Thursday, April 28, 2005
Saturday, April 23, 2005
RedPrairie to be Acquired by Francisco Partners
Source: ARC Wire
RedPrairie Corporation, a provider of supply chain technology solutions that enable business process transformation announced it has entered into a definitive agreement to be acquired by Francisco Partners, a technology-focused private equity funds.
Francisco Partners is a technology-focused investment firm. It invests in public and private technology companies at inflection points, where its strategic insight and long-term focus give it a differentiated view of investment value. Francisco Partners provides transformational capital by working in close concert with the management team to reposition, recapitalize, or otherwise rejuvenate companies to support strong long-term value creation.
Adrian Gonzalez, ARC Advisory Group, commented, "This news confirms a rumor that had been circulating for a couple of weeks. As the software landscape continues to consolidate--and the large enterprise players like Oracle, SAP, SSA Global, and Microsoft become more powerful--vendors like RedPrairie are being forced to think defensively and find new sources of capital to accelerate growth. Going public continues to be a challenge for small and midsized software vendors, especially with the added costs and constraints inflicted by Sarbanes-Oxley. Therefore, it's not surprising that RedPrairie and others are going the private equity route--i.e. consolidating ownership under one entity and pursuing a roll-up strategy (a strategy that's easier to pursue as a private entity instead of a public company). The rumor that was floating around also said that a large Transportation Management Systems vendor was also being acquired. It remains to be seen whether this comes true, but additional acquisitions will certainly occur this year. What does this mean to customers? Being acquired by an equity firm is arguably less disruptive than being acquired by another software company. So in the near term, it's business as usual. It remains to be seen what changes Francisco Partners makes down the road from a strategy and acquisitions perspective."
RedPrairie Corporation, a provider of supply chain technology solutions that enable business process transformation announced it has entered into a definitive agreement to be acquired by Francisco Partners, a technology-focused private equity funds.
Francisco Partners is a technology-focused investment firm. It invests in public and private technology companies at inflection points, where its strategic insight and long-term focus give it a differentiated view of investment value. Francisco Partners provides transformational capital by working in close concert with the management team to reposition, recapitalize, or otherwise rejuvenate companies to support strong long-term value creation.
Adrian Gonzalez, ARC Advisory Group, commented, "This news confirms a rumor that had been circulating for a couple of weeks. As the software landscape continues to consolidate--and the large enterprise players like Oracle, SAP, SSA Global, and Microsoft become more powerful--vendors like RedPrairie are being forced to think defensively and find new sources of capital to accelerate growth. Going public continues to be a challenge for small and midsized software vendors, especially with the added costs and constraints inflicted by Sarbanes-Oxley. Therefore, it's not surprising that RedPrairie and others are going the private equity route--i.e. consolidating ownership under one entity and pursuing a roll-up strategy (a strategy that's easier to pursue as a private entity instead of a public company). The rumor that was floating around also said that a large Transportation Management Systems vendor was also being acquired. It remains to be seen whether this comes true, but additional acquisitions will certainly occur this year. What does this mean to customers? Being acquired by an equity firm is arguably less disruptive than being acquired by another software company. So in the near term, it's business as usual. It remains to be seen what changes Francisco Partners makes down the road from a strategy and acquisitions perspective."
Friday, April 22, 2005
Tuesday, April 19, 2005
Wednesday, April 13, 2005
The Slippery Slope Of Moving R&D Overseas
The most frightening statement in "Outsourcing innovation" (Special Report, Mar. 21) was from Quanta's Barry Lam: "It's now difficult to get good ideas from our customers." This shows what the real threat is. You can't develop new product ideas if you can't integrate intimate knowledge of the market with knowledge of emerging technologies. Companies that pretend these interlocking streams can be separated won't be around for long. The last thing they will outsource is the chief executive and the board.
Daniel E. Whitney
MIT Engineering Systems Div.
Cambridge, Mass.
It is frightening to think that the bean counters' new "target of the day" is the amount Corporate America should spend on R&D. In one tidy, neat statement, Allen J. Delattre of Accenture (ACN ) has relegated research and development to line-item status -- as nothing more than the last great "controllable expense" on the ledger. Delattre's comments are those of a tactician, the same mind-set that stated at the turn of the 20th century that all new important inventions had already been invented or that Einstein was a lazy student who would amount to little.
The continuing success of America's ability to innovate needs to be articulated with a sense of strategic vision by someone who will not ask: How much does "X" save us in making our new widget? Rather he will ask, how will our widget revolutionize the world? Focus on the correct question, and the appropriate savings and profit will follow.
Louis Janicek
Ramsey, N.J.
There is a business term for companies that leave manufacturing and design to others -- they're called retailers. Once the Asian companies get their own brand name and distribution network, they won't be working for us anymore, they'll be working for themselves.
Paul Wetor
Wauwatosa, Wis.
I surely cannot be the only one who has noticed the disconnect between what corporate CEOs are saying and what they are doing. On the one hand, they complain that the U.S. education system does not focus enough on math and science and does not produce enough graduates to fill high-tech engineering jobs. On the other hand, they fire the talented and experienced engineers that helped build their companies so they can outsource those jobs.
Dan Tischendorf
New Cumberland, Pa.
I think you missed a critical distinction: When the dominant design, technology, and features have been established in a category, the important work of gaining sales and share by getting those features and costs right are not the province of the high-value R&D experts or scientists. Rather, this type of work requires good intuitive and interactive work among feature engineers, usability teams, and cost-down teams.
The high-value work of inventing breakthrough science and capabilities still seems to rest with the R&D geniuses who are worth their weight in gold.
Fred Heller
Stamford, Conn.
It is naive to assume that Silicon Valley and the U.S. have a monopoly on creativity and innovation. The argument, cited often in this article, that intimacy with the customer is an edge in this global competition is also naive: It presumes that there are no markets other than the U.S. to which Chinese, Taiwanese, and Indian manufacturers can direct their advanced products.
Outsourcing technology development is a slippery slope. In a number of software companies I am closely familiar with, it began with sending quality-assurance work overseas, then bug-fixing (which requires intimacy with code), and finally the entire product development (since bug-fixers eventually became coders).
Jon Handaru
Palo Alto, Calif.
I have worked at major software companies, including such icons as Sybase Inc. (SY ) and J.D. Edwards, for the past 20-plus years as a software engineer in various capacities. As far as I know, both Sybase and Oracle Corp. (ORCL ) outsourced entire maintenance engineering to India many years ago to compete with each other. Now almost all development has moved to India. I can guarantee that next generations of database engines will start from India, not from the U.S.
No engineer starts developing high-end products from zero. Such people learn their trade from a master -- as with music, carpentry, etc. -- by maintaining their codes for years and in time take it to next level. We are so shortsighted on giving away our crown jewels. Maybe it is the problem with capitalism.
Nick Shener
Alameda, Calif.
There's More Than One Way To Bring Radio To Life
I enjoyed "The new radio revolution" (News: Analysis & Commentary, Mar. 14). The 1996 rewrite of the Telecommunications Act was a near death blow to radio. Radio was already getting pretty boring, but letting four companies own most of the radio stations and automate boredom was criminal. Tuning across the dial, it sounds as if there are only four or five stations, cloned and repeated, playing the same tiny group of songs over and over.
The National Association of Broadcasters thinks that going digital and having CD-quality sound will save them. I think not. Digital boredom will be just as boring as analog boredom.
Stephen Hawkins
Boone, Iowa
You overlooked the one device that will grab share and revenue from current and new broadcasting technologies such as pod-casting and satellite. Although still in its infancy, the streaming of radio programming through a cell phone, known as mobile streaming, combines the best features of all other broadcasting technologies. Users can receive preprogrammed or personalized programming, purchase music they hear, and easily send recommended programming or songs to friends. Most importantly, mobile streaming provides operators with strong, recurring revenue streams. There certainly is a radio revolution taking place, but the battlefield will move to the cell phone.
Gilles Babinet
Chairman and Co-Founder
Musiwave
Paris
Commercial radio is becoming its own worst enemy -- because it is putting profits first and customer satisfaction second. Stupid commentary from deejays, endless commercials, and the like have driven me away. It was only a matter of time until this business model came crashing down. I believe that Internet radio is in a position to become a primary medium. I like my Internet radio station so much that sometimes I have to turn it off in order to focus on my work -- it's that good!
Tom Caine
Mountain Lakes, N.J.
Copyright 2000-2004, by The McGraw-Hill Companies Inc. All rights reserved.
Terms of Use Privacy Notice
Monday, April 11, 2005
Saturday, April 09, 2005
Funding Your Software Venture
When my partners and I started ASE Services, Inc. in 1980, there wasn't a lot in the way of Venture Financing available. Instead, we relied on good old fashion bootstrap financing. We didn't know what bootstrapping was at the time - all we knew was that we were starting a business and had no money - so we found clever ways to make it work. First, we started as a services business offering local IBM sales people a way to bring manufacturing resource planning consulting and programming expertise to new prospect situations in order to help IBM "close the deal" against HP and Digital (who were starting to win more deals locally through partnerships with companies such as ASK.)
None of us had any formal sales experience but we did know what we were talking about and knew it better than anyone else in the area. So we started consulting, writing code, installing packages, then selling and supporting packages. We outsourced our work to subcontractors until there was enough load to add them full time and grew our business this way so that during light load times we could turn off the valve. I remember going several months initially without a pay day and using my credit cards for cash advances so that the mortgage was paid and my family ate.
Bottom line was that we did whatever it took to get the business running and to keep it growing and within a year we were all making more than we had ever thought possible. We built a repeatable sales model, hired reps and pre-sales consultants (a crucial role we thought we invented in 1980) and became the largest VAR of SSA's Business Planning and Control System - BPCS(TM) and several years into it had a $20million local business which was acquired by SSA 6 months after their IPO. ASE had more MRP/ERP clients in New England than any other software company including IBM with MAPICS. We had a vision of "owning the market" and achieved it.
We never had any VC money, nor angel funding. We bootstrapped out of cash flow by being totally up front with customers. We earned the right (with our expertise and full service and guaranteed success approach) to ask for payments in advance. By earning a reputation for excellence (won IBM's customer excellence award) and for delivering on our promises, we were able to convince customers we were the best path to success and they were willing to "partner" with us. We delivered more value with less risk and the business grew. We never had to touch the $50k line of credit until it was time to build a building to house our operation. We obtained a "no money down" loan from the state (Mass.) industrial finance authority at 75% of prime for $1mill to build a 15,000 sq ft building which we leased back to ourselves (the lease ran coterminous with the mortgage and when we sold the business the lease went with to provide us with a nice cash flow after the deal.) The mortgage transaction cost us $50k in legal fees - well worth it.
There are many ways to raise money which are outside the now traditional angels and VC channels. Start by looking creatively at savings, friends & family (but understand the implications if you fail), credit cards, home equity loans, bank loans, federal and local government money, SBA, IP licensing to an OEM, line of credit, bank loans, pre-pay or down payment terms, outsourcing with terms that pay when you get paid, partner marketing co-op funds, suppliers, etc.
You need to earn the right to go to Angels, Angel Groups and VC's. You need to show you have the right stuff for today's typically gun shy investors. Most investors have returned to the basics of looking for companies that have a more proven track record for success. Companies with experienced management teams, developed products, large markets, and paying customers (who are willing to stand up and be references) and companies with value proposition proof points. You may ask, why would I need money if I had all that going for my company already? Maybe you don't - you can bootstrap if you have the time. But if time isn't your friend, then you need to think about outside funding.
IPO's are another source of funding. SSA went public at approx. $60mill in revenue and used the money for rapid expansion (100% growth for a few years.) I have been fortunate enough to have benefited from IPO's with SSA, Effective Management Systems, Firepond, PrimeResponse & Eyretel. In each case we loaded up the war chest for growth and it gave us the strength to land major contracts with companies concerned about viability. A very small number of companies actually make it to an IPO and even a smaller amount survive the post IPO expectations. It can also an expensive way to raise money. Now with the SOX Act, it can easily cost $2mill/year to stay public. And valuations "ain't what they used to be", although they are still higher than what you may get from other sources.
Another approach is one we used on my second journey with SSA. I had returned, as Americas president, when the company was stagnated at $350mill. In revenue and was in the midst of a technology transition from AS/400 focused to being on a distributed object computing architecture (that's another story...) This time we used convertible debt to raise $150mill in the second round of financing the company went out for in 1999. SSA had gone the first six years on a boot strap, then grew from '87 thru '98 with nothing more than the IPO raise. Now it was faced with extinction due to the drain of R&D and lack of entrepreneurial spirit in the company (especially in sales and marketing.) So in a addition to the raise we got back to basics in the field. We focused the sales force on verticals and geographies as well as the install base. We removed the marginal players and added "A" level players. We installed CRM tracking infrastructure to manage the sales pipeline and sales process. We cranked up the marketing and focused back on a TEAM selling approach. Within a very short time we were growing again (at 35%/year for the next several years) which helped cash tremendously.
In addition we got the boot straps out again and came up with additional ways to raise cash from customers, royalties, suppliers etc. Pre-paid multi-year maintenance plans, technology change insurance policies, co-op marketing, cross-sell and up-sell campaigns, resale of complimentary products, increased focus on services revenue and consulting....all of these thing helped SSA survive a very challenging time.
SSA was not able, however, to raise enough overcome poor R&D execution. At that time,SSA suffered from an inability to deliver on the technology transition in the time frame that was promised. The result was that the company created it's own chasm to cross and was faced chapter 11 and subsequently acquired, at a bargain price, by investor group who took it out of Ch11 and took it private. Now SSA is growing by investing in acquisition of products and customer bases at good prices and is once again profitable and attractive - demonstrating that regardless of how things are, if you are agile and funded properly you can find a way to turn things around. SSA recently filed for another IPO (or should be called an sIPO - second Initial Public Offering?!)
In any event, the message is to get creative when raising money and treat meetings with potential sources of funds as the sales call of your life time. And, especially if going to angels or VC’s, make sure you are prepared... anticipate their question, stay confident, know their background and funding objectives.... and make sure your “A” team is on their “A” game.
None of us had any formal sales experience but we did know what we were talking about and knew it better than anyone else in the area. So we started consulting, writing code, installing packages, then selling and supporting packages. We outsourced our work to subcontractors until there was enough load to add them full time and grew our business this way so that during light load times we could turn off the valve. I remember going several months initially without a pay day and using my credit cards for cash advances so that the mortgage was paid and my family ate.
Bottom line was that we did whatever it took to get the business running and to keep it growing and within a year we were all making more than we had ever thought possible. We built a repeatable sales model, hired reps and pre-sales consultants (a crucial role we thought we invented in 1980) and became the largest VAR of SSA's Business Planning and Control System - BPCS(TM) and several years into it had a $20million local business which was acquired by SSA 6 months after their IPO. ASE had more MRP/ERP clients in New England than any other software company including IBM with MAPICS. We had a vision of "owning the market" and achieved it.
We never had any VC money, nor angel funding. We bootstrapped out of cash flow by being totally up front with customers. We earned the right (with our expertise and full service and guaranteed success approach) to ask for payments in advance. By earning a reputation for excellence (won IBM's customer excellence award) and for delivering on our promises, we were able to convince customers we were the best path to success and they were willing to "partner" with us. We delivered more value with less risk and the business grew. We never had to touch the $50k line of credit until it was time to build a building to house our operation. We obtained a "no money down" loan from the state (Mass.) industrial finance authority at 75% of prime for $1mill to build a 15,000 sq ft building which we leased back to ourselves (the lease ran coterminous with the mortgage and when we sold the business the lease went with to provide us with a nice cash flow after the deal.) The mortgage transaction cost us $50k in legal fees - well worth it.
There are many ways to raise money which are outside the now traditional angels and VC channels. Start by looking creatively at savings, friends & family (but understand the implications if you fail), credit cards, home equity loans, bank loans, federal and local government money, SBA, IP licensing to an OEM, line of credit, bank loans, pre-pay or down payment terms, outsourcing with terms that pay when you get paid, partner marketing co-op funds, suppliers, etc.
You need to earn the right to go to Angels, Angel Groups and VC's. You need to show you have the right stuff for today's typically gun shy investors. Most investors have returned to the basics of looking for companies that have a more proven track record for success. Companies with experienced management teams, developed products, large markets, and paying customers (who are willing to stand up and be references) and companies with value proposition proof points. You may ask, why would I need money if I had all that going for my company already? Maybe you don't - you can bootstrap if you have the time. But if time isn't your friend, then you need to think about outside funding.
IPO's are another source of funding. SSA went public at approx. $60mill in revenue and used the money for rapid expansion (100% growth for a few years.) I have been fortunate enough to have benefited from IPO's with SSA, Effective Management Systems, Firepond, PrimeResponse & Eyretel. In each case we loaded up the war chest for growth and it gave us the strength to land major contracts with companies concerned about viability. A very small number of companies actually make it to an IPO and even a smaller amount survive the post IPO expectations. It can also an expensive way to raise money. Now with the SOX Act, it can easily cost $2mill/year to stay public. And valuations "ain't what they used to be", although they are still higher than what you may get from other sources.
Another approach is one we used on my second journey with SSA. I had returned, as Americas president, when the company was stagnated at $350mill. In revenue and was in the midst of a technology transition from AS/400 focused to being on a distributed object computing architecture (that's another story...) This time we used convertible debt to raise $150mill in the second round of financing the company went out for in 1999. SSA had gone the first six years on a boot strap, then grew from '87 thru '98 with nothing more than the IPO raise. Now it was faced with extinction due to the drain of R&D and lack of entrepreneurial spirit in the company (especially in sales and marketing.) So in a addition to the raise we got back to basics in the field. We focused the sales force on verticals and geographies as well as the install base. We removed the marginal players and added "A" level players. We installed CRM tracking infrastructure to manage the sales pipeline and sales process. We cranked up the marketing and focused back on a TEAM selling approach. Within a very short time we were growing again (at 35%/year for the next several years) which helped cash tremendously.
In addition we got the boot straps out again and came up with additional ways to raise cash from customers, royalties, suppliers etc. Pre-paid multi-year maintenance plans, technology change insurance policies, co-op marketing, cross-sell and up-sell campaigns, resale of complimentary products, increased focus on services revenue and consulting....all of these thing helped SSA survive a very challenging time.
SSA was not able, however, to raise enough overcome poor R&D execution. At that time,SSA suffered from an inability to deliver on the technology transition in the time frame that was promised. The result was that the company created it's own chasm to cross and was faced chapter 11 and subsequently acquired, at a bargain price, by investor group who took it out of Ch11 and took it private. Now SSA is growing by investing in acquisition of products and customer bases at good prices and is once again profitable and attractive - demonstrating that regardless of how things are, if you are agile and funded properly you can find a way to turn things around. SSA recently filed for another IPO (or should be called an sIPO - second Initial Public Offering?!)
In any event, the message is to get creative when raising money and treat meetings with potential sources of funds as the sales call of your life time. And, especially if going to angels or VC’s, make sure you are prepared... anticipate their question, stay confident, know their background and funding objectives.... and make sure your “A” team is on their “A” game.
Tuesday, April 05, 2005
Knievel's Wild Ride - Terrific Premier Show
Just finished watching Robbie Knievel and Crew's first show. I thought it had alot to offer. Reality, entertainment, fun, excitement and a feel for Robbies lifestyle. Great job guys !
Spring thaw in spending freeze: replace or be replaced.
News Story by Thomas Hoffman APRIL 04, 2005 (COMPUTERWORLD)
- A thaw in the four-year IT spending freeze is becoming more evident as companies are slowly beginning to look at replacing core applications with newer systems that offer improved functionality and scalability, IT managers and analysts said last week.
At the same time, some organizations are using Web services and service-oriented architectures to extend some older applications in addition to installing new ones.
For instance, DTE Energy Co. in Detroit is deploying ERP software from SAP AG to replace five financial systems, two mainframe supply chain management systems and one human resources system, said CIO Lynne Ellyn.
The energy supplier is also replacing two distribution operations systems and nine implementations of a plant work management system with Maximo, an asset and service management system from Bedford, Mass.-based MRO Software Inc., she said.
DTE Energy is simultaneously harnessing Web services to help it develop applications for functions that few, if any, commercial systems can automate, said Ellyn.
Varied Predictions
In a survey of 118 senior financial executives published late last month by Iselin, N.J.-based Siemens Financial Services Inc., 73% of the respondents said they expect to have shorter replacement cycles for software over the next five years.
But Bill Zadrozny, president and CEO of the Siemens AG unit, which offers financing for hardware and software purchases, said he hasn't seen any significant increases in software spending from Siemens' users so far this year.
"We're hearing it from customers, but we're not seeing it yet," Zadrozny said.
Fenella Scott, an analyst at AMR Research Inc. in Boston, said the frequency of software replacement cited in the Siemens survey "seems a little aggressive." She estimated that roughly 5% of AMR's manufacturing industry customers plan to replace their core packaged applications over the next 12 months.
Harrah's Entertainment Inc. is making increased use of middleware from vendors such as Tibco Software Inc. to more closely integrate its existing systems, said Tim Stanley, vice president of IT and CIO at the Las Vegas-based gaming and hotel company.
But Harrah's is also upgrading its core off-the-shelf applications more frequently in order to migrate to newer versions that Stanley hopes will contain fewer bugs "and put us on a more predictable path."
Other CIOs, such as John Schille at American Fidelity Assurance Co. in Oklahoma City, said they aren't planning to increase software replacement over the near term because their applications are working as expected.
Kathy Quirk, an analyst at Nucleus Research Inc. in Wellesley, Mass., said, "What I'm seeing is that a lot of companies are selectively replacing software, depending on the business need." That includes instances where companies are consolidating multiple packages of CRM and other types of software onto a single platform or are upgrading various business users onto the same version of a system, she added.
- A thaw in the four-year IT spending freeze is becoming more evident as companies are slowly beginning to look at replacing core applications with newer systems that offer improved functionality and scalability, IT managers and analysts said last week.
At the same time, some organizations are using Web services and service-oriented architectures to extend some older applications in addition to installing new ones.
For instance, DTE Energy Co. in Detroit is deploying ERP software from SAP AG to replace five financial systems, two mainframe supply chain management systems and one human resources system, said CIO Lynne Ellyn.
The energy supplier is also replacing two distribution operations systems and nine implementations of a plant work management system with Maximo, an asset and service management system from Bedford, Mass.-based MRO Software Inc., she said.
DTE Energy is simultaneously harnessing Web services to help it develop applications for functions that few, if any, commercial systems can automate, said Ellyn.
Varied Predictions
In a survey of 118 senior financial executives published late last month by Iselin, N.J.-based Siemens Financial Services Inc., 73% of the respondents said they expect to have shorter replacement cycles for software over the next five years.
But Bill Zadrozny, president and CEO of the Siemens AG unit, which offers financing for hardware and software purchases, said he hasn't seen any significant increases in software spending from Siemens' users so far this year.
"We're hearing it from customers, but we're not seeing it yet," Zadrozny said.
Fenella Scott, an analyst at AMR Research Inc. in Boston, said the frequency of software replacement cited in the Siemens survey "seems a little aggressive." She estimated that roughly 5% of AMR's manufacturing industry customers plan to replace their core packaged applications over the next 12 months.
Harrah's Entertainment Inc. is making increased use of middleware from vendors such as Tibco Software Inc. to more closely integrate its existing systems, said Tim Stanley, vice president of IT and CIO at the Las Vegas-based gaming and hotel company.
But Harrah's is also upgrading its core off-the-shelf applications more frequently in order to migrate to newer versions that Stanley hopes will contain fewer bugs "and put us on a more predictable path."
Other CIOs, such as John Schille at American Fidelity Assurance Co. in Oklahoma City, said they aren't planning to increase software replacement over the near term because their applications are working as expected.
Kathy Quirk, an analyst at Nucleus Research Inc. in Wellesley, Mass., said, "What I'm seeing is that a lot of companies are selectively replacing software, depending on the business need." That includes instances where companies are consolidating multiple packages of CRM and other types of software onto a single platform or are upgrading various business users onto the same version of a system, she added.
Saturday, April 02, 2005
How are Lifecycles Influencing Your Revenue Growth?
Your organization and its products, markets and buyers that produce one time or ongoing revenue streams each have a lifecycle.
A lifecycle has a beginning (birth) and a end (death). Each lifecycle includes stages of maturity. Maturity stages within lifecycles will impact your revenue balance as it relates to various lifecycles and revenue generation. In order to effectively plan for growth an organization must analyze these lifecycles and map them against their existing organization’s lifecycle and growth plans.
Lifecycles include certain influencing factors. An influencing factor could be something as subjective as analyst coverage or something much more tangible such as a buyer procurement cycle. The objective of this briefing is to expose specific lifecycles and illustrate how your organizations revenue balance and growth could be impacted based upon lifecycle stages and influencing factors.
Product and services organizations are structured and managed differently. Both have unique revenue recognition, utilization, profit and lifecycle nuances to manage. Organizations that fail to find the "right" revenue and profit balance supporting double digit revenue and value growth often find themselves struggling with cyclical cash flow issues that typically inhibit profitable growth. Identifying various lifecycles that impact your organization and creating a strategy to ensure proper revenue balance will be critical to the success of your organization.
Executive teams should consider that revenue and profit projections are dependent upon lifecycle stages and must factor the following lifecycle influencers when creating growth strategies:
The Lifecycle of the Marketplace or Market Segment:
A lifecycle has a beginning (birth) and a end (death). Each lifecycle includes stages of maturity. Maturity stages within lifecycles will impact your revenue balance as it relates to various lifecycles and revenue generation. In order to effectively plan for growth an organization must analyze these lifecycles and map them against their existing organization’s lifecycle and growth plans.
Lifecycles include certain influencing factors. An influencing factor could be something as subjective as analyst coverage or something much more tangible such as a buyer procurement cycle. The objective of this briefing is to expose specific lifecycles and illustrate how your organizations revenue balance and growth could be impacted based upon lifecycle stages and influencing factors.
Product and services organizations are structured and managed differently. Both have unique revenue recognition, utilization, profit and lifecycle nuances to manage. Organizations that fail to find the "right" revenue and profit balance supporting double digit revenue and value growth often find themselves struggling with cyclical cash flow issues that typically inhibit profitable growth. Identifying various lifecycles that impact your organization and creating a strategy to ensure proper revenue balance will be critical to the success of your organization.
Executive teams should consider that revenue and profit projections are dependent upon lifecycle stages and must factor the following lifecycle influencers when creating growth strategies:
The Lifecycle of the Marketplace or Market Segment:
- Immature
- Evolving
- Emerging
- Mature
- Declining
Lifecycle of the organization selling within the segment:
- Start Up
- Early Stage
- High Growth
- Mature
- Declining
Lifecycle of the product or service being sold within the market segment:
- Immature
- Emerging
- Mature
- Commodity
- Declining
Demographic and adopter cycle of buyer within market (based on Geoffrey Moore's Crossing the Chasm):
- Innovator - Leaders
- Early adopter (Visionary) - Winners
- Early majority-MAINSTREAM MARKET POPULATION - Pragmatists - Vertical Buyers
- Late majority - Conservatives
- Laggard - Skeptics - Losers
5 Quick questions to ask yourself on lifecycle preparedness:
- Have you documented and analyzed the various lifecycles within your market segment?
- Have you created growth and financial models for each level of those lifecycles?
- Have you identified what lifecycle stage(s) determines high growth for your firm?
- Have you created processes and disciplines around revenue generation and marketing within your organization to ensure lifecycle awareness and tracking?
- Have you validated your go to market and performed a lifecycle and revenue growth gap analysis to identify inhibitors that might have not shown themselves yet?
Awareness, demand and education is often required to pull prospective clients to your organization but in order to produce effective marketing materials, sales communication and approaches within your go to market you must first understand the lifecycle of your company in relation to the product, market, and buyer.
Mastery of balanced revenue growth and lifecycle alignment is critical within executive levels of any organization. This level of knowledge is not found in educational institutions but through experience in building high performing marketing and revenue generating organizations.
Lack of experience and comprehension of revenue balance and lifecycles has fueled the following statistics:
- Sales and Marketing turn over in the high tech marketplace was over 72% in 2004
- In 2003 63% of Fortune 500 CEOs had been on the job less than 1 year; some organizations estimated that since 1998 nearly two thirds of the worlds companies had replaced their CEOs.
- CFO turn over has spiked between December 1st 2004 to January 31st 2005 up nearly 200% from the same time last year
- Hi Tech CEOs have some of the highest turn over rates
- Debt in businesses with less than 500 employees has grown from $680 Billion to over $1.3 Trillion since 1998
*1.Culpepper 2.Fortune Magazine 3. Drake Beam Morn (DBM) 4. Booz Allen Hamilton 5. SBA
Influencers and inhibitors to revenue and value growth with various lifecycle segments can be identified and addressed through revenue and market place audits and analysis.
For more information on having VentureFuel perform and audit and analysis for you contact me at 401 475 3106 or email Paul Lavallee at VentureFuel.
Subscribe to:
Posts (Atom)