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Soft On Selling Solutions |
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Written by Edward Mandla
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Tuesday, 21 February 2006 |
I worry that the technology industry will finally settle at a dozen or so companies. Rising stars are increasingly rare and a future staked solely on "innovative" products is common. With existing products appearing to work, part of the problem is that companies don't see the need to buy.
Today, business software products are bulletproof and do the job for seven or more years without upgrades. This is the thrust of SAP-owned TomorrowNow, which runs around JD Edwards and PeopleSoft sites saying, "we'll halve your Oracle support costs, sign with us as your software won't miss a beat and you don't really need to pay for updates you'll never use". Oracle undoubtedly has an equally compelling contrary argument. Either way, with buyers being in no hurry to swap out software, it is a tough obstacle for up-and-comers with a "great product".
I conveyed my fear to Systems Union global chief executive Paul Coleman, in Australia on a tour from Britain, suggesting we may end up with just three accounting software companies, Microsoft, Oracle and SAP. "I've been worried about that one for five years," he said. Yet by plugging away at niche markets and at the right time, introducing a broad business solution, Systems Union continues to climb out of a hole it had previously dug for itself.
Many software companies find themselves in a hole living off maintenance revenues from legacy products and inventing new ones that don't sell. Systems Union found itself bogged down in products and technology with a misaligned R&D function driving the agenda.
The problem is all too familiar in non-American software companies. They just don't see that the agenda needs to be moved forward by sales and marketing to solve specific business problems. In Australia, many software companies are case studies in furiously trying to sell interesting products with an immature or missing sales and marketing strategy. This is exacerbated by inferior hiring based on too-low salary levels and cutting corners by recruiting friends or other people's problems off the internet. Such hiring ends up alienating potential buyers for years.
The result of a solution sales and marketing strategy accompanied with solid management has seen Mr Coleman take the company to 1500 staff, 46 worldwide offices, $A250 million revenue, $27 million profit and a place in Gartner's Magic Quadrants. A far cry from the $72 million loss on $144 million revenue when he took the helm five years ago and everyone was excited about products.
If you think modern accounting software is just transaction-recording, think again. A look at Gartner classifications shows a complex world of enterprise resource-planning, financial and corporate performance management within business intelligence and data warehousing. No wonder companies become lost in products.
Systems Union is guided by a marketing vision of transforming the accounting department to be a value-add department to the chief executive.
The ability for finance to conquer an ever-increasing amount of data holds back many organisations. According to Mr Coleman, more than 50 per cent of finance departments use spreadsheet "Band-Aids". Gartner research vice-president Andreas Bitterer emphasises that you can't run a business on spreadsheets.
The product links to fulfil Gartner's solutions vision came from the acquisition of German company, MIS AG in 2003 and Australian export-winning company Lasata, founded by Steve Wall and current Australian Systems Union managing director, Tony Farrell.
Mr Farrell tells a compelling story of the rise of his company: "It's so difficult to raise capital to make the quantum leap into the international marketplace - the tax system doesn't work for you and our (lack of) government technology strategy is not a huge encouragement. It's very hard to build a Microsoft in Australia when the Government is focused on, 'Dig it up, put it in a ship and send it away'."
Much can be learnt from the Systems Union approach and Lasata acquisition. Too often, boffins fill out the forms to obtain grants for programming, infrastructure and export assistance for products that won't sell. Our technology ingenuity needs government assistance in sales and marketing. Availability of such funds is a discussion I have had with IT minister, Helen Coonan. Maybe Mr Farrell's words can shake some cobwebs: "It's a scary thought - it would be difficult to do Lasata again."
First published in the Age/Sydney Morning Herald on 21 February, 2006
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