CSC444F'07 Lecture 1 1

The Software Vendor Business Environment

CSC444F'07 Lecture 1 2

The Software Vendor’s Business

• Make money from– Providing software and related services

• Software– Must satisfy a need or a want in a market that is

• Big enough• Is willing to pay enough

to pay the costs + re-invest + profit

– Licensed (not sold) + maintenance• Bulk discounts• Negotiable prices

– Follow-on revenues are key• Maintenance, Upgrades, Consulting, New related products, ...• Software is quite “sticky”

– Cost of acquisition

– Need to ensure sold software is used

» Not “shelfware”

Software Releases• Releases are the lifeblood of the software

vendor company.– Must get an initial release of a new product

out the door.• Must support and maintain that release.• Must market and sell it

– Must get new feature releases out the door on a regular schedule

CSC444F'07 Lecture 1 3

CSC444F'07 Lecture 1 4

Software Vendor Structure

• Shareholders– Owners of the company.– All profit and value increase accrue to them– They elect the Board– True for publicly traded or privately traded companies

Chief Executive

Board of Directors

Shareholders

Marketing Sales Client Services Software Development Finance/Administration

Executive Team

CSC444F'07 Lecture 1 5

Software Vendor Structure

• Board of Directors– Represent the shareholder’s interests– They appoint the officers of the company– Will advise the CEO– Responsible for company acting lawfully

Chief Executive

Board of Directors

Shareholders

Marketing Sales Client Services Software Development Finance/Administration

Executive Team

CSC444F'07 Lecture 1 6

Software Vendor Structure

• Chief Executive Officer– Appointed by the Board– In charge of running the company day-to-day

• By coordinating the activities of the Executive Team

– Commits to financial targets (revenue growth / profitability)

Chief Executive

Board of Directors

Shareholders

Marketing Sales Client Services Software Development Finance/Administration

Executive Team

CSC444F'07 Lecture 1 7

Software Vendor Structure

• Executive Team– VP’s and “C-Level” officers hired and assembled by the CEO

– In charge of running the company day-to-day

– Meet regularly to coordinate activities and to set strategy

– Functional responsibilities + corporate responsibilities

Chief Executive

Board of Directors

Shareholders

Marketing Sales Client Services Software Development Finance/Administration

Executive Team

CSC444F'07 Lecture 1 8

Marketing

• Product Management– Defining what products/services the company will sell at what price

– Preparing collateral materials for partners and sales

– Coordinate the release activities

– Key area

Marketing

Product Management

Marketing Communications

Business Development

CSC444F'07 Lecture 1 9

Marketing

• Marcomm– Communicating with the external world

– Advertising, press releases, - generate “buzz”

– Experts not at product (see prod mgmt) but at knowing how to reach people with a message

– Lead generation to feed sales pipeline

Marketing

Product Management

Marketing Communications

Business Development

CSC444F'07 Lecture 1 10

Marketing

• BusDev– Developing new business opportunities

– New channels to market

– New geographies

– New partnerships

Marketing

Product Management

Marketing Communications

Business Development

CSC444F'07 Lecture 1 11

Chief Executive

Board of Directors

Shareholders

Marketing Sales Client Services Software Development Finance/Administration

Executive Team

CSC444F'07 Lecture 1 12

Sales

• Responsible for achieving the revenue number.

• Sales models:– High-level direct sales

• Identify decision makers with budget, chase them down, negotiate terms, close

– Dialing-for-dollars• Dial out to big lists assembled by marketing

– Channel sales• Sell indirectly via other organizations

• Paid via base + commission– May not be profit based

– Therefore need strong sales management

CSC444F'07 Lecture 1 13

Sales Process

• Sales “pipeline” or “funnel”,E.G.,– Leads

– Qualified opportunities

– Short-listed

– In negotiations

– Close

• Sales management maintains pipeline– Attaches estimated close date, sale value, and probability of close to

predict future revenues

– Keeps the pipeline filled

• Uses a CRM system

CSC444F'07 Lecture 1 14

Chief Executive

Board of Directors

Shareholders

Marketing Sales Client Services Software Development Finance/Administration

Executive Team

CSC444F'07 Lecture 1 15

Client Services

• Pre-sales support– Technical help for the sales group

– Implementation project planning pre-sales

• Onboarding / Implementation– Ensuring a customer starts using the software

• Account Management– Ensuring customers are happy

– Mining to see if they need additional software/services

• Customer Support– Help desk

CSC444F'07 Lecture 1 16

Chief Executive

Board of Directors

Shareholders

Marketing Sales Client Services Software Development Finance/Administration

Executive Team

CSC444F'07 Lecture 1 17

Finance & Admin

• The mechanics of establishing and reporting against budgets

• Spending controls– Purchase requisitions. Purchase orders, signing limits, ...

• Taxes

• Financing– Leasing arrangements– Cash management– Investments

• Funding– IPO’s– Private investments– Investor relations

• Administration– Human resources– Office management– Internal IT

CSC444F'07 Lecture 1 18

Chief Executive

Board of Directors

Shareholders

Marketing Sales Client Services Software Development Finance/Administration

Executive Team