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

3 Must Do’s to get the Max from a Salesforce.com investment

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Written by Daniel Tautges @danieltautges

CEO Pinpoint Worldwide

I have worked with Saleforce.com really since its inception and built out entire implementations.  I consider myself a power user both at the Exec Management Level and at the configuration/code level.  After using CRM’s from several vendors, I prefer Salesforce.com based on the fact that it’s relatively easy to customize to get top end analytics that help manage the business.  Like any software though, it’s not perfect and a lot of the benefits are highly dependent on how the software is implemented.   What I have found in working with my clients is that there are good implementations and not so good implementations.  In discussing their previous SFDC configuration, client’s have made comments like:

“Our salespeople don’t regularly update it and hate it, the reports are not actionable.”  Exec from Billion dollar Medical Device Manufacturer.

“Our pipeline is never accurate, the software costs so much for the value.”  CEO  from Enterprise Software Company, 

“We are really not sure if our lead generation is working or where to invest more marketing money.”  CEO IoT Data Center Hardware/Software vendor,

These comments are all classic indicators that the implementation was not done well.  There are three must dos in maximizing a SFDC implementation to get the most out of the CRM investment.  Must do’s include configuring the platform to insure reliable forecasting, architect a sales process that tracks, reports and manages the pipeline, and (probably the most important) is to make it easy to use for the salespeople.

Reliable Forecasting

A CRM has to provide the ability to produce a reliable forecast.  The only way to do this is to configure the CRM with a defined selling processes that stages sales against pipeline weighed indicators.  Each sales step weight needs to be hard coded so that when certain stages have been achieved a set percentage weight is given to the opportunity.  You can’t rely on salespeople to weight their deals.  I have never met a sales person who wasn’t 99% sure the deal was going to close.  Remember, that eternal optimism is why you hired them in the first place.  By driving weights against percentage of sale process completed forecasting can be an analytical process vs. an emotions one.  Configure the CRM to maximize Forecast accuracy.

Pipeline Management

Saleforce.com has the ability to be configured so that the sales process and each stage within the sales pipeline is reported and visualized.  Its easy to get a dynamic representation of what is moving into, out of, and through the sales pipeline.  It is important to use this information to determine new lead activity, opportunities converted, days in each stage of the pipeline, total sales cycle, stuck deals, and activity by sales rep vs. their peers.  If we put a lead in the top of the funnel when should we expect it to come out?  To maximize Salesforce it must be configured to dashboard and report on the performance and health of the pipeline.

For Pete’s sake make it easy to use

For Pete’s, for Jim’s, for Joy’s, for sales, make it easy to use.  Salespeople get paid to sell.  They are keenly aware that this is their charter.  Most (all) don’t like doing paperwork.  The configuration of Salesforce (CRM) needs to be easy and intuitive.  Extra fields for the sake of extra fields are just are not needed.  Keeps custom fields to a minimum.  Configure to allow users to click and select vs. key.  Understand the selling process prior to building out the architecture.  One of the biggest, most common, mistakes I see in SFDC implementations is that IT does the implementation without getting deeper input from sales.  This is a implementation breaker, it will always be a struggle to keep the data current in salesforce, and will make the really important analytics out of date or completely wrong.  To maximize Salesforce make sure that it is configured to be easy to use or you will not only not maximize it but potentially jeopardize the entire implementation.

Get the max our to SFDC to produce reliable forecasting, clear sales pipeline tracking, and reliable data by making it easy of use or risk losing the benefits of your CRM investment.

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

 

 

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

You Know Your Business is Challenged When..Technology Misses Market

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Written by Daniel Tautges – @danieltautges

CEO Pinpoint Worldwide

Running and advising global businesses for most of my adult life, I have found that there are common problems that most face in reaching their growth and revenue goals.   In this post lets take a look at the dreaded our technology is great but doesn’t solve a problem.

When technology misses market, this is clearly a case of aim..fire..ready.   It happens a lot more than one might think.  The great thing about technologists they are usually complete geeks about the technology.  They get so lost in creating the perfect product they can loose site of the end customer.  Some are able to get away with this approach, Steve Jobs comes to mind, while others get stuck with a product that they are unable to sell.

A company that I worked with, shall remain nameless, had exactly this problem.  They had purchased some interesting software IP and got their initial funding round to sell their product as an add on to a Microsoft application.  When ready for market, they attempted to sell the product and found, shockingly, that no one was interested.  They had literally, no sales.  Where did they go wrong?  Millions invested, great technology, no revenue.  Clearly, their technology did not solve a problem.

How do you recover from falling off a cliff?  You need to climb back up the cliff.  This is where I was brought in to determine what happened and how to get back on track.

The first thing you need to do is quickly determine why the product was not selling and fundamentally what problem is it solving and for what persona.  Are we marketing to the right audience and are we generating ROI for their business.  After my review I quickly found out that the product was a perfect fit for really no market.  It was priced too expensively for the market it was trying to be sold into and did not have enough features to compete in a market that offered the greatest opportunity.

As part of the effort, I interviewed thirty prospects and met with thought leaders in the their vertical.   We completed a new business plan, market requirements plan and product plan.  We engaged early adopters who committed to buy the early prototypes, raised a small amount of additional capital and augmented the development team with insource/outsource resources.

The results were amazing.  In 18 months we were able to secure 60 new clients, top logos, get to cash flow breakeven, with $2M per quarter run rate.  Make sure your technology is great and solves a problem.

To learn more about Pinpoint Worldwide and how we solve problems, please visit http://www.pinpointworldwide.com or contact me at daniel@pinpointworldwide.com