Software licensing and systems services represent areas of biggest potential profit for software resellers, according to Mort Rosenthal, chairman and chief executive of Corporate Software Inc, which has done business in Europe since 1986. Licensing is approaching 50% of his company’s revenue. It doesn’t go through a warehouse, it is not shrink-wrapped software, so it is an entirely uncharted process for the user, the reseller and the publisher and there is more opportunity for value-add, he said. Most importantly, he noted, gross margins are not declining on software licences or shrink-wrapped software, as they are everywhere else. In the licensing process, for example, a value-added reseller can provide knowledge of licensing terms and availability; tight integration with the vendor for sales and administration; and design of the procurement process. On the services side, increasingly, we’re obliged to provide value to both ends, the customer and the software publisher. The end-users want the company to ensure the successful deployment and use of the technology, which implies a broad and deep system management capability and a low transaction cost.
Assaulted
Software publishers, he said, want successful marketing of their technology and an increase in the return on their assets. The good news about being assaulted for assistance on all sides, he said, is that it can be synergistic; the skills are the same for both. When you identify technology trends, they affect both groups. Corporate Software has two types of services for end-user organisations – system management, which is designed for cost savings, and solutions, which is designed to generate revenue. With this trend, Rosenthal sees a convergence of the reseller and facilities management market. Software resellers will become full service partners for developers, software users and other users of intellectual property, at a low transaction cost, he said. He added that large size, or scale of a company, matters most in driving efficiency in low-cost transactions, but that it doesn’t work as well across borders as within borders. The company is doing systems integration, he said, largely in the area of systems management, in integrating Notes into a network, for example. Nobody is managing Notes as though it were strategic, although it is, he said. In general, some of the factors that will contribute to beating the competition, he said, are – incumbency: If you’re doing good business, you have a good chance of keeping it; – providing more and more solutions across product lines; – being a low-cost provider; and – being global. – Marsha Johnston
