Software Executive Magazine

December 2017

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Page 18 of 43

the transition. "If a reseller is enjoying three or four en- terprise sales per month, it might be a matter of only a few months before cloud subscription revenues begin to replicate on-premises sales figures," he says. "It's ed- ucating resellers on the conscious decision to take that temporary hit, and showing them the success stories about resellers that are experiencing far shorter sales cycles and more predictable cash flow after making the switch." Sales cycles, he says, are minimized due to the very factors resellers initially feared — there's no hard- ware, no staging, and no on-site implementation nec- essary. It's also a win for the reseller that the custom- er's nominal capital outlay for the software typically mitigates the need to engage the C-suite, and training is reduced to hours, minimizing the customer's time to value. "We were early to the game, so pushing this transition was a bit more challenging for us than it is for software developers today," says Morris. "Today, a combination of younger 'cloud-native' resellers and end users' sheer acceptance of cloud delivery, in large part due to its enablement of a remote workforce, are com- bining to drive acceptance by the reseller community." So important is the company's reseller communi- ty, and so central is it to Digitech's success, company CEO HK Bain addressed resellers via scripture when crafting the Digitech Systems guiding principle. That statement is based on Proverbs 16:8: Better a little with righteousness than much gain with injustice. "Every decision that we make, every strategy that we come up with, we consider how it's going to impact our re- seller partners and how it's going to advantage them," says Morris. "They do very well. They solve their cus- tomers' problems, and we make a little bit of money along the way to take care of our 55 associates and their families." Digitech has, in fact, been profitable since its seventh month in business, and its growth has been completely organic. I can't help but ask Morris and Robbins about the gravitas of building a scripture-based mission state- ment. Regardless of your faith, it adds a fair bit of weight to a promise. Robbins doesn't flinch. "We're committed to it. It's a core component of our culture, and we're committed to the entire ecosystem. That means refusing to take food off of our resellers' tables to feed our families," she says. In a healthy market for ECM—and in a software industry where many devel- opers are motivated by greed to build value quickly and sell out—Digitech's commitment to spreading the wealth requires discipline, restraint, and foresight. The same kind of discipline, restraint, and foresight the company had back in 1999, when it realized before ev- eryone else that the cloud would make it rain. S SaaS market by 2020. Firm research director Sid Nag says that more than 50 percent of new 2017 large-en- terprise North American application adoptions were composed of SaaS or other forms of cloud-based solu- tions, and that by 2019, more than 30 percent of the 100 largest vendors' new software investments will have shifted from cloud-first to cloud-only. Despite that lit- any of stats supporting a SaaS future, media conjecture that cloud-based SaaS is already ubiquitous is flat-out premature. Many legacy software providers have yet to take the leap. That makes Morris and Digitech's early learnings relevant all these years later. Morris points to a host of concerns Digitech had to tackle before launching in the cloud — the market's skepticism regarding security and uptime, for instance — but the scalability opportunity is the one he finds most compelling. He's quick to point out that the scal- ability benefits of the cloud work for both end users and software providers. Of course, users can add seats (or, in the case of ImageSilo, storage) at their discretion, but Digitech benefits equally from the efficiencies and economies of scale. "We created our software offering as a multi-tenant environment from the beginning," says Morris. "We did that to ensure that we'd benefit from the economies of scale associated with having all of our thousands of global customers running the same application." If Digitech rolls out a new feature, function, or upgrade, it's available for every customer to take advantage of instantly, and Morris likens that to sending his company's smartest tech in to every customer site all at once. That would obviously be cost prohibitive in a distributed on-premises environment, but not when one instance of software is maintained for the benefit of all customers. Changing The Channel Mentality I don't recall interviewing a software company exec- utive as rabidly enthusiastic about his channel sales partners as Morris. Still, I won't let him sugarcoat his 500-plus channel partners' acceptance of selling software subscriptions in place of all the server sales, networking, and integration work that came with on-premises sales. The launch of ECM as a service, par- ticularly back then, was surely met with some trepida- tion on the part of Digitech's channel partners. "With- out our channel partners, we wouldn't be here today," says Morris. "We recognized that there was some un- certainty about how selling ECM Software-as-a-Ser- vice would impact the reseller's sales cycle, and how that would impact cash flow." Morris says Digitech had to demonstrate its willingness to support its resellers through the temporary revenue lull that's required of 19 SOFTWAREEXECUTIVEMAG.COM DECEMBER 2017

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