I want to acknowledge an interesting article published on the topic of how software products are priced. The article is titled Enterprise Software Pricing: At the Tipping Point? It has been published by TPSA partner NeoChange, and the entire article can be downloaded by clicking here.
The reason I believe this article is important is that it begs the same question I asked the audience at our Silicon Valley summit this past Spring:
How much do product company customers value the product by itself?
Does a piece of software or hardware solve a business problem out of the box? Never. Customers need help adopting and leveraging the power of any given technology. To make this point, I used the picture of a set of Russian nesting dolls as shown below:
Product companies are constantly marketing business solutions. Product companies want to be considered trusted business partners to their customers. However, take the above picture to the head of sales in a product company and see if they truly buy into the message. For that matter, take it to the CEO, COO, or CFO.
Neochange attended the TPSA Spring conference and incorporated the above image into this white paper. More importantly, it contains some interesting data that shows the image is absolutely becoming true in the world of enterprise software. TPSA, and our sister associations SSPA and AFSMI, believe the traditional product sale is an artifact of the past. Enterprise customers want to consume business improvement—not product features. And we believe the internal service organizations within the product company are the fundamental source for enabling product adoption that leads to business impact. Whether the service organization delivers a service directly or enables service partners, they must own the identification and development of offerings that unlock product potential.
There is no new ground covered in the posting. In many ways, this dialogue is motherhood and apple pie to all service professionals that work for a product company. But look at the white paper—we need to move beyond platitudes. That is, if we want to keep our customers.