Pitfalls in Moving from Services to Software

Got a lot of positive feedback on my post from yesterday about some lessons learned while growing OctetString, so will write a few more articles along these lines...

Given that consulting billing rates and hours go down in tough times, many consultants will undoubtedly decide to build businesses to "product-ize" some of their solutions.

This is completely possible -- our own Oracle Virtual Directory started out that way, as mentioned yesterday. Some of our best partners were started this way as well.

However, there are a number of common traps that consultants fall into when they enter the software business.

1. Repeatability, not complexity...

Repeatability in software gives you the ability to scale your customer base.

Consultants often work in the role of car mechanic -- look under the hood, find scary problems, suggest some solutions that will require parts and labor, and finally plan and implement that solution. Each customer has a new problem requiring different parts, plans, and execution.

Software is a very different business. You're looking for as much commonality as possible between customers so that what is delivered can be repeated at other customers with the minimum possible effort.

This doesn't mean that you can't solve complex problems or require services to implement. It simply means that the product-ized part of your product shouldn't be different for every customer.

It also goes without saying that building your software on standards-based middleware will help reduce the amount of post-sales time spent doing customized integration with each customer.

2. Don't design around one big customer...

Even companies that don't originate from consultants tend to fall into this trap a lot, but consultants do it almost every time because they tend to be solving a problem that they encountered at a particular customer.

It is wonderful finally finding a customer or prospect who will spend a significant time helping you understand their requirements. You should certainly listen to them -- they are the customer, eh?

The trick is to use that customer to validate your approach rather than try to solve every esoteric problem that the customer might have through your software.

You might consider providing extension points, allow for customer designed templates, and so forth to accommodate their needs without building less repeatable stuff into the product. You'll also want to consider that your product may not be the right place to solve a particular issue.

3. Consulting isn't Software Sales

Many consultants have great people skills. They can help customers understand complex technology as it relates to the customer's own environment. Customers often base decisions about technology purchases in-part on recommendations from expert consultants.

However, this doesn't always (or even often) translate into being able to actually sell software. Not that you can't learn to do so, but the process of selling is very different from the process of pitching a solution as a consultant.

As a consultant, you have high credibility in part due to your independence. As a vendor, that credibility is diluted to some degree, even when you're still trying to help the customer do the right thing to solve their problems.

The overall process goes far beyond what you say and how credible you are with a customer. You're going to need to educate yourself and bring in the right people to help you be successful.

What happens when you don't know what you're doing?

A (now) funny story from our very first sales call (with Fannie Mae, oddly enough) back in early 2001 before we hired our first sales person or took the time to better understand the sales process:

I was on the phone with the customer while another person from the company was acting as the "account manager". Nobody is in the same room. The customer's first question: "What does this solution cost?" Oops! We hadn't priced it yet and hadn't discussed how we would handle this question. After an uncomfortable silence, the customer's question was answered (after a flurry of background instant messaging).

Thankfully we got better at this with time, brought in people that had experience selling enterprise software, and things worked out well.

I should also point out that the very first customer we did end up selling to was BEA Systems. This is why a portion of Oracle Virtual Directory's original 1.0 release is actually embedded in every copy of WebLogic 7.0 and above.

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This is Clayton Donley's official blog. Views expressed are not necessarily those of Oracle.

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