Hi Shege:
Agreed, the "core" of support is well understood, and entry into that core is much easier today than 8 years ago. In a previous life, I was in the CAE world (early "80s). At first, schematic capture was so new, people paid big $$ for it. Eight years later, it was a commodity product. But by then, customers needed more than schematic capture to stay competitive; they wanted simulation, layout, and libraries. The target kept moving, allowing companies like Mentor Graphics and Cadence to continue to command premiums for their products.
There will always be space for smaller and some niche midsized offerings in this area, but the key is that the customer base continues to push on the functionality boundaries in the hopes of finding that competitive edge. I agree that most customers don"t need all of our functionality (we have a HUGE amount), but the funny thing is that they THINK they do (or might in the future). No one wants to make the decision to go with a less functional vendor for fear of running into a functionality wall down the road.
Steve F made an excellent point about the 80% rule (can you tell he has sold a few of these systems?) You can build any old system that will fulfill 80% of a GIVEN customer"s requirements; unfortunately, that same product might only fulfull 40% or 30% of another customer"s needs. Interesting history story: when we started out, we were going to provide 100% of the functionality that all our customers needed. Early on, we skimped on the customization tools because everything would be "out of the box". Boy, did we get our ears slapped back; our 2.x product had significant customization and upgrade capabilities, and we continue to invest in strong customization tools.
There is definitely room for Honda"s and even Yugo"s. But price isn"t the main criteria (or even in the top 8) in these deals; the investment a company makes past the purchase is many times that initial outlay (in customization, training, deployment, etc).
However, definitely agree on the SFA expertise issue; there ain"t a lot of it around today. It was definitely one of the main upsides in our Metropolis acquisition. But I agree that the main entry barrier into SFA will be this expertise (which SEBL has a lead on, but not a monopoly).
BTW: caught SEBL ad on CNBC for first time. What"s up with that? Branding at this stage seems to me to be ego play. Also caught the conference call. 33 new customers; 25% bought both SFA and support. But Tom balked at the question of how many bought JUST support; said they didn"t have the numbers. So, they have the numbers on how many both both SFA and support, but not just support? Hmmmm, seems like ole Tom was caught again. Can we all extrapolate what that support number was? Well, it is still early...this game will go on for years to come.
We"ll work on the techno babble buzz words, right Shege?
Good luck.
ps: what exactly are work hours? Maybe my confusion stems from my inability to define non-work hours... |
