A Newsletter About Solutions and Creating Exceptional Value Essay

High Impact ProjectsA Newsletter active Solutions and Creating Exceptional ValueSoftware Company Narrows Focus from1 one thousand thousand Prospects to 40 Closes 30 Sales in First Year by and by 3 Years of Revenues Less than $2 Million, Sales Soar to $75 Million in 4 YearsSystems Produce Paybacks for Clients of more than 10-to-1 stop Trying to Sell to Information Technology Department Found clientele Executives With An Urgent ask to Buy CEO Found a direction to Reduce Risk and Capture Financial Upside A quotable Pattern Emerges Compiled by Tom Ingram, PMPiBefore Jeff Miller took over as CEO, Documentum had suffered three years of flat revenues, never exceeding $2 billion per year. subsequently Miller took over, the next years sales increase to $8 jillion, followed by $25 million, $45 million, $75 million and an initial public offering in subsequent years.Granted, these were the godsend years but this success grade carries some essential lessons which I occupy seen work in some(prenominal) former(a) cliquetings over the years. Below is a summary of these key lessons from several(prenominal) sources, including a Harvard Business School case study. None of this is easy. Documentum went through a period when it was burning $1 million per quarter, with only $4 million in cash reserve, and only two new customers. Success in the intangible, black magic world of packet is ambitious, and my hope is that you can arrest some useful lessons away from this summary. Following are some of the things that worked for them. change Their Focus from everyone in the world that touches complex documents to a rifle shot. Documentum chose to b anoint down initially on the regulatory affairs segments of Fortune 500 pharmaceutical companies. This narrowed their universe of prospects from some 500,000 to only 40 companies worldwide. Urgent Need to Buy Documentum was able to identify buyers in extreme pain payable to the regulatory paperwork requirements for submitt ing new medicates for approval. They cerebrate on finding prospects that were in a situation where (1) regulatory requirements created much pain, (2) prospects demanded a solution and (3) the solution could see a significant competitive advantage.Documentum closed 30 out of 40 initial taper prospects in the first year Help for attempt Software Companies tomtomingraminc.com 972-394-5736Newsletter 25 July 2004Page 1 tom INGRAM & ASSOCIATES, Inc.Huge Payback for Customer Every day that was saved in drug approval application time resulted in a $1 million incremental profit for Documentums clients. The system reduced drug approval application time from 1 year to approximately sise months. Average profit per day of $1 million times 128 age saved = $128 million in incremental profits per drug application. A typical system might cost $4 Million Resulting in a 32-fold Payback mastermind Buyer Documentum discovered that their target buyer was non the Information Technology (IT) depar tment IT departments are often bright with the status quo while line executives are not. They too discovered that executives and department managers were really the ones that drove the priorities for IT. Documentum stopped trying to sell to IT department buyers and focused on line executives with a problem and a budget. I go away add that I possess seen this to be true in dozens, if not hundreds, of instances in my 24 years in the technology and software product business.The boom times of the 90s were a slight exception to this rule. The IT department was buying a great deal, and companies got used to selling to the IT department. When reality came crashing down upon us, and the techbubble burst in the early 2000s, this aberration disappeared. I will note that this is an extremely difficult shift for companies to make because their sales force, including sales executives, and even the CEO, often have experience only selling to the IT department they have no skills, believabili ty or capacity to sell to line executives. Picking the Initial Target recession One of the key issues in picking the initial target niche is the size of payback to the customer. By focusing on the celestial sphere which your customer has the greatest payback, they have the most to gain economically from purchase from youquickly.Assuming you can consistently deliver this payback, it is much easier to get Niche 2, Niche 3 and Niche 4 going after you have a strong set of happy customers behind you. Subsequent Niches After Documentums initial success in the regulatory affairs department, they distribute to other niches in every department within pharmaceutical companies. (regulated chemicals, oil refineries, etc.) This included a big win in the document commission area for oil and gas exploration and production companies, where Documentum helped them manage the billet/lease/royalty paperwork. This approach is often called the bowling pin model, because you set up the initial niche as a headpin, smasher it down and that makes it substantially easier to knock down the following pins. This approach also helps you keep a controlled risk (or cash burn rate) by requiring the software company to demonstrate that it can find and close customers with an urgent claim to buy, one niche at a time.Changes to Software Product Offered remark that Documentum had the discipline to stay focused on the needs of very tightly defined sets of customers. They started in the regulatory affairs departments of pharmaceutical companies, and slowly spread, niche-by-niche (bowling pin-by-bowling pin) to other departments and other industries. It is critical to recognize that Documentum invested its precious cash in software product enhancements only for these customers. The Harvard Business Review Case highlights a feature situation where Documentum declined a $2 million order because it would have postulate them to makeHelp for Struggling Software Companies tomtomingraminc.com972-3 94-5736Newsletter 25July 2004