In this series, I will comment on the written feedback I received after my presentation. Also, I will answer the online questions asked by students I had no time to amply reply to during said presentation
Lehren für Unternehmensführer – das Leben, das Wissen, die Informatik und die Ethik
(Lessons For Managing Directors – Life, Knowledge, Computer Science and Ethics)
„Innovative Entrepreneurs“/ Summer Semester 2010
Leadership in growth-oriented enterprises
Today: Market and Competition
Question:
I assume acquiring the first customer is particularly hard. Can you tell us something about how you got your first “great” order? Can you give advice as to how start-ups might approach this common dilemma: customer acquisition for a product without references, no references because no customer wants to be the first (guinea pig)?
Answer:
First customer:
I had business partners from the time before I founded my own company who knew me well and liked cooperating with me. Consequently, it really was not hard for me and my partner Wolf Geldmacher to get our first orders.
First great order:
Our first great deal was doubtless when we established our text system HIT as software licenced by Siemens. We were able to convince a big government agency that HIT is the ideal product for their needs. One of our mentors, Dr. Peter Schnupp, was a great help in the process.
The next thing I had to do was convince Siemens AG that HIT was what they wanted. We aimed at getting Siemens AG to offer our product as standard. Standing on our own, we as “no names” would have hardly stood a chance, even with the government agency we had already convinced. Since at the time a big text system development project for UNIX (SINIX) had just failed, the time window was perfect. Without our government agency and the excellent (trust-based) relationship with the responsible parties at Siemens, we still would not have had the slightest chance.
In terms of marketing, the entire business was an extremely fine-spun coup de main the like of which probably is seldom a success. In fact, based on my experience today, I often wonder how we managed to fit it all together so perfectly.
The rest was “trivial”. The SINIX systems swept the market — and our software was (almost) always part of it. And this is how we were able to spread our wings on many Unix systems of other origin: Altos, DEC, HP, IBM (AIX), ICL, Kienzle, NIXDORF, SCO … It was, indeed, a wonderful time.
Acquiring customers and references:
In those days, the IT sector was still a rather limited community. I had already worked full-time on the IT front for six years and had good references from special projects (DISPOL, SNATCH, START). To be sure, we had no references for our product. Well, it would not have been possible, since it only existed as a specification on paper. All we could offer was a prototype showing how it was supposed to look and work. We were lucky in that there was hardly any competition. Unix was totally new, we had the advantage of building on “virgin land”.
Yet, here are some more reasons for our success: we had thoroughly studied and evaluated the functionality of the technology offered on the market at the time both by small and huge companies. The “stand alone” text computers designed by companies like IBM, Kienzle, Nixdorf, Olivetti, Triumph-Adler, Siemens and Wang were our models. We took these systems and identified the necessary functionality. Then we optimized it in cooperation with “real” and competent users. Then the result was implemented with a radically different surface (Unix as a digit processing system was actually revolutionary in this respect). Since we were not on a “real computer”, instead of a special hardware for text generation, we were now able to link the “old” but totally newly implemented functionality for text generation with databases, communication and other office elements. This was actually a stroke of genius. It is how a rather competitive and convincing application was developed. It did not take long for the first customers and the first references to start coming in. And on the SINIX market, after all, we had all the sales power of Siemens AG to support us. To be sure, we only received a rather small part of the licences, but we were still able to finance the necessary and expensive further development of the product in a stable way.
Question:
My question is more about the market you are currently active in. I wonder who are your customers and who is your competition. Do you share the market with Accenture and T-Systems, or is your focus elsewhere?
Answer:
We are mostly friends and often cooperate as partners with the competition for whom we have the highest esteem. There are quite a few in Munich, but also all over Germany, and also, for example, in Switzerland. As a general rule, we are talking medium-sized IT enterprises.
Enterprises such as Accenture and T-Systems offer services similar to ours. They can, however, not be compared with us as far as size is concerned. They also have a totally different market model (go-to-market) und “function” totally differently.
Especially the aforementioned enterprises are also sometimes serviced by us, in one instance, roles are even reversed. It would not be appropriate to use the term “market sharing”. As a general rule, you could say: an enterprise the size of InterFace AG will never have really huge projects. Normally it is always the “great players” that sit on those. And all we can do is be happy with playing the role of supplier.
:-)Still: there are exceptions to the rule!
Question:
How did you notice that, maybe, it was going to be a good idea to change and become a service and counselling enterprise? Why and how did you install the change? Did you replace all the employees?
Answer:
It was easy to see: above all, new technologies (MS, Windows, World) caused our money influx from licences to diminish continually. We assumed it was not going to make sense to compete against Microsoft. Consequently, we tried to “make room with elasticity”.
Question:
How do you/Interface AG cope with the continuing globalization process? Will you, perhaps, similar to SAP, go the way of turning from Germany towards an internationalization in order to survive in the ever harder IT market (see: SAP versus Oracle )?
Answer:
Currently, our turnout is achieved mostly in Germany. Neither do we use “near-shore” or “off-shore” capacities these days. We think the competitive programming prices, for instance in Belarus and India, due to the high transaction and collaboration costs, will only pay – if at all – when you have really huge projects.
Consequently, we only accept small projects. For huge projects, we supply project leaders, architects or specialists (quality, implementation or special tools). When doing so, we also like partnering with one of the “global players”.
Yet we create solutions for local enterprises on the global market. That is why we installed a separate subsidiary company for localization. Deeply integrated into our development process, it supports us in international applications and helps us when we want to deliver quickly in various languages.
On SAP and Oracle:
We were never very concerned with SAP. ERP is of no consequence in our enterprise.
For us, the take-over of SUN by Oracle was interesting. Now, Oracle owns mySql, Java with its strong software technology (glass fish), OpenOffice and much more. These features make Oracle very interesting as a global partner. But I wonder if the big players (Dell, Google, HP, IBM, Microsoft, Oracle, SAP) will be able to hold onto all they bought in the long run. I neither know nor do I believe. We will probably see huge empires fall.
In my next post, I will write questions and answers on employee responsibility (Mitarbeiterverantwortung).
RMD
(Translated by EG)
Loading ...