Tag Archives: market analysis

Ten Tech Trends for Your 2012 New Year’s Resolutions List

Article first published as Ten Tech Trends for Your 2012 New Year’s Resolutions List on Technorati

BabyNewYearOne of the most exciting things about working in tech is using it to create new ways to work, play—and even live. We have seen many great technology innovations develop over the past few years. Over 2012, ten of them will complete the jump from “new concept” to “mainstream trend.” How many of them are your ready for?

1. Everything Will Be Portable. The move to portable computing (smartphones, tablets and ultrabooks) will accelerate. Thick laptops and—even worse—desktops will be a relic of the past (except for those with high-power computing needs). If you are not yet mobile- and portable-ready, you better get there very soon.

2. Augmented Reality Will Go Mainstream. Augmented Reality (AR) is no longer a science fiction concept. Smartphones and (especially) tablets are mass-market platforms for everyday augmented reality. We are already seeing the first applications at Tech Meetups, CES and more. At least three innovators will exploit this, gaining mainstream adoption, by the end of 2012.

3. Touch Will Be Ubiquitous. Over the past five years, capacitive touch interfaces have re-programmed how millions of us interact with technology. As more devices are now sold today with touch than without, it is time to begin optimizing your user interface and user experience for touch (instead of a two-button mouse and keyboard).

4. Voice Will Be Next. While the intuitiveness of touch is a leapfrog improvement over mouse-and-keyboard, it still ties up our hands. Voice-based interaction is where we need to go. Apple’s Siri began the move of voice-driven interaction into the mainstream. This year, we’ll see SDKs for iOS and Android that harness the creativity of thousands to explode use of voice.

5. Fat Will Be the New Thin. Over a decade ago, broadband Internet enabled browsers to replace thick client applications. Now, portable computing usage across low power, lossy networks (e.g., mobile, WiFi, Bluetooth) coupled with AppStore Model has brought locally installed apps back in vogue. Building web apps is not enough; you need AppStore apps too.

6. Location-based Privacy Will Be Solved. Over the last two years location-based services became really hot. Unfortunately location-related privacy issues became hot too. The move of these services into mainstream populations of tens of millions will expand anecdotal security scares into weekly news stories, forcing adoption of safer location-based privacy policies.

7. Cloud Will Be the New Norm. Cloud computing is no longer an “edge market.” It is now adopted by big enterprises, public sector agencies—and even consumer tech providers. The cost, convenience and flexibility advantages of cloud computing will make it too hard for everyone not to use—everyday—by the end of this year.

8. …So Will Twitter. While people still love to debate the reasons to use Twitter, everything from the Arab Spring to the Charlie Sheen Meltdown showed that Twitter is now a well-recognized media channel. #Election2012 will accelerate mainstream use of Twitter—with the same overwhelming intensity we have seen for years in “traditional” campaign advertising.

9. ‘Consumerization of IT’ Planned and Budgeted. Consumer tech has become so sophisticated (without sacrificing ease-of-use and intuitiveness) that we began last year to demand its use in the enterprise. 2012—the first year in which most enterprise budgets include planned projects to support the consumerization of IT—will both accelerate and “lock in” this new tech trend.

10. 2012 Will Be Declared the Begin of “The ‘Big Data’ Era.” This year we will see another 40% increase in data we need to manage. This growth, coupled with recent releases of enterprise-ready high-scale NoSQL products will begin adoption of this tech by the entire industry. Looking back, 2012 will represent the start of the global, cross-industry Big Data era.

If you haven’t started embracing these already, now is a great time to add them to your “2012 Technology New Year’s Resolution List.” Sponsor a few pilot projects in your enterprise. Buy one or two Post-CES products to help you work more efficiently at the office. Or—if you want to include the whole family—buy one to use while you shop online, watch TV or manage your household.

How to price new enterprise software products

The enterprise software market is almost always a paid one. So how do you price a brand new enterprise innovation?

sw_px-200pxSoftware is one of those “magical” goods in microeconomic terms: it has virtually no Marginal Cost. So how do you get a customer to pay you thousands—or even millions—of dollars to buy something you can reproduce for free?

If you’re looking for a “magic formula” to calculate the price of your software, you can hit the ‘back’ button. You won’t find that here. Instead, if you are looking for a strategy to establish a tangible, defensible price for an intangible innovation, read on…

STEP 1: Price by the value you create

There are many, many software pricing models. However, at the end of the day, you’re going to have to defend your quoted price. This is easiest to do, if you price based on what your customers value. Figure out what units your customers use to measure value, and then pick a price model based on those units. Now you have Value-based Unit Pricing.

STEP 2: Use ROI to establish your “list price”

Enterprise software purchases are investments in “promised value.” However, it will take a lot of work for your customer to “unlock” that value: they have to get budget approval, initiate a program, execute it without over-runs, integrate it into their business operations, etc. To make it worthwhile, your software will have to provide a large return on this upfront cost—at least 40-50%. If your software cannot do this, it will never clear the triple wicket of business sponsor, IT manager and procurement manager.

Look at the market—and more importantly—what it costs your customers to do the very thing you are trying to automate or improve. Calculate the cost per year and subtract enough for a 40% ROI. Now you have your List Price. (Note: if there is already software you want to displace, price your product to make replacement of it something that yields a 40% ROI. Why should anyone take the risk to buy your product if it is not good enough to do this?)

STEP 3: Use co-development to establish your “maximum discount”

When you go to a new customer with a new product and quote a price, they will immediately ask for a discount (especially if you are new to the market). How do you insulate yourself against this? Establish a fixed lower bound for your software that you can legitimately never price below (at least until 1-2 generations pass and everything changes).

The best way to do this is by using co-development partnerships. Co-development partners not only buy and use your product; they provide added time, people, teamwork and insight to make it better. (This is not only good for them, it is also a path you can use to establish market leadership). Co-development should be rewarded with your Maximum Discount.

Once you have done this, whenever a follow-on customer pushes for a larger discount, you can point out that your co-development partner only received your maximum discount because of the work and time they contributed.

STEP 4: Build your price rate cards

You now have all the tools you need: value-based unit pricing, list price and maximum discount for co-development. You are now ready to give your sales and contracts team all those wonderful spreadsheets to calculate the price of your new enterprise software—at least until the next generation of innovation arrives…

A Few Closing Remarks: Two things to NEVER do when pricing your software

Give it away for free to get the deal*. You will inevitably get enticed to give your software away for free to get a major customer. Don’t fall into this trap. Once you have done this you have established your software truly has zero Marginal Value (not just zero Marginal Cost). It is really hard to negotiate UP from zero. Give away add-ons, charge implementation at cost—do anything—but don’t give away enterprise software for free (*unless you are using a Freemium model, of course).

Demand premium pricing. You may be so proud of your latest and greatest software that you will want charge more than “legacy providers” for your innovation. Unfortunately, unless you can demonstrate—at a visceral level—that your software provides value that no one else can, you have destroyed the ROI value proposition of your product.

Article first published as How to price new enterprise software at Oulixeus