How should people buy software and technology services?
Perhaps the better question is how do suppliers deal with the different ways in which their end users want to buy?
It's not often the discussion about distribution strategies includes an element about how customers want to buy. Usually, these questions focus on the cost of sales, which is why some things are sold through direct sales forces and others through resellers.
But the topic has been addressed by the men running the largest companies that peddle mid-market accounting software: Doug Burgum of Microsoft Business Solutions and Ron Verni of Sage Software. Their comments aren't directly related and their conclusions stem from different products. But there is an intriguing thread running through their analysis.
It's always been clear that large companies don't like buying from small resellers. A former boss of mine says that companies like to buy from companies of a similar size: large from large down to small from small.
But there are other motivations and Verni has pointed to these when it comes to selling payroll services to companies. Some companies like to process their own payrolls while others prefer to outsource the operations. Rarely, he says, do companies with a preference for one method change to the other, and Sage has used the word "genetic" to describe this predisposition. A smart company, he reasons, has products to appeal to both groups.
In a recent interview, Burgum talked about a self-service market of businesses that don't want to deal with value-added resellers when they need to purchase financial software. Granted, some of this discussion is related to the size of the end user and, more particularly the company's pocketbook. But that's not the only factor.
There have always been do-it-yourselfers. However, I think this self-service market is growing for two reasons: 1) Even the smallest companies are often more computer savvy than they were ten years ago. 2) Software is a lot easier to work with, and, as subscription-based software takes hold, will get even easier.
The former is obvious. Computers are more a part of everyday life.
The second point is less obvious to anyone who gets frustrated with software. But remember, it wasn't that long ago that publications had sections in their product reviews about installation. That analysis became unnecessary because, in many cases, the user hits the "Install" button and wizards walk the person through the process.
This doesn't happen, of course, with complicated mid-market applications. But the size of the market in which it is possible is growing. As it grows, more buyers will be able to choose how they buy and not have this process merely remain a function of cost structures.
And the Web, of course, may make the whole discussion obsolete and change the whole logic of how selling channels are selected.
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