Sunday, May 13, 2007

time rich, information poor - part 3

Hi All

Sorry there's been a slight delay in posting.

The weathers closing in for winter down here, so we've been getting as much walking in as possible before all the high trails are closed.

So where were we ... oh yes, we were going to extrapolate the hypothetical strategic choice 's as picked, into a limited form of tactical and operational decisions.

However, when I started thinking about the possible devolution's (as I was swearing down another hill the other day).
I realised that I probably need to analyse the information in a bit more detail, within the confines of a series distinct model's profiled to the market niche ( it just so happens, I discussed this very requirement with some friends over a beer or 3 last year) and went as far as building the first cut which I happen to have available.

So, utilising this (loose) model in a (slightly) more formalised way (ie written on scraps of paper, as opposed to just in my head) we devolved down the following choices :-

Investigate the Need Wants Desires of the current market places, and asses their potential requirements for the future

So put very simply, what do the market in each of the customer facing business units require in the current and future products, and where are we as a product offering (value proposition) currently deficient (internal and external) against the existing (and foreseen) market place and competition?

This is a huge question. So who's in the best position to make this call ? - probably the customer facing staff of the devolved global business units ?!!

So, they must be actively involved in gleaning the requirements from their individual niche, formalising these into requirements and even possibly product specifications for a (swift!) decision to be made on current and future focuses, that their specific markets are going to require for R & D.
(In can be expected that these will fall of the order of 30% existing product enhancements/improvements, 70% new product requirements).

In reality the main drivers for our global niche market as a whole are usually evolved (and devolved) from requirements first derived and encountered within the North America SBU and then roll like a wave across into Europe and onwards to the rest of the first world economies.
Historically the propagation of this wave around the globe to date has been of the order 18 to 36 months.

So in practice the main emphasis in research for future product would pby need to come from requirements developments within the US market, with the rest of the core businesses feeding their thoughts, needs, wants & desires into their technical lead.

To accomplish this a minimum expectation should be set at the initiation of this 'futures project'. This maybe, a series of use cases, a full product specification, a HCI design, interactive prototype or composite model. Its production will need to be time boxed, and its should be expected that this team will require mentoring and strong management.

Downside: This will remove key personnel from the US market and dedicate them to working on the futures for the product set. They will need to be substituted. This will be a direct cost that will need to be incurred by the business as a whole.

Maintain and maximise support revenue.

Re-asses the Value For Money matrix relating to the current support offerings, and produce as series of options and costings to profile the potential revenue and effort required, against that currently being generated.
All software houses charge support revenue for their products. The level of service offered (and experienced by the customer) varies across the entire bell curve.
But all rely on this annual revenue stream in some form or other.

So instead of offering just a straight the xx% pa for yy updates and/or support
There is a whole raft of service levels potential offerings and protracted support deals that can be packaged up to fit an individual customer.

Within the organisation for whom I work, each one of the customer facing business units has a different focus, different core market and different drivers to focus on, but they share a common thread that there is good bottom line revenue to be made from tailoring support services to meet a customers (ever changing) solution support requirements.

To exploit this thread of gold, you just need to understand your customers needs ...

Downside: This will have a start-up timeframe and (personnel) cost. It will require dedicated account management and technical services, to identify the customer's requirements, build the specific engagement model, deliver this and keep on meeting the requirements/expectations of the customer.

Upside: Better communication between the business unit and the customer base. Better communication from the field directly into development, increased customer retention rates, and improved bottom line for support activities (why sell it once, when you can sell it every month ? )

Investigate the potential for expanding the role of a global professional services division in generating revenue and supporting sales and product delivery.

So, the first decision to make is do you want a Global Professional Services Division.

If NO then your forcing your self down the boutique software, stack it high, sell it cheap model - because were in the '00's now and the requirement to 'add and aid' our new and expanding customers solutions is quintessential to the way the niche market operates in all of the customer facing business units arena's.
To not have it means you go from a global player to a provincial player, very quickly.

If Yes, then what tools do our 'grunts on the ground' and 'strategic partners' require from the product offering to make it fully flexible and in tune with the market need/wants/desires.
They should be given clear direction on the engagement model with customers and partners and should expect full support from a distinct division within the development arena.

Without this senior management direction and a bi-directional communication flow you risk ending up with a mixed message going out to the customer facing divisions and them picking the best path that fits their market model at that particular time.

Finally, pro services consumes people.
If you pick this path your gonna need a high head count, talent in depth, a raft of additional folk to support those on the coal face, and you need to arm these guys with the tools they require to 'add value' to the initial solution proposition.

Downside. The main focus of any Pro service's must be to support sales to sell more licences (low cost of sale and %pa support contract). So the reality of the situation needs to reflect that the required annual utilisation for the pro services staff needs to be directly geared towards new sales targets that have been made, and covering the overall cost of the services organisation.
The possibility arises of only measuring this function against a strict billable utilisation estimate verses attained, and this is a misleading measure, that doesn't factor in the contribution made to the customers solution, and the credence it gains you in the market place.

Maintain the current product's portfolio and market place impact

This company has one of the best product offerings in its market niche. Its well developed, mature, functionally rich, stable and accurate. So in reality the question should be how best can we exploit these positives.

This typically falls to the marketing of a product, and I fully accept that this another aspect here that I will have barley touched on.

Product Marketing, Corporate Marketing, Communication. These are key functions to making any 'product' into a customer facing 'solution'', and I will be the first to admit I'm no expert in this field.
But I would like to see a more innovative customer engaging approach from the market as a whole.
We (the products and players in this niche) do sometimes come across as a bunch of librarians, constantly sharing around the same bottle of mum's cooking sherry ...

However, any product set operating within this niche market has a finite life.
It doesn't matter how you add on to it, re-engineer the interface, repackage it or guild the lily, there will come a time when you will need to 'completely' replace the current offering with a newer, wider, brighter, offering that will meet today's and tomorrow's market requirements, as opposed to yesterdays.

Of course at the same juncture, you have to maintain the current offering (from a dev/support aspect upwards), not upset or offend your existing market base and of course keep the shareholders happy.

Now there are a number of points raised within the statements above, that could easily point you in the direction of putting off making the decision not to introduce a new product for years,

'the old one's still shipping well, were still getting a good geld, and of course we've got the support revenue"...

But any global organisation cannot afford to stop the process of investing in the critical (and lets face it darn costly) research that will provide you with the thought process, idea's and raw spark that will lead to the next innovative generation of product for our market.

In the main any organisation working with the above (below) hypothetical market condition's would realistically be wanting to invest a good proportion of their revenue into Research and Development of futures and not just production development of the existing portfolio.

So this should be in place already or if it isn't then your already behind the game.

Maximise shareholders value offering and their potential rate of return.

So the shareholders, have been happy and content with the rate of 'till dip' (dividend) over the last few years - and long may the good times continue !!

But I've presented here a hypothetical scenario, based on the only information I currently have available (remember I'm time rich, & information poor) down here where the sweet, warm, pacific winds blows.

So what plans are in place, and what needs to be in place ?

In reality this picks up from all the points above.
A investor (shareholder), wants to see the organisations current success maintained, and that high plans are in place for continuing success and ongoing development of the product within the global market place.
The will need to include exceptions to take a count of the changing dynamic (possible, probable, actual) that are effecting the market niche we operate in.

In the main these need to be communicated to and developed with the operational staff directly involved in the business units concerned and utilised to aid the strategic senior management in the development and maintenance of a 5+ year organisational plan.
This message needs to be communicated to all members of the organisation at all levels (were in software, these folks are damm bright, use them!) - they all need to be a part, for it to be a success. Or of more importance they need to be in position to observe changes in their key sphere's of influence, so that the plan can take account of the changing environment.

Thanks for listening, climbings over now, heading for home now (to the land of my father's) for a long bath, a pint (or two) of Gem therapy and to go on the waiting list for a new set of knees.

Normal glib service will resume soon.


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