The “Reset” Button
What is so magical about the clock ticking over from December 31st to January 1st? What really changes? Your business doesn’t. Your customers don’t. Your action items roll over (unfortunately). But yet, for most corporations, there is one magical change that happens on January 1: your goals, financial or otherwise, reset! Yes, out with the old, in with the new, just like that. Like magic, starting every January 1st, you get the opportunity to be measured differently, to convince your boss why the bad things from last year can be forgotten, and to build on the good things that happened.
I’ve noticed several economic and industry trends heading into the new year, and each one presents unique opportunities for all of us. These trends will greatly influence the software industry in 2013, and as such, we all should consider how they integrate to our goals:
- Financial Conditions: All indications are that economy is soft and will likely continue to be that in 2013. However, there is more hope than ever before. If you look at projections, two major items stand out: (1) worries in China have dissipated (after a shaky second half in 2012), and (2) the US is seen as the region that might lead a worldwide recovery.
- Software Landscape: There isn’t a single CEO or CFO of a global enterprise who doesn’t wake up thinking how to get more production out of the resources they already have. In a soft economy, companies downsize, and workers are doing more work with fewer people. Simply put, people productivity is maxed out, and global enterprises are looking elsewhere to improve productivity. This will lead many organizations to technology and software as the means to improve production, which is really good news for most high tech companies, especially B2B software companies.
- Customer Expectations: Your end customers are likely to be more demanding than ever. Competition is fierce. Start-ups abound. How do you maintain your competitive advantage? With customer experience. Most software companies, especially established ones, have to find better ways to connect with their customers, and constantly improve their experience with your technology. Customer experience means many things: from how they buy or license your software (pricing, fulfillment), how they deploy it, or to how they get support after the sale.
Considering these industry projections, here are some tips that software producers should consider as they set goals for 2013:
- Opportunity Identification: Whether you focus on entering new geographic markets, like China, or decide to strengthen your position in established markets like US, you have to start by clearly identifying your new opportunities. Set a reasonable financial target from each of those opportunities, and map out what you will need every part of your organization to do to achieve them.
- Product Flexibility: Product managers have got to be measured on and accountable for how well they have architected the monetization of their product. Two factors that can make or break a product’s success are packaging and pricing. In November, when I blogged about moderation being the key to successful software monetization, I highlighted just how critical packaging is to the monetization lifecycle, and how finding the right balance of packaging options is best for customers. And, in Putting Customers First: Why ISVs Need Flexible Pricing Models, I urged USVs to consider just how important subscription and usage-based pricing model are to the end user. Both are here now and here to stay. Depending upon the type of product you have, this is the year to experiment with those if you haven’t already!
- Compensation Structure: Many companies are shifting compensation plans for their sales teams from straight revenue to “bookings” largely as a result of the strong emergence of cloud-based software offerings and subscription-based pricing models. The key to this change is to motivate your sales reps to sign long-term contracts with your customers. It’s not an easy transition to make but once you do it, you will never look back.
- Operational Agility: Executives who lead IT and Operations departments in larger companies tend find themselves further removed from product-generating organizations than ever before. As a result, it is more important than ever that departmental goals be aligned with business goals. For example, if you are tasking product managers to add flexible pricing models, then the back-office personnel must be tasked to support those new models. The most important area to focus is to generate improvements in the quote- to-cash process. This is the time to re-evaluate your processes and find tangible areas where Operations and IT departments can improve support for product development in 2013.
It is so easy to get lost in the routine of doing exactly the same things you did in 2012, but if you do that, you may miss out on growth potential. A new year is the right time to assess and improve, with the help of one giant reset button called 2013, and by doing so, you are on track to grow your business in the new year.