1. Selling Software in the Europe of 2012
“Hard Times”
Current Trends and their Implications:
Changes in why and how enterprises buy in 2012
(A few thoughts for Independent Software Vendors)
February 2012
Nick Fryars

2. Once upon a (hard) time, just after a war…
Earl Silas Tupper (1907-1983)
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3. …the first Tupperware lady threw a party
Brownie Wise
• Launched a way to sell a product
that nobody understood
• Leveraged peer pressure to sell
astonishing quantities
($152,149.13 in 1949: $1.4M in
2011 dollars)
“It is a proven fact that you will
sell more to a group of 15
women as a group than you will
sell to them individually”
• Developed a self-sustaining
“viral” business model
The dealer (sales, new party bookings)
“Three people must gain” The hostess (subdealer, social leader)
The invitees (enjoy the party)
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4. Two perspectives on another hard time
Political New Names
Economic Retention
2012 Business
Demand
Environment
Generation
Factors Social Upsell
Technical Cross-sell
What does the one mean for the other?
From whom can we learn?
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5. Hard times: the European political scene in 2012
We can expect a period of increasing authoritarian rule
-
Degree of
democracy
+
Cheap Vote-buying
credit + by politicians
+
National Debt
+
Consensus
on need for
authoritarian
rule
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6. Source (2-4): Beyond Austerity: A path to economic growth and renewal in Europe (McKinsey Global Institute)
Hard times: focus areas for authoritarian rulers
Ways to stimulate growth and balance budgets
in a world where the West no longer has economic dominance
Trend Implication for the enterprise
SW market
Financial re-regulation Tighter credit and risk
management
Labour market reform: Complex change in HR: ongoing
participation, flexing, downsizing, talent management,
higher retirement age matching, contingent labour, …
Participation Deregulation of regulated Consolidation  demand for
55-64 year olds: services: e.g. healthcare, scalable systems (2013-2014)
Italy 37%, Sweden 74% pharmacy, legal services
Stimuli for specific New buyers: mostly small, but
Youth unemployment: “growth” sectors: clean some will scale fast
Spain 51.5% , Italy 28% tech, biotech, nanotech
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7. Hard times: Europe in debt
Country sizes are proportional to each country’s external debt
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8. Hard times: the European economic scene in 2012
The after-effects of the debt crisis will be dominant for a long while
Phenomena:
• States deleveraging
• Consumers deleveraging
• Zombie economy: many enterprises with
poor liquidity
• Distressed assets  M&A
• Pension funds looking for balanced returns
Enterprise Implication
Reaction
Conserve liquidity Headcount reductions  higher
by cutting cost stress levels within buying units Some areas
will NOT buy
Focus on core Highly focused investment:
value creation a few areas get all CapEx, others none Favourable for
De-risking Improvements in small steps rather cloud offerings
than large ones; exit options
PICK YOUR BATTLES!
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9. Social trends in hard times: role of social media
Social media are already THE key vehicle to build a buyer’s trust
BLOGS: 34% of
You know the seller
and trust them REFERRALS/ bloggers post
RECOMMENDATIONS opinions about
products & brands
Someone you trust
Why would you trust Brand & advertising
knows the seller and
somebody? €€€
recommends them
“Proof” by the seller:
Your trust is built by
references,
external mechanisms
testimonials
Naomi Bloom
Third party
“certification” incl.
Any big player needs all of these, but bear in mind: Thought Leaders
• 90% of consumers trust peer recommendations
• Only 14% trust advertisements (Nielsen/Socialnomics, 2012)
• All business people are consumers too
Josh Bersin
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10. 10

11. Technical trends in hard times:
cloud offerings exploding...
Why cloud?
• Little/no CapEx, low
initial outlay
• Easy to trial
• OpEx scales with use
• Rapid implementation
• Easy exit
Red = key arguments in
today’s economic climate:
• Minimise use of liquidity
• Link spend to business
volume
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12. …and cloud pricing coming down
This is a seriously aggressive move driven
by Amazon’s place on the experience
curve: “don’t even think about getting
into our space”
Source: blog Werner Vogels, CTO Amazon
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13. Two perspectives on another hard time
Political New Names
Economic Retention
2012 Business
Demand
Environment
Generation
Factors Social Upsell
Technical Cross-sell
What does the one mean for the other?
From whom can we learn?
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14. Growing Net New Names in 2012
How to win trust?
No equivalent system Supplier X’s system
• Why would I buy one? • Why should I switch?
• How would it drive value? • Benefits versus cost & pain
• What trusted person can • “Technical” evaluation:
tell the story? Referrer? Trusted Third Party –
Thought leader? Gartner, Forrester, Ovum etc.
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15. MRI scanner. Credit: Southwestern Medical Center
Customer Retention in 2012
The supplier of medical Big Iron’s dilemma
Be seen as a partner,
not just a supplier,
and certainly not the bad guy…
The answer: provide valuable (paid) services at a competitive price level
Training Clinical Handling Productivity &
extra staff innovations staff churn Utilization Examples
(training)
Orientation & Initial System
Decision-making Handover Training Typically 10 years
Purchase
Planning & Commissioning Decommissioning
Operation & Disposal
Procurement & Startup Repurchase
Commissioning
Operation
How to have a good relationship at the & Startup
moment of repurchase without spending a
fortune on Account Management?
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16. Up- & cross-sells in 2012
Drivers: S C A LE
CONTROL
Are we ensuring the
success stories are
captured and told?
Extended Warranty….
Is it big enough…?
WiFi 16GB €479 +3G €599 32GB €699 64GB €799
(The customer just spent 67% more than she planned) 16

17. Upsells are crucial to the cloud model
Profit created here Replacement: customer will
normally seek lower cost level
Rollout: organizational scope
Spend rate in € increases significantly
Broadening: more functionality/content
within same organizational scope
Procurement Business Event: e.g.
project acquisition, new location
0 6 12 18 24 36 42 48 54 60 66 Time in months
Risk of
Initial Purchase:
Low outlay, significant
contract loss
functionality and content, limited
organizational scope Sell to function head, not CIO
‘Foot in the door’
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18. One thought before we close the box…
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19. Where is Big Blue? Where will you be in 2013?
Rutherford Laboratory's IBM 3081, December 1982
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20. Thank you
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