Vendor ties fees to ROI
 
|
|||
 | |||
|
Sign up to receive this and other networking newsletters in your inbox.
Many companies are analyzing the return on investment they get from management software. But one vendor is taking the concept a step further - using such analysis to determine how much you should pay for its software.
We recently talked to Martin Demers, senior vice president and chief marketing officer for Ace-Comm, and discovered that he is using ROI to guarantee a return to selected clients and then share in the return.
Ace-Comm has traditionally provided mediation products for large private networks such as those in the government and military. Recently, it has made inroads among enterprise companies. Its solutions are geared towards managing the vast amounts of usage data that modern networks can generate. In service providers, the task of managing the billing data generated can often amount to a cost greater than the revenue generated for some accounts. Ace-Comm simplifies and reduces the cost of this process by aggregating data from the many transactions that are generated as well as providing additional sources of revenue through better transaction tracking and control.
What Ace-Comm has done that is particularly striking, though, is to utilize ROI techniques to perform a feasibility study on a potential client's business process. If the ROI prospects look significantly positive for using its products, Ace-Comm offers the client the option of having the installation and license for free.
If the benefits are truly positive after a specified period of time, then Ace-Comm will share in the return. This approach, obviously, has significant upside potential, but it also puts Ace-Comm's value proposition, and ROI analysis, where its mouth is.
According to Demers this approach has generated some significant successes. He does caution, however, that there needs to be a mutual trust in this arrangement, with both sides involved in ensuring a successful outcome. As he notes, this is easy in certain markets, notably competitive local exchange carriers and wireless providers, where the benefits of aggregating data are more apparent.
Of course, the virtues of this approach are very clear. Rather than leaving a company to fend for itself once a sale is made, the vendor that adopts a guaranteed results strategy is making an explicit commitment to the outcome of the sale. This puts both the vendor and consumer in the same boat and sends the message that the vendor is serious about both its claims and its ability to meet the customer's needs. The only way that a process like this can work, though, is for the vendor and the customer to understand and apply rigorously the discipline of ROI analysis.
RELATED LINKS
Network World, 02/11/02
Dennis Drogseth is a director with Enterprise Management Associates, a leading analyst and market research firm based in Boulder, Colorado, focusing exclusively on all aspects of enterprise management. Dennis has extensive experience in network management platforms and products and is researching trends in management software and changing IT roles internationally. His 18-plus years of experience in high-tech includes positions at IBM and Cabletron. He has been quoted in the press and is a speaker at industry events. He can be reached via e-mail.
Audrey Rasmussen is a research director with Enterprise Management Associates in Boulder, Colorado, a leading analyst and market research firm focusing exclusively on all aspects of enterprise management. Audrey has more than 20 years of experience working with distributed systems, applications and networks. Her current focus at EMA is e-business, SMB/SME and MSPs. She can be reached via e-mail.
Enterprise Management Associates in Boulder, Colorado, is a leading analyst and market research firm focusing exclusively on all aspects of enterprise management software and services.
