The Good, the Bad, & the Ugly of building the Channel – Lessons Learned

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dt_twitter_picture  Written by Daniel Tautges @danieltautges
CEO – Pinpoint Worldwide

“If you save your breath I feel a man like you can manage it. And if you don’t manage it, you’ll die. Only slowly, very slowly old friend.”

I started my career working in the channel, in sales and management at mega-large industrial distributors.  Later in my career I succeeding in creating global OEM and Reseller agreements that led to 10’s of millions of dollars in new business and dream exits for early stage technology businesses.  This experience set a foundation in how I think about the channel and how I have been able to build the good, while managing the bad, and avoiding the ugly.

The Good

“There are two kinds of people in the world those with guns and those that dig. You dig?

Whether OEM, Distribution, VAR, or Representative Sales, Channels and Partners should be part of the total selling strategy.  I have created channel relationships with some of the largest technology companies in the world, brand names like HP, IBM, BMC, Cisco, CA, Ericsson, BT, AT&T and NTT.  The good is that the channel can be a huge contributor your business and provide scalable revenue growth.

Good OEM relationships are characterized by the OEM owning the end customer relationship, Cx, and 1st and 2nd level support.  In OEM deals, typically your product becomes a component of a much larger solution.  OEM relationships can be a great way to build technology while building revenue.  OEM’s providing a funding source for your R&D.  OEM’s are also a direct source to market, to gain insight into customer personas, and without the direct sales overhead expense.

Good Distribution/VAR relationships are typically not white label, like OEM, and require more pull through marketing to build channel demand.  Examples of VAR/Distributors are companies like Avnet, Arrow, Gaybar, and Anixter.  They expect you to drive market demand and the VAR’s to deliver your product by attaching their service or compliment products.  A great VAR relationship can greatly reduce the cost of sales and provide access to global and vertical markets without building out local facilities.  Global Distributors are now hybrids that provide VAR like services while maintaining their traditional value, maintaining inventory, and providing credit.

Good Selling Representative channels are typically successful when there are individual’s or groups of people who are highly connected with your target customer.  I have been the most successful with these when opening international or geographic markets.  The Rep  is independent and maintains the selling relationship with the customer.  The company supports the product and provides the terms of the sale and finance.

The Bad

“..but you know the pity is when I’m paid, I always follow my job through. You know that.”

The bad part about building a channel strategy is getting started and then executing.  Building the right channel model, legal contracts, selling tools/CRM and branded marketing collateral is time consuming and can be costly.  Pricing models, localization, product support, sales overlays, and supporting assigned teams all require resources.

There are several bad challenges that can delay or derail a channel plan.  Including:

  • Building enough interest in the market so that there is demand.
  • Developing the right relationships that will deliver results is often difficult to predict.
  • Going global through channels before penetrating the domestic market can dilute cash resources.

Understanding how best to channel the product requires experience.  Make sure that the effort doesn’t turn ugly.

The Ugly

“If you want to shoot, shoot, don’t talk…

The ugly is when the channel strategy goes wrong.  The OEM’s are not interested.  The VAR’s and Reps commit to penetration and account exposure but are not delivering.  Tools, Marketing, and Ops expenses have been spent but there is little revenue to show for the time and cost.

I have been in these situations as part of my consulting practice and was able to move from ugly back to good by refocusing.  What is typically wrong is that the channel partners picked the company vs. the company picking the channel partners.  The partners were either easy to access by the company (came to them) or friends and associates that the leadership team supported.  The most important thing to do to stay out of the ugly is to understand your market and focus your efforts on the channel partners (OEM’s Resellers, Reps) that will deliver value.  Measure the effort, incentivize the results, and support their success.  All huge factors in a good channel strategy.

images_note   dunnan dun, wa wa wah

So a sales channel can be good (it can be great), it can be bad (hard to do) or downright ugly.  The lessons I have learned in building global channels are that like any approach there needs to be a solid plan, an understanding of the value of the product to the channel, measurements, structure to support, and the committed financial resources necessary to be successful.

If you would like to learn more about how I have built over $100M in channel business for technology companies while leading or consulting for global business’, please contact me at daniel@pinpointworldwide.com or visit our website at http://www.pinpointworldwide.com.

 

DCIM at a Crossroads – Is IoT the Answer?

 

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dt_twitter_pictureWritten by Daniel Tautges @danieltautges
CEO – Pinpoint Worldwide Consulting

In 2004, I joined a startup in San Francisco in the Microsoft Visio ToolSet software business.  The company had licensed visualization technology and were building a toolkit to help engineers document data center racks.  This company Visual Network Design (Rackwise) had about six people and a few thousand dollars in total revenue.  What I knew at the time was the business model they had didn’t work but what I didn’t know was that this company would be one of the early innovators in Data Center Infrastructure Management Software (DCIM).

My early days in DCIM and the Network Management Software space led to me launching Nlyte Software into the US market, as President, and then building my consulting practice and assisting in growing the software business’ of Schneider, Geist, No Limits, InControl, Optimum Path, Asset-Point, Modius, RIT Tech and Track-It.  I have been on the product development and marketing side, closed early clients and partners, worked with VC’s, advised analyst and written and executed the complete corporate plan for these and other companies.  The evolution of DCIM, the strategic interest and new emerging markets, have led DCIM to a crossroads.

Evolution of DCIM

What is DCIM?  My guess that if you are reading this you probably already have a pretty good idea, but fundamentally DCIM is the management of data center infrastructure in regards to Cooling, Space, Capacity, and Power.  IT & Network Assets (ITAM), Service (ITSM), Uptime (NMS) are all associated components of the physical management of the data center and DCIM vendors have features to support parts of this as well.

Facilities vs. IT

Who in the organization should own DCIM and why is that important?  It’s really interesting as it is different ownership at different companies.  I have seen IT own the software, facilities own the space, and HR own the budget.  It can make for a difficult and long sales cycle when HR owns the Data Center budget.  I believe right now, companies that own data centers have determined that it is core to their business.  If not, then they have outsourced or will soon move to an outsource model.  Therefore, if they own their own data center the DCIM budget is now strategic.  Strategic funding comes from the Executive level and so CEO’s, CIO’s, and CTO’s are now directing DCIM buying and architecture decisions.  This is important as selling at this level can grow into a much bigger and strategic sale.

True Story

Back in the early days of DCIM I worked closely with (my mate) Robert Neave, CTO and co-founder of GDCM (Nlyte Software).  Rob had managed a large data center for UPS in the UK so he had a deep understanding of what was needed and knew that DCIM software that existed in the market at that time had some serious deficiencies.  Rob was a visionary and I had a great time helping him bring his vision to market.  Rob and I both realized that DCIM would touch everything from IT to Facilities to Service Desk.   I think now even more.

Outsource Impacts Evolution

Cloud and Co-lo providers had a serious impact on the DCIM market as Enterprises shifted to an outsource vs. insource model.  This seriously impacted the growth of DCIM and did some serious damage to the appetite for investment in DCIM technology and killed off a few companies that were early entries.  What is happening now is interesting in that the large incumbents have de-emphasized their DCIM innovation, focusing on their traditional business, while the smaller software-only players have focused their innovation around markets that are attracting new funding.  IoT is one of those markets.  There were always IoT components in data centers, sensors for temperature, humidity, access, etc.  So some DCIM vendors have now built interfaces to support IoT data.  It’s not a far reach to now be able to manage those arrays in the context of larger upstream systems.

An IoT assisted data center workflow example could be: run this Pod (area of compute), turn on thermal imaging sensors, predict load impacts, start/stop economizer, reduce/optimize load when temperature reaches a point where set point values need to be adjusted.

Internet of Things 

IoT offers great advancement in tuning, measuring and managing but there are large challenges with areas around protocol compatibility and security.  DCIM has, for the most part, already solved those problems and the platforms modeling and predictive capabilities should be leveraged both inside the data center and now outside the data center.

The evolution of DCIM, the Executive level interest and the new emerging IoT market has led DCIM to a Crossroads.  It will be interesting to see which companies have the vision and capacity to continue to evolve in and out of the traditional data center.  The ones that do could be the ones that continue their journey beyond today’s crossroad.

To learn more about Pinpoint Worldwide and how we have solved company growth problems, helped penetrate new markets, and launched innovative technology to a global marketplace, please visit us at http://www.pinpointworldwide.com or contact me at daniel@pinpointworldwide.com

Heavy Civil Construction Software – On a similar path to Network Management Market

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Written By Daniel Tautges @danieltautges
CEO Pinpoint Worldwide

Spending the last twenty month working with a Software Technology innovator in the Heavy Civil Construction market has been very exciting and reminds me a lot of 2002.  I was aware of the planning side of the market as I had worked with CAD supplier Autodesk in the past but I didn’t realize the tech effort now being shown in bringing large civil projects to completion.  When you think about the billions in global expenditures on Roads, Bridges, Dams, Tunnels, Railways and Airports it makes complete sense.  It’s really a wonder that I wasn’t aware that this market represents a new frontier for Technology Innovation.  Drones, IoT, Mobility, Automation, Data Mining, Fleet Management, Mapping, Collaboration, Payment Systems, Maintenance, Scheduling, Document Management and 3D/4D Modeling are all innovating rapidly to grow in this marketplace.

The scope of engagement for me personally has been quite broad.  My work with Pavia Systems  has allowed me the ability to engage clients at large Department of Transportations, Consulting Engineering Firms and Technology Vendors.  What I have learned is the the market characteristics of  this space is very similar to the early days of Network Management Software.  Specifically that there are lots of fragmented, point solutions, that lack integration capability and the buying requirements often lack the information necessary to build to a long term scalable architecture.  Further, there are many custom and home grown solutions and Commercial Off the Shelf (COTS) solutions are still evolving.  Users of the systems typically don’t have the technology background, are adverse to change, and require products that are easy to use, adapt well to their current processes and support self service.   Small productivity gains and risk avoidance are driving many buying decisions with true technology architecture decisions taking a back seat to single point or custom requirements.  As products/services and buying sophistication advance, this will transition to really consolidating all of the information and greater insights to information.  Things like project modeling, intelligent material selection, scheduling, costs management, risk avoidance with advance on a similar path to fault, capacity, availability, performance and security did in the Network Management Space.

Intelligence, data mining, event notification, and single pane of glass.

Pavia Systems is one of the vendors that has a clear vision on collecting information once, integrating disparate systems, and delivering a single pane of glass on the complete life cycle of Heavy Construction Projects.  Pavia’s HeadLight Project Intelligence Platform builds off of a mobile collection interface that clicks and swipes, vs. types and writes, on-daily site inspection data that is then stored, shared, and indexed on their cloud based platform.  In my research, they are the only vendor that gathers this data via rich media (video, images, and mapping) and intelligently indexes.  This ability to collect and manage large files builds a YouTube like library of what happened, when and by whom.  Integrating this across the stack of payments, drawings, legal, drone video, events  provides the closet match to true project intelligence that existing in the market today.

New Frontier for growth

With a market TAM in the billions, opportunities in Heavy Civil Construction software, services, and tools is large and growing.  The market is really in the early stages of development with a few large companies focus on just a few niche areas and there lacks a true architecture to support an end-to-end process.  Building today and tomorrow’s Roads, Bridges and Railways is going to require higher integration to deliver projects faster, with higher reliability, and lower cost much like the Network Management Market did in building the information super highway in the early 2000’s.

To learn more about Pinpoint Worldwide and how we have solved company growth problems, helped penetrate new markets and launched innovative technology to a global marketplace, please visit http://www.pinpointworldwide.com or contact me at daniel@pinpointworldwide.com

Growing Technology Sales: Setting the Sales Foundation in an Early Stage Venture

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dt_twitter_pictureWritten by Daniel Tautges @danieltautges

CEO Pinpoint Worldwide

In my twenty-year career I have had the opportunity to build and head sales in early stage, mid stage, and large organizations leading to $100’s of millions in global sales.  Each companies stage presents its own set of challenges and opportunities. This blog will address the key elements in creating a high functioning sales engine in the early stage venture.  In getting started there are three things that have to be done in the early stage that if not done correctly could break the sales car before leaving the garage.  In early stage is it critical that Sales Leadership 1.  Personally engage prospects and the market,  2.  Build-out a sales engine (CRM, Process & Measurements), and 3.  Document and share the sales playbook.

The New Venture

The profile of the early stage venture is typically a revenue starting point of under $1 million, with limited sales resources (people), little or no channel, low product/service market awareness, with limited marketing budget, lightly seeded or boot strapped, limited engineering resources, and no or just a few clients.  Really, who would want to start a sales organization with this?  Ah, but in the challenge lies the accomplishment.  The new venture is a stage that is really exciting and really fun.  The company has a newness and is pressed to move forward at a high rate of speed.  There is little bureaucracy or past baggage and sales is truly the engine that is pushing the company race car.  Fun…fun.. fun.  I have always felt that my actions had major impact on winning deals and it was never truer than in the new venture.  Winning here is imperative.  There are not many second chances.

Personally engage prospects – as many as humanly possible

This seems like a “no-brainer” but the funny thing is I have been in organizations where the executive team only worked with a few “key” prospects and didn’t really have a feel for the total market place.  It can’t be stressed enough how important it is to understand your customer.  Early communication leads to the right play book and early selling opportunities. I have several stories of how and why this works but here is one.

True Story

I had the opportunity to launch an early stage UK software company into the US market.  The leadership team had spent a great deal of time with a few key local clients but they just didn’t have a feel for why they were not selling more in the US.  I spent the first month speaking with global prospects, about 30 of them, and gathered intel on the perception of the company and how the product matched their requirements.  What I found out was that their largest competitor had done their homework on the company.  They knew where the product and company had holes and were broadcasting to the market.  Armed with this information I changed our global approach, the sales playbook, and implemented how we attacked the US.

Early conversations with prospects allows sales leadership to build a working playbook that can be templated for the sales organization.  This interaction leads to early company sales even if the product is not quite at the commercial stage.  Prospects appreciate a consultative approach and often, since the product is still in development, features can be tailored to fit a market gap and take advantage of an incumbants weakness.

Systems, Processes, & Measurements

Every successful sales organization, regardless of size or stage, has to incorporate Systems, Sales Processes and Measurements.  Typically in the early stage, there hasn’t been a lot of this foundation laid so this is an opportunity to create a modern, “world-class”, selling engine.

CRM

The Customer Relationship Management platform is a critical piece in the sales engine.  I have worked with just about every CRM platform, including home grown, and lean in the direction of Salesforce.com.  With Salesforce, I have been able to build-up from a blank shell the necessary infrastructure to manage sales from Early stage-to-Late, from US-to-Global, and from Direct-to-Channel.  It also provides the foundation necessary to build out a manageable sales process, task based and stage based tracking, and KPI measurements.  It doesn’t have to be Salesforce, but the foundation of a measurable process, progress management, reliable forecasting, client/sales engagement history, rep/channel accountability are the injectors, pistons and transmission of a “world-class” sales engine.

Document the Playbook

Now that you have spoken to the market and the tools are being implemented,  it is time to build the sales playbook.  The sales playbook’s objective is to get those great plays that you (sales leadership) knows will work as a resource for the team.  At a minimum, the sales playbook outlines what we are selling, to whom (personas), our selling process, our strengths/risks, pricing/packaging, handling objections, our selling collateral and our competition.  The playbook should be written and communicated so that everyone in the organization can understand it.  It is very important for the team (especially in early stage) to be on-board with the approach.  When resources are limited, everyone is on the sales team.

In early stage ventures it is important to build a solid foundation for growth.  It offers the unique opportunity to do-it-right the first time.  So engage the marketplace.  Talk to customers, analysts, domain experts.  Get that first hand intel to lead the selection of the right tools and build an executable sales plan for success.  Do it right.  Build the right engine.  Hit the throttle and enjoy the ride!

To learn more about Pinpoint Worldwide and how we have solved company growth problems, helped penetrate new markets, and launched innovative technology to a global marketplace, please visit us at  http://www.pinpointworldwide.com or contact me at daniel@pinpointworldwide.com

 

Custom Software-to-COTS: Challenges & Lessons Learned

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dt_twitter_picture Written By Daniel Tautges @danieltautges

CEO @Pinpoint Worldwide 

Moving from custom software to commercial software is a challenge for nearly every early stage software firm.  Developing Commercial, Off-The-Shelf (COTS), software should be easy right?  Well in my experience it is probably one of the hardest things to do and can be significantly affected by three seemingly manageable things; the market, the company culture, and the corporate image.

Why COTS?

Software margins are the greatest when companies can achieve scale and reach the market with a repeatable business model.  Fred Luddy, the Founder and CPO of ServiceNow, has been a business mentor to me and sat on the board of directors at one of my previous companies.  Fred use to tell me, “anyone can sell anything 10 times, it’s the 11th time when it becomes a product.”  It was paramount for our board and our company  (and me) to prove that the product was commercial and that the model was repeatable at scale.  In Fred’s experience that number was 11.

Achieving Scale

At scale, software companies can leverage the development team to create new differentiating enhancements vs. continuing to customize code that might or might not be reusable across clients.  At scale our ability to deliver product without a long development queue allows the company to sell and deploy to more users, in a repeatable way, at lower cost.  At scale sales and marketing can develop a go-to playbook to maximize the sales approach and marketing plan and spend.  Commercial off-the-self scale is when the company has the ability to grow quickly and profitably.

Problem 1 – The Market

The market affects the companies ability to reach COTS in a few ways.  First, if the market is new and evolving, customers are still defining what their requirements are.  In a new market there is no defined leader in the space so the solution is evolving to solve complex problems that could have wide scope with little defintion.

There are several examples of this type of market and how difficult it is to hit a moving target.  The IoT market is one that is a current example in that the characteristics of the market still lacks definition, but is growing and is evolving quickly.  To develop software in this type of market and reach COTS could be a challenge for the next few years.   Lots of complexity.  Every IoT device has a different communication protocol, IT sees security risk, integration of top-end systems, node configuration intelligence, ect..  Lots of moving parts and each buyer is going to have a different set of highly customized requirements.

For these type of markets it is best for software companies to develop a product vision that clearly defines your niche, what you do best.  Align with end-user customers that share your vision.  Modularize the build to get maximum reuse of code and find partnership/integration opportunities to add more value to your combined solution.  Find a way to “configure vs. customize” by developing enough flexibility in the code without requiring total rewrites.  Know that the product is going to evolve so build a software foundation that lets you get there.

Problem 2 – The Culture

Company culture can be a hinderance when trying to reach COTS.  I have worked with several companies who will never reach COTS.  Their idea of company growth was based on the number of lines of code vs. a real, repeatable, business model.  “Software companies write software.”  You bet they do but.. you can’t keep changing the business model based on the “next cool thing.”  I call this managing the “shinny bobble syndrome”.  Most software companies are founded by brilliant technology people.  Most aren’t great business people. Some are, but most aren’t.  The really smart ones figure this out quickly and bring in business people (like me) to help them commercialize the technology.  For every Bill Gates, there needs to be a Steve Ballmer.

When the company culture is stuck in “shinny bobble syndrome” the only way out is to make the company responsible for the business plan.  Top down agreement on the vision and direction.  Let a very detailed business plan be the guide for what the company does and how they do it.  If the technology side-step supports the business plan then great, if not then focus on the plan.  Innovation is amazing when it supports a COTS business model.

Problem 3 – The Corporate Image

Getting past the corporate image is probably one of the hardest to break-through to achieve COTS scale.  Both the internal and external image is that of a company that builds customized products.  Business Process Outsourcing, as an example, is a great business but it would be very difficult (for a number of reasons) for a BPO company to reach COTS.  When I think about corporate image,  I think about what your clients regard you as and what your employees regard you as.  Changing from “we build great custom code for XYZ systems” to we have “product A” is culturally and marketing-wize a tough hurdle.  Most won’t make it.

But, when a company has a image problem, there is hope.  Strategies that work in this situation are things like corporate rebranding.  Often this is achieved by creating a subsidiary company that has the resources of the parent without the market and employee perceptions.  The subsidiary company has a fresh start and can build a business plan/model leveraging all the resources of the parent (existing channels, IP, development, funding, etc.) to move into a market/product that can reach Commercial Off-The-Shelf.  New processes, sales play books, and marketing focus can be aligned to move quickly to gain market traction.  Further advantages are the ability to leverage cash flow from the existing businesses and/or attract venture with the strength of an existing balance sheet.

So getting your software to commercial can seem like a insurmountable challenge.  Don’t get caught in “the shinny bobbly syndrome, by market traps, or by a incompatible corporate image.  With a solid business plan and assistance from experienced professionals who have done it before, you can get there, I promise.

To learn more about Pinpoint Worldwide and how we have solved company growth problems, helped penetrate new markets and launched innovative technology to a global marketplace, please visit http://www.pinpointworldwide.com or contact me at daniel@pinpointworldwide.com