Licensing and software management as a business

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Interview with an entrepreneur:

Licensing and software management as a business

The site clogicsecure.com, as part of a joint project of the Community of Information Portals Promoting the Development of Small Businesses, continues a series of interviews with successful entrepreneurs who are ready to share their own experience in creating a business and help newcomers take their first steps in business.

" In theory, the minimum threshold for entry is the cost of registering a legal entity. In practice, capital investments can tend to infinity. "

Sergey Pronin, Director of Logisiel LLC, shared the experience of creating a company specializing in software management and licensing with clogicsecure.com readers.

Sergey, tell us a little about your company.

Three years ago, developing the development concept of the company Logisiel (fr. Le logiciel - software), I came to the conclusion that to achieve a truly high professional level is possible only within the framework of one specific area of ​​activity. This direction for Logisiel was, first, software licensing, and later, literally less than a year ago, grew into software management as assets (Software Asset Management).

SAM helps manage the software that is used in the job throughout its life cycle. That is, literally, from the moment when it was needed to the moment when it is no longer needed. Or when the rights to use it expired.

Need, budgeting, buying, installing, updating - these are all parts of constantly performed operations with programs. SAM is a standardized approach to their implementation.

Many people think about starting their own business, but not all of them eventually open it: they stop the fear of uncertainty, instability, high risks, etc. Have you easily made the decision to become an entrepreneur? How did you come up with the idea of ​​starting this particular business?

The idea that it is time to engage in independent activities has ripened since his student years. After some time of employment, having gained experience and connections, I realized that I already physically can’t continue to work for a share of the profit in other IT companies.

It got to the point that on my shoulders grew one after another business of companies that provided me only with infrastructure - a workplace, telephony, marketing, accounting, a legal entity, personnel, etc.

I really love my profession, so the prospect of doing what I love as a non-subordinate and a leader was very attractive, and essentially had no alternatives. All that remained was to find a niche in the market, understand what people needed and act by outsourcing the infrastructure.

How did you implement the idea? How long did the implementation of the idea take?

I made my first attempts to conduct independent activity while still working for hire in a company in which I headed the sales department for information technology (supply of everything related to IT - hardware, software, office equipment and the provision of services for launching these products). At that time, I already had on my shoulders purchases, and managing a sales department + working with key customers, and setting tasks for service engineers. My work was paid at a ridiculous rate and a generous percentage of profits. I already felt like a leader in my soul, because too much was tied to me.

After some time, I managed to agree that I would not be attached to the workplace, I would get a free schedule and I would continue my work (sales, purchases, consultations and a bit of managerial activity) for only a percentage of the profit.

For the sake of freedom, I had to sacrifice a salary, but this arrangement was not very annoying for me. Spreading my wings, I began to give most of my duties to colleagues who remained in the state, and as a result I was completely free to do exactly what I want under the guise of a high-profile brand and legal entities. the face of my former employer.

Now this company is my best and most reliable partner, and former colleagues are real friends. Thanks to them for everything!

I was on my own. I made a website, got a direct number, organized an email on my corporate domain, ordered business cards, compiled an extensive software price list, placed it on price aggregators (market.yandex.ru, hotline.ua, etc.) and started working selling software softly and advising people on licensing issues.

This went on for several years. I began to devote all my free time to searching for the direction that the breakthrough would give. This direction was the "management of software as assets." Fortunately, the idea of ​​this service is not mine.

Software Asset Management is a methodology standardized in 2006 by the international organization ISO, standard ISO / IEC 19770-1. A huge piece of work on the development of teaching materials was done by Microsoft Corporation, as a market monster and a leader in the civilized development of the IT industry.

It was only necessary to get these materials, study them, try to implement, at least partially, this methodology at the enterprises of friends and acquaintances, naturally for free, to understand how it works, gain experience, and step on pitfalls.

The first pitfall turned out to be the inability to crank it all up yourself. I had to ask for help from friends, former colleagues who were competent in licensing issues.

It later turned out that it was not a single licensing, and this was just the beginning. No less significant role in SAM is played by management and accounting. There were experts in this area.

I had to analyze supply contracts, licensing agreements, all kinds of additional agreements, the question arose about access to confidential information during the work on SAM - a lawyer was also found.

With such a modest composition of four people, we began to work on a commercial basis. It was impossible to do this in the shade, all actions needed to be supported by agreements, and somehow he did not want to raise a new direction of activity to his beloved partner. It was then that the de Jure company appeared.

Where and how to search for software dealers? What are the conditions for cooperation with them?

A software sales channel is built in this way:

Vendor (aka Software Developer), consider Microsoft as an example ->

Distributor - a company having the right to directly work with the vendor, and without the right to work with the end user (ordinary legal entities and individuals) ->

Dealer (aka Reseller) - a company acquiring software from a distributor and selling it to consumers.

Regardless of who needs to find a supplier (buyer, or reseller), the best option is to go to the developer's site and see a page with a list of authorized partners in your city / country.

Each of the distributors may have their own requirements for partners, it makes sense to sign agreements with everyone with whom it is possible, because one way or another they compete with each other, and eventually choose a “beloved”. Some distributors work only with those dealers who undertake obligations on the volume of purchases, most try to work with everyone, regardless of the number and amount of orders.

For potential customers, Microsoft has a whole portal of so-called Microsoft PinPoint, created to help companies choose a supplier of products (reseller), or services related to them.

How is the company certification process going? What are the requirements?

The certification process of the company may also vary for different vendors, but in most cases, to start it is enough to register in an affiliate network. Fill out a short questionnaire, tell about the company, indicate contact persons for certain issues.

In response to such registration, the vendor will provide a list of authorized distributors that will provide logistics and mutual settlements, and will offer to choose a “favorite” - the so-called Preferred Distributor.

The further way of partnership with any vendor is to obtain an increasing number of competencies (tasks that the partner is competent to perform) and higher statuses.

For this, employees need to undergo training (paid and free, online and in class), pass certification exams (also paid and free). For the highest statuses, it is often required to make commitments on sales volumes, coordinate joint marketing activities and even pay affiliate fees.

How to create an assortment of programs? Should I offer a full range of software or focus on one program or area?

I know companies that build their business only in partnership with any one vendor. Or they do not include competing vendors in the product portfolio, for example, they offer customers only one of many antivirus products. But I am 100% convinced that this is just a conscious refusal of profit and I do not understand such a strategy.

Of course, having agreed with one vendor that you will be promoting its solutions, you can achieve additional conditions such as free marketing support, additional affiliate discounts, participation in a rebate program (the developers call the kickbacks so beautifully.

What share of the profits does the sale of bring to you, and which part does the service bring to you?

The key income item, of course, is services. Our profit on the sale of most software tends to zero, because for us this is just an excuse to start working with a company, but more on that later.

How much do your software management services cost?

Our service is divided into three stages:

Preliminary audit, consultations, recommendations.

Implement Software Asset Management

Accompanying companies implementing SAM

The first and last stage costs symbolic money, about $ 300. Often, as part of joint events with developers, we provide significant discounts on “Diagnostics” (audit, consultations, recommendations).

The implementation of Software Asset Management itself starts at $ 2000 and depends on the size of the company, affiliation of branches, employee training, availability of inventory tools and other individual features. We have developed special conditions for the SMB segment (Small & Medium Business) - for small companies the implementation of SAM will cost approximately $ 1000.

What difficulties did you encounter in the initial stages of doing business?

The company began work, relying solely on its own resources, without attracting credit money, investments from outside, even without bartering services with other familiar entrepreneurs. Therefore, the most difficult thing was to start, find the first customers and money for further development.

Our first Software Asset Management customers were, of course, companies that had previously dealt with us, simply bought software from us. Or even not with our company, but with companies in which we previously worked, but who dealt with us personally, as specialists in these matters.

According to your estimates, what is the minimum amount with which you can start this business today? What equipment will be required?

This question, in fact, is similar to the question "what kind of car is good?" The answer is that how much money is there is such a good one. In theory, the minimum entry threshold is the cost of registering a legal entity. In practice, capital investments can tend to infinity.

The question is how much money you "do not mind", and no matter how much they are, there is no guarantee that you will succeed or not. As they say, happiness is not in money.

We have not bought absolutely anything. In our business plan, there was no CapEx section at all. Guided by the trends of the IT market, we have completely placed the infrastructure of our enterprise “in the cloud” on the technical sites of our partner.

We did not buy servers, software, tables and chairs, telephones, nothing. Each had his own laptop and mobile, to which calls were redirected from a direct number. All of these issues fell on operational costs and still remain there.

We get everything we need for doing business on a “pay only for what we use” principle from suppliers of certain services.

The main investment for each person is an investment in himself, in his head. For each business, the main investment is employees, it is desirable that these would be people who have already taken care of investing in themselves. The presence of start-up capital, in my opinion, does not affect the success of the business, it can only the growth rate. In this matter, I rather share the point of view of Bill Gates, who said, “The way you collect, organize and use information determines whether you win or lose.”

Are there any additional administrative requirements (to the premises, the experience of specialists, etc.)?

The basis of any business, and especially consulting, to an even greater degree is the IT business - people. Experienced, knowledgeable people. The business of Logisiel is consulting, IT in general, software licensing in particular, law, audit and accounting. Each employee is guided in all these areas, of course, delving into one.

What can you save on and what should you save on?

You can save on everything except people.

By people, I mean colleagues, customers, and, of course, partners. It is on relationships with people that we build our long-term development strategy.

You should not save money by thinking, “Should I give a bonus to all employees, or buy a car for myself?” - give a bonus, let everyone be happy. They will work better, even more projects will be completed and everyone will buy a car for themselves.

You should not think about sharing 1% of the profit with a partner who helps you do business, or half of the profit.

Give half. Be always honest with yourself and generous with others.

Do not think whether to invest part-time cleaners in marketing, or an amount similar to the salary of a commercial director. Invest in relations with customers as much as possible, it will surely pay off.

How long have you paid back your initial investment?

Due to their absence - from the very first project, we went into profit, it happened in the first month of work.

Does seasonality exist in your business?

There is no pronounced seasonality. There is always enough work. A certain increase in loads is observed once every three months. The fact is that we love the public sector, although many hate it because of the inability to put work with such enterprises on the conveyor. But as already, most likely, it is clear - we love to be friends with people and always be flexible, to agree so that everyone would be happy. Therefore, the peak of work is the turn of the quarters when state employees begin to "drain" money. But this concerns the load rather than profit.

Which specialists should be paid special attention to. How did you select key employees?

You need to pay attention to the selection of all specialists. It was easier for us, we are all from the largest software distributor in Ukraine and its partners, both representative offices of software developers and regional dealers.

Of course, as the company grows, it’s more difficult to invite people close to us to work, but a good recruiting agency helps us.

What payment scheme do you practice?

Each of our employees has a good salary.

One of the team leaders for the Microsoft programming team wrote on his blog about the problem of motivating programmers as very unpredictable people. He defended the point that if a person likes his work and he is not preoccupied with anything other than him, then additional motivation is not even necessary.

The idea is to give the programmer round-the-clock access to work, an upscale workplace and development environment, food and drinks, a salary that will fully provide his family with housing, food, leisure and will cover everyday needs. Such an employee (not necessarily a programmer) does not need to worry about anything, it remains only to do his favorite work. We try to use this principle in practice with us.

As for the additional motivation, we still have it. None of our employees are left without incentives based on the company's performance. We use collective motivation. If someone sold the project, someone implemented it, and someone helped specialists in this, then everyone deserves rewards. I understand it sounds strange enough for a job as a cleaning lady mark salary + bonus + %%. But with us it is.

Obviously, during your work you have tried various advertising methods. Which advertising media have proven their effectiveness, and which ones did you end up with?

The best advertising is the recommendations of our customers. We generously thank everyone who came to us for their friend. Our service is so specific and associated with the risks of disclosing confidential information that not a single sober-minded person will apply for it to the first company that comes across, and any advertising here is powerless.

How do you promote your services?

We use the principle of dividing our offers into the so-called Front End and Back End.

In order to sell rather complex and not cheap services, you need a high level of trust from the client. People do not buy them in trains, in stalls in the underpass, from the guys from the street. They are bought from someone who is well known, with whom they have dealt and made sure that you can work with these people.

It turns out that in order for you to be well known, you need to have time to work with you, and for you to start working with you, you need to be well known. Vicious circle.

This problem, of course, has a solution - otherwise I would not have been involved in this business. You just need to divide the sales process into several stages in order to first attract a customer with a simple product that is easily sold and without a high level of trust, and then, having demonstrated your professionalism and reliability at this first sale, you will be able to sell more complex and expensive services.

The product that is sold in the first step is called Front End. Это то, что становится на витрину – точно так же, как в супермаркете на витрине, или на самом видном месте у входа стоит дешевый и привлекательный товар. Задача этого товара – привлечь покупателя в магазин, а там уже он купит не только это, но и множество других, уже не столь дешевых продуктов.

Точно так же продаются и сложные услуги. На витрине нужно выставить что-то простое, дешевое и не требующее для осуществления продажи тесного контакта с клиентом.

Для нас, например, Front End'ом является ПО. Не специализированное, а всем известное. Антивирус тот-же, или Microsoft Windows. Это продукт, который всем понятен, не требует от поставщика очень высокой квалификации, его более или менее все равно, у кого покупать. Выставив на эти продукты цену чуть ниже, чем у конкурентов, получается первая продажа, возможность разговаривать с клиентом, и тогда уже продавать ему что-то более сложное.

Это «что-то более сложное» называется Back End. Когда у клиента уже есть положительный опыт взаимодействия с вами, можете продавать ему сложные продукты.

И здесь уже цена может – и должна – быть гораздо более высокой. Все честно – клиент может либо купить у вас, зная, что здесь все будет качественно и надежно, либо пойти искать на рынке, у кого дешевле – с риском наткнуться на кого-то, у кого не все хорошо с надежностью и качеством. А такой клиент, которого интересует только цена, собственно, никому и не нужен.

Итак, разделение предлагаемых продуктов на Front End и Back End позволяет привлечь клиента дешевым, простым и безопасным продуктом на витрине, дать ему возможность убедиться в том, что с вами можно работать, после чего вы уже начинаете предлагать ему сложные и дорогие продукты, а он может вам доверять и поэтому готов эти продукты покупать именно у вас.

What can you say about competition in your business?

К счастью мы выбрали свою нишу вовремя. Смело могу сказать, что сейчас у нас нет конкурентов. Рынок ПО в Украине хоть и насчитывает огромное количество компаний, еще очень молод, и имеет огромный потенциал роста. Конечно, не продает ПО в Украине только ленивый, ведь прибыль на этом гораздо выше, чем на оргтехнике, комплектующих и т.д.

Почти все из этих компаний сертифицированы, имеют в штате насдававших супер-экзамены специалистов, но управлением ПО не занимается всерьез никто кроме нас. Все норовят продать, что подороже, сорвать куш и разбежаться. Мы играем в абсолютно другую игру.

Мы помогаем людям сэкономить в темном лесу лицензирования ПО. Мы даже не ставим за цель сотрудничества продать кому-то лицензии, хотя всегда готовы это сделать. Наша задача – оказать качественную услугу, помочь привести ПО в порядок и поддерживать этот порядок постоянно.

Has the economic crisis affected your business?

Конечно, отразился! Он стал началом нашего бизнеса. Он стал мотивом к росту. Он создал проблемы нашим клиентам, заставил думать о каждой копейке и мы, не долго думая, взялись помогать им в решении этих проблем.

How do you see the prospects for the further development of your business? Are you planning to expand or open related areas?

На ближайшую пятилетку открывать смежные направления мы не собираемся, как это ни странно, на столь динамичном рынке. Во всех смежных направлениях деятельности у нас есть партнёры, которым мы всегда рады привести клиента и они отвечают нам взаимностью. На самом то деле рынок ПО достаточно тесен. Все мы злые конкуренты в глазах клиентов, но чуть ли не семья в пятницу в любимых ресторанах.

Что касается расширения, то мы уже сейчас работаем со все Украиной, но ключевым специалистам приходится очень много времени проводить в командировках. Поэтому сейчас мы нацелены на открытие представительств в городах-миллионниках, а со временем рассчитываем открыть представительства во всех областных центрах.

Based on your experience, what would you advise to those who are just planning to start this business?

Дерзайте! Будем рады видеть Вас в наших рядах! Здесь прибыльно, интересно и весело!


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