Beat the credit crunch with software that saves

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Written By: Peter Williams
Published: 10th November, 2008
Content Copyright © 2008 Bloor. All Rights Reserved.

If you are a vendor and you want to beat the credit crunch then you need to provide software and/or services aimed at saving your customers money in the short term—and be able to show clearly why that is. Maybe that is stating the obvious but it is especially true right now.

The reason is simple. Your potential customers are feeling the pinch so are most likely to buy if they can show a very quick ROI—that means budget approval.

In the past couple of weeks I have met several software vendors, all of whom service large and medium-sized organisations—and all are reporting a softening of demand. One noted that it seemed to occur in the UK first, then other parts of Europe, and then the US only in the last quarter, suggesting things could be worse this side of the pond. Unsurprisingly, it is the big orders that are either drying up completely or being delayed. This is not good news—but it is a truly ill wind if nobody can gain.

For instance, in articles such as this I have repeatedly asked why any company would not want to include de-duplication (de-dupe) when doing backups and archiving. A typical average reduction in disk space for backups is 20 times, archiving more like 5 times (although there is a huge variation dependent on the types of data involved). There can be immediate returns from potentially massive equipment and running cost savings; this is therefore also a green approach.

I think the message on this is beginning to get through. For instance, de-dupe specialist Data Domain has just reported third quarter profits exceeding its target and has slightly revised up its full year estimate; yet there is a huge untapped market of those who have not taken this technology—and the company sees Europe as a couple of years behind the US in waking up to this.

Meanwhile VMware in particular has cashed in on virtualising the server capacity although storage virtualisation has had slower take-up. Used sensibly, virtualisation can be used to consolidate many servers or storage devices while utilisation levels rise—with running costs reduced. Those vendors who offer thin provisioning that overlays virtualisation with incremental storage resource allocation only as needed should also be scoring at this time.

A completely separate area is a nightmare for most large organisations—software licensing. It is hard for them to keep track not only of what has been purchased but what is actually being used. Meanwhile some large software vendors, not least Microsoft, have been working hard to ensure they are receiving their full licence revenue entitlement. Here though is another opportunity.

Europe-based services giant Computacenter has realised that users, anxious to save costs (and perhaps not totally trusting vendor-biased reports on their licensing) can usually benefit from a full and independent software asset management (SAM) assessment. This can involve discovering what is being used and where throughout the organization. By offering this service, Computacenter can help the client to be legally compliant; but it also believes it can pretty well guarantee to show how major immediate and ongoing savings can be made with fine tuning. That being true, I am almost bound to again ask customers: "Why wouldn't you go for this type of service?"

The one other type of software vendor who should do well despite everything is the one whose software—as well as fulfilling a customer's specific need in a user-friendly way—just keeps running reliably. Too many software products are difficult to maintain and have minor bugs that undermine efficiency.

One company I know has bucked a market trend by bundling annual maintenance with the software itself, raising the price and selling both as one. That may sound fool-hardy, and Wall Street doubted the wisdom too. However the company is respected and the product is known for reliability, straightforward installation, and relatively modest pricing. So maintenance support is rarely needed and its customers love it. So they just keep renewing and the company has a more predictable cash-flow. Its annual maintenance renewal rates far exceed the typical channel level of about 70%. This is about savings through lack of hassle—and much of its new business comes from users' word of mouth.

The downturn looks set to go on and get worse, so customers will be looking for savings or will simply stop buying. Software vendors who can save them money may stay successful. As for the rest...

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