Beat the credit crunch with software that saves

Written By: Peter Williams
Published:
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…