thing to do was setting the “per copy” price – and maybe considering site and company-wide licenses. If you got the pricing wrong, it was easy enough to change it. Within a year of starting your business, you had figured out the appropriate price point – at least what the ball park was the price needed to be in. As business developed creating a product line was a logical next step – having several products at various price points. But for most companies, the pricing – monetization - structure of the business was set long ago. And as revenue grew changes to the basic business structure were small and infrequent. And as revenue grow, you grew more risk averse – making business model changes nothing more than a rare passing thought.
Now you are looking at what to do around adding a cloud and mobile offering. It’s obvious the old per copy pricing structure is not appropriate. But is per user per month the right answer? It depends. Cloud and Mobile solutions are often sold to people that will be more casual users of your technology – whether that be a few minutes to an hour a day. Some of the early adopters of design and engineering related cloud and mobile technologies are in the construction space where people are used to thinking and budgeting by project – with the number of potential users changing constantly as a project goes from concept through detailing to construction, on to commissioning and then to long term operations. Per user per month pricing models are a lousy fit for project based industries.
Many cloud and mobile technologies in the design and engineering space are all about getting the design information in the hands of people that historically only had access to derivative information – PDFs, DWFs, static images, tabular data derived from the designs, and so on. Getting these people access to design and engineering data in real time – their getting their derivative views of the design information in real time – is of great value eliminating mistakes from old and down rev design data being used – and allowing rapid changes/improvements in design and engineering because EVERYONE that uses the data can access the most up to date info in real time. You know the value of your desktop apps to users that use your apps for many hours every week – but what is the value of cloud and mobile software to infrequent users – and users that use and create value based on the design data in very different ways and amounts?
You’ll likely be selling to different people too – the same companies you sell to now but into different departments – departments that are upstream (like sales and marketing) and downstream (like construction, manufacturing, and maintenance) from the people you know today. These new potential buyers have very different needs, sensitivities, and budgets then the people you work with today.
So how do you build a business (licensing, pricing and sales) model to base (justify) your developing new cloud and mobile offerings?