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January 2003: Back to Business Basics, Part 1
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Strategic Software Partners Ltd. SSP House, The Old Bakery, 44b Commercial Way, Woking, Surrey, GU21 6HW,
Tel: +44 (0)1483 747 812 Website: www.sspltd.com
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Established in 1995,
Strategic
Software
Partners
specialises in helping enterprise software companies grow locally and globally, by providing consultancy, market research, business planning and finding partners in the UK, Europe, the USA and beyond.
SSP
has the
resources,
expertise,
knowledge and
practical
experience
to
enhance,
complement or
even replace
your business
development
capabilities.
We
have decided
to use the
knowledge
that we have
gained in a
newsletter to
perhaps
eradicate
some of the
myths
relating to
technological
issues.
If you
would
like to
know more
about SSP
then please
visit our
website,
www.sspltd.com
or contact us on +44 (0)1483 747812
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Company Focus
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This
newsletter is
read by an
audience of
15,000 key
decision-makers
in the IT
software
industry.
In this
space we are
offering you
the chance to
be included
in future
newsletters.
For
more
information
on how you
can reach
potential new
partners in
the UK,
France,
Germany,
Italy, Spain,
Benelux,
Nordic
region, USA
and Middle
east email us
at
newsletter@sspltd.com
or phone +44 (0) 1483 747812 and ask for Graham.
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Toplevel Computing are a UK
Software company who develop
the OfficeForms suite of
products. OfficeForms improves
data collection with intelligent,
dynamic e-forms that are
easier to use than paper. Costs
fall because quality data
reduces form rejection rates
and effort keying received
form. OfficeForms smart client
e-forms are designed for
employees or trading partners,
OfficeForms
zero client HTML e-forms are
ideal for citizen facing use. SSP
are undertaking a project in
partnership with TopLevel to
increase their reseller and
distributor partners throughout
the UK market. |
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The Database Group.
To
implement data-based
marketing, you need an expert,
independent partner with a
proven track record.
Independence frees you from
reliance on any single targeting
system. Independence releases
you from being tied into any one
software application.
Independence gives you the
tools which work best for you.
The Database Group is just such
an independent service business,
and its success has been built on
the reputation of its employees
and the satisfaction of its
customers.
Sysmetric Solutions are a
multinational software
development house with a wealth
of experience. With offices in the
UK and USA, with their
development headquarters in
India, Sysmetric boast an
impressive array of development
skills including MS SQL, NT, .Net,
Delphi, Magic, Sybase, Oracle,
Javascript, Visual Basic, ASP.
Sysmetric are committed to
delivering projects on-time, within
budget and to exacting
standards.
SSP have put together a 4 part
series of newsletters on Partnering
in a Global Economy into a handy
guide. This 12 page booklet
offers advice on the types of
partnership likely to succeed, how
to find the right partners, how to
negotiate deals and, crucially,
how to go about managing the
channel once it is created. This
booklet can be obtained by emailing your details to us.
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Part 1 Validating your ideas
First
of all a very
prosperous
New Year to
all our
readers and
let us hope
that 2003 is
an
improvement
on 2002.
During
the next four
issues SSP
will be
focusing on
the theme of
back to
business
basics (B2B2)
and
highlighting
those
elements that
we believe
are crucial
for success
for
technology
companies.
During the
latter part
of 2002 SSP
met with many
fledgling
companies
struggling to
raise funds,
get to market
and generally
bemoaning the
state of the
industry.
These
companies
believed that
they had
developed
superior
technology
and were
highly
critical of
investors and
venture
capitalists
that simply
did not
understand
the
technology or
what they
were doing.
Upon closer
scrutiny, SSP
started to
analyse a
selection of
companies in
similar
situations
and the
business
models they
were adopting.
The Traditional Technology Business Model
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Initial Idea
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Leave
job/fund
privately
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Develop product
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Development
Overrun
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Business
plan
to
raise
cash
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Cash
shortfalls
late
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Early sales late
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No
cash
for
marketing
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This model has been around for years and many companies could sustain an income
stream from revenues generated by early adopters and innovators. However in the
current climate this market has been significantly reduced. So if you are an aspiring
Innovator and Entrepreneur what model should you follow today?
How technology markets have changed
In our opinion and experience there has been a fundamental change in our industry.
That shift is that most buyers have forsaken innovation for consolidation. Buyers will
only look at new technology if there is a business case for its adoption. Similarly the
investment community has now accepted that the days of twenty, thirty times or
more return on capital are over. Everywhere there is caution. However, a good
entrepreneur will exploit this because there will always be opportunities. The
fundamental change we anticipate is that more attention will be required at the risk
analysis stage and that there will be far more commodititasion and marketing required
to be successful.
The New Model for Technology Innovation
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Initial Idea
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Business advice
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Market
research
and
feasability
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Business Plan
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Detailed
development
specification
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Outsourced
development
to
agreed
timescales
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Sponsorship
programme
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Outsourced
marketing
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Outsourced
sales
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From Cottage Industry to Collaboration
The new model will demand that there is collaboration at the outset. Ideas need to be
scrutinised and validated. Do they make business sense? Will they make money? What
is the exit strategy?
Recognition needs to be made that skills, expertise and knowledge that are
complementary to the Entrepreneur need to be brought in as early as possible. For
instance do you have the skills to accurately size a market and categorise the types of
buyer?
Do you have the skills and the bravery to recognise that if your opportunity is really
large that you actually can REDUCE your risks by going global rather than just being
local to start with.
Can you conduct real market research rather than validate your own
preconceptioncetions of what you want to believe?
Can you write a business plan that is both a roadmap of objectives and an aid to
raising cash?
Validation of your idea
Before you embark on detailed market research or develop a detailed business plan it is
essential to validate your ideas. We would advise you to do the following:
- Explain the benefits of what your product does to someone who will NEVER ever
use it and carefully record all their answers.
- Write down in one page the reason why you want to develop the product.
- Write down all the reasons why you should not develop this product
- List any technology innovation that you will develop and carefully detail the
benefits and to whom
- Estimate your development costs and timescales
- Estimate your market size by location,type and size
- Estimate your potential buyer’s buying cycle
- Estimate your break-even point
- Estimate when you will generate a return on capital of 15%
Now the probability is that you will not be able to validate all of these answers without
assistance. You will need the critical external advice at this stage more than at any
other time. Better to validate a dumb idea now than let the ego run riot and spend and
waste valuable cash.
If the idea gets past this stage and you are still undeterred then the next stage is to
conduct more detailed market reseach and create the business plan for both internal
usage and as a prequisite to raising finance. That will be the topic for the February
newsletter.
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Strategic Software Press
is published by
Strategic Software Partners
Ltd. All rights reserved. Contents may not be
reproduced in whole or part without the written consent of the publishers. Copyright 2002.
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