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This is a guest post from Houston Neal who is looking to gather feedback on his ERP Software Timeline.

ERP software has come a long way since the days of performing accounting and inventory management on mainframe computers (e.g. IBM’s 360 series). In the 70’s we saw the introduction of material requirements planning (MRP) and the founding of today’s ERP leaders (SAP, Oracle). The 80’s included the emergence of MRP II and introduction of the coming Y2K bug. “Enterprise Resource Planning” was coined in the 90’s, and “merger mania” dominated the early 21st century. Today, cloud computing is all the rage. Will “social ERP” be the next game-changer?

To understand the context of current enterprise software events, check out the manufacturing & ERP software timeline at Software Advice. They have included 17 key events that have shaped the industry over the last 50 years. Feel free to share your ideas on what should be added. They want to expand the timeline to 30-50 events/dates with the help of industry experts. Sort of like a “wiki” timeline. If you have any ideas, please forward them on to Houston Neal (houston@softwareadvice.com).

 Ian Graham

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I was chatting with one of my favourite new start-ups the other day in the common area at TheCodeFactory and the topic of selling on the Internet came up. They explained that they were consulting with a local Entrepreneur in Residence and the first question asked by the EIR was “Who is your first customer?” I am reasonably certain that the expected response was something like Big Red (fictional service provider), Big Blue (another fictional service provider) or Dancing Goats (yet another fictional service provider). However, that was not the response that they received.

The answer “if you give me $2.99 you will be my first customer.”

Fortune magazine annually produces a list of the top 500 companies in North America. This is known as the Fortune 500. These are large companies with likely thousands of employees and multiple locations.

The Fortune 5,000,000 is a term coined by David Heinemeier Hanson of 37Signals used to describe selling to small businesses online. The Fortune 5,000,000 is arguably that mythical Holy Grail we often hear referred to as SME’s (Small and Medium Enterprise). Selling online has opened an incredibly efficient channel for tapping into this vast market.

From a local perspective, as I see it, the challenge in Ottawa is that there is a significant paradigm shift from selling to the Fortune 500 (traditional telecom sale) compared to selling to the Fortune 5,000,000. If you are selling BIG ticket items to Big Red or Big Blue in a pre-millennium mindset it is quite a leap to selling web aps. The difference between channels, value chains, direct sales and other traditional sales is light years away from the virtual distribution and selling online.

If your first question to a start-up selling web aps is “who is your first customer?” You are likely coming from that Fortune 500 paradigm and don’t get it.

Next post will delve a bit into what are some considerations for selling online.

Cheers,

Ian Graham

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Certain industries are much slower than others to adapt to technology. My specific example for your perusal today is the payment system industry. You know that industry that provides credit and debit terminals for retailers and anyone who needs them. This industry has evolved from the major banks in Canada and there are a very limited number of companies to choose from. In terms of web presence this is an industry devoid of any sort of web savyness at all, in fact you might want to refer to it as being a web savant; really good as businesses, but real idiots at harnessing the power of the internet.

In trying to find companies that provide payment systems I started in my usual way with Googling a few search terms. I did find one company with an OK website that had used Google Adwords to generate the lead. Logged onto their site, filled out a long clunky form to get in contact and then nothing, no reply no follow up. Called their customer service number and the person indicated that they would follow up with me within 1 business day, 21 business days later  … nothing. The sad part about all of this is that the apparent technology leaders in the field were poorly using technology at best. The other companies that I did find on the web were manufacturers and had abysmal sites that looked like something the local high school class might have done in an introductory HTML course, but wait, … this comparison actually does a disservice to the high school students.

I finally did find a couple of companies in of all places the yellow pages. Not sure if you have used the yellow pages lately but, what a disaster. I predict a total collapse of yellow pages ad revenue within the next 5 years. The Yellow Pages web presence takes a horrible physical presence and uses the web to make it even worse, I digress. It takes a great deal of persistence to find the right category for what you are looking for. After half a dozen categories I did finally find my two companies. Called both, left a voice mail at one, call still not returned 2 business days later and chatted with a very helpful rep at the other.
Instead of using the web to generate leads these companies are creating lead deterrents.  I guess when there are only half a dozen choices and the majority of your business is referrals from the bank you don’t need a solid web presence and this is reflected in what the payment system companies provide in terms of Internet enabled lead generation.

Certainly room for improvement here.

Cheers,
Ian Graham

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Most people remember the first man to step on the moon but few remember the second. The benefit in first mover advantage is being first, gaining that recognition and market leadership. The challenge with first mover advantage is that the fast followers tend to improve upon your innovation. Once you are in the lead it is incredibly important to continue to adapt and maintain leadership over the competition.

Beta and VHS product introduction is an excellent example of a new competitive technology displacing the early leader. While Beta technology did adapt and come out with a longer tape length to accommodate feature length movies. The change was too slow in coming about and VHS had already secured the production studios channels to market. The ability to adapt rapidly to changing market demands or product short comings is essential if you develop a first mover strategy.

The Ford Model-T was perhaps the companies most successful product every with Ford at one time having a 60% share of the world wide automotive industry. This product had a sustainable first mover advantage for many years, however, when Buick started to introduce new models in different styles and colours Ford failed to react. The famous Henry Ford saying was “You can have it in any colour you want so long as it is black.” The lack of adaptation cost the company significantly and sales of the Model T plummeted between from just over 2M units per year in 1925 to 0 units per year in 1927.

If you are going to adopt a first mover strategy then keeping an eye on your competitors innovation and your product up to date are essential.

Cheers,
Ian Graham
 

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As I was searching for a way to repair my busted email a while ago I came across this comment that I found incredibly interesting. The comment was made by someone in Microsoft technical support. On one of the forums a customer had raised a concern regarding the new “intrinsic search” (hope I have used the right term).

The customer complaint was something to the effect of “I really don’t like the new Vista explorer search capabilities very much it isn’t giving results that I want.” Essentially the user is expressing frustration with functionality that was unexpected and unwanted. They were familiar with and liked the old search methodology and knew how to use it to get results.

The response from the support technician was classic techese. “Once you get used to the new intrinsic search you will find that it is much better than the old search.” How is the search better? I suspect from a technical point of view the new search is elegant and technologically superior. The important consideration here is that from the customer perspective the elegant solution requires a new learning curve and time investment by the user, plus the results delivered are different than what had been expected.

The fact is the customer didn’t want much better, they wanted functional and easy to use. Forcing the customer to learn something new makes them less productive while they learn the new technology. Does the value of this “new and improved” search provide value to the customer? I would suggest probably not the old search worked just fine.

The lesson here is give the customer what they want, NOT what you think is best for them. Listen to your customers and DON’T MAKE ASSUMPTIONS. “New and improved” doesn’t necessarily translate into better value.

Cheers,
Ian Graham

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There are a number of products being advertised that are promoting the idea that less is better. The two examples that immediately come to mind are half size chocolate bars and more “powerful” detergent.  These ads are excellent examples of how manufacturers are improving their margins and operating efficiencies in a mature market. If you are in a mature or slow growth market with few large competitors then you will want to focus on operational efficiencies.

You gotta love these newish chocolate bar ads. The chocolate bar has been reduced in size by about half or more. The spin on the advertising is that these new smaller chocolate bars are better for you because they are only 100 calories. There seems to be some magic around 100 calories because that number appears in many foods based ads. Anyway back to less is more. So basically the chocolate bar manufacturer has reduce the size of the chocolate bar but continues to charge the same price and this is better and healthier for you the consumer. I would be curious about the impact on the bottom line of the chocolate bar companies, it just has to improve one would think.

Detergent is another product where less is the new more. The packaging has shrunk you get less product; however, it is more powerful so you don’t need as much. This is very clever and a way to significantly improve margins. Just think about it; your shipping and packaging costs are significantly reduced, you have probably reduced your product costs and you get to tout the mantra new and improved.

If you are in a mature or declining market it is all about operating efficiency. The chocolate bar and detergent provide some excellent examples of how to achieve efficiency objectives through creativity and marketing.

Cheers,
Ian Graham

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 … hey nah, hey nah my emails back.

Let my start this post by saying how totally dependant I am on technology for my day to day operations. Two days with out email is about two days too long. Electronic technology whether it be email or phone, crackberry, or whatever is the life blood of business. Being without email has totally disrupeted my business and productivity.

This tale of woe started with an unsolicited windows upgrade, that I didn’t authorize, however, the default in Windows is to enable upgrades automatically. So this unwanted automatic upgrade corrupted my outlook.pst file. Trust me this is something that you don’t want to have happen. After a couple of hours searching and struggling with an assortment of messages it’s still down.

As I struggle with Vista, Office 2007 and various error messages I think to myself. Office 2007 and Vista are something that I would call valueless value add. While the teams and marketing geniuses at Microsoft have put lots of effort and engineering energy into these products is it something that loyal customers actually want. In my opinion the answer is a resounding NO THANK YOU. I liked Office 2003 new how to use it and was able to bang out documents and presentations quite quickly. With all Vista and Office 2007 shining new bells and whistles have actually made me less productive than I was with the older version. Therefore the simple questions are “Why should anyone familiar with Office 2003 upgrade to Office 2007?” My answer is they shouldn’t stay with XP and Office 2003.

I am of the strong opinion that Microsoft really missed the mark with Vista in terms of positioning and migration. Microsoft could probably have turned XP into a real cash cow with the appropriate lifecycle management. Instead they introduce Vista as a “Next Generation” (really not a big fan of the NG term) product that no one really wanted or at least none of their existing customer base. So instead of milking the cash cow and capturing the innovators and early adopters with Vista Microsoft has pst off the existing customer base and created opportunities for Google Office and Apple.

Cheers,
Ian Graham

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When you are studying the diffusion model in an academic setting there are very clear labels for where you are in the adoption cycle. There’s the innovators, early adopters, early majority, late majority and laggards. When you are doing a real market study there are no clear distinctions of where you are in the adoption cycle. That being the case, how do you tell what phase of the adoption cycle you are in?

In my opinion there are two strong indicators of where you are in the adoption cycle. The first indicator is market size, growth and trends. You can usually find this information from competitors and suppliers annual reports or press release, magazine articles about the industry or industry associations. The real challenge is that this information is usually unavailable for new and developing markets. The second and more readily available source of information is the competitors in that market. If there are many smaller competitors and lots of new entrants that is a sign of a growing market that is early in the adoption cycle. If there are fewer larger more established competitors with few new entrants then this is likely a mature market or later in the adoption cycle.  There are all sorts of variations of the above conditions. The key is to be able to read the market and competitive signs to get a reasonable picture of where you are in the adoption cycle.

Cheers,
Ian Graham

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I have watched with great interest the huge success of Steve Colbert for president on Facebook. What struck me as truly remarkable about the speed with which his facebook group grew to a million wasn’t the facebook part of it but the role TV had to play in establishing the 1,000,000 mark.

Other presidential candidates like Barak Obama and Hillary Clinton organically grew their facebook groups and it took several months. The big difference with Mr Colbert Report was announcing the group on TV and being able to harness the power of TV and Facebook together. A cross pollination of media so to speak. This is where I believe the true value of media is migrating. Using the broad reach of TV to tip the facebook epidemic Mr. Colbert is the master Maven, commanding two media at the same time and being able to measure the reach of his message.
Apply these same concepts to consumer marketing and you have a powerful new weapon to inundate unsuspecting consumers with your message in a matter of days. This probably brings new meaning to “The Medium is the Message:” this has been apparent in other forms too like texting to vote for the new American Idol and so on. Facebook brings this to a whole new level. The spectre of advertisers gathering vast amounts of facebook demographic data quickly raises its ugly head. There may actually be more value in the facebook business model by harvesting group demographics than in the community itself. Anyway I digress into some Orwellian world.

The time to a million also reinforces in my mind that TV as a media is far from dead and in fact the internet helps to make it just that much better. Where previously TV was primarily one way with the advent of facebook or other slick internet tracking tools you have a very powerful way to measure the results of your advertising and marketing programs. TV is far from dead, but the traditional programming will likely change significantly.

If only those annoying TV reality shows would finally go away.

Cheers,
Ian Graham

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There are a couple of irrefutable properties related to the product life cycle. The one I would like to talk about today applies primarily to consumer goods but also to some enterprise products. That is that the time to one million units on a successful product has been shrinking for decades. Marketing and distribution have improved a whole lot since the Second World War. The chart below summarizes the time to one million for a number of different products (in years).

Xbox ………………………………….. 0.1
Nintendo ……………………………… 0.5
DVD Player……………………………. 1.9
CD Player……………………………… 2.7
Big-Screen TV………………………… 4.2
VCR…………………………………….. 4.6
Color TV……………………………….. 8.8
** Source Artisan Entertainment SEC filing 333-30722 filed on 2/18/00

The time to a million with software and downloadable products will only continue to shorten the time to a million.
Next product life cycle topic “Trickledown” and not the Tragically Hip version thereof.

Have a great weekend.
Ian Graham

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