A long time ago, I wrote a white paper about how on-demand technology would change business. The paper covered all of the ideas you’d expect, including lowering costs and improving access to on-demand applications. But there was another part of the paper that speculated that if technology was that easy to come by, then the next thing to look for was enhanced service based on the technology.
In other words, technology access would cease to be a gating factor in executing business processes. Replacing technology as a gating factor would be having the smarts to use it optimally. I envisioned that service companies that had operated more or less locally would, or at least could, become national or global by selling their expertise based on the on-demand technology. The computer- and telephone-enabled public relations firms could become national in scope, but a bit more is required for a marketing services company or a design company, for example.
It has taken a long time, and it seems that what happened first, and what I had not fully foreseen, was the globalization of applications based on platform technologies. Right now, Salesforce.com appears to be the most successful practitioner of that art. But now we appear to be at the beginning of an era when business services will become global, or at least national, based on the consolidated expertise of some organizations.
Judging by some of Sage Software’s recent actions, that globalization might be taking off at the small and medium-sized business (SMB) end of the spectrum. Recently, Sage announced new marketing services for its ACT! customers. The first service will be email marketing available on-demand. Now, this may not seem to be a very big move, since there are many independent email marketing providers already on the market, among them Constant Contact, ExactTarget and VerticalResponse (Google returns 36 million hits on a search for independent email marketing providers).
But don’t lose sight of the bigger picture. With a 3 million-user installed base in North America that has many marketing needs beyond email, Sage is poised to build a services engine that could eventually rival its software business. This would be a very smart end run around the company’s own business model limitations. To be precise, Sage sells its products exclusively through a reseller channel. The resellers deliver product, customization and advice, leaving slim pickings for Sage beyond the license revenue.
The primary way Sage grows in this model is through product sales and by recruiting new partners. But no market is infinite, and the market of resellers is relatively small compared with the market of end users. You see where I am going. There is nothing prohibiting Sage from offering services based on the products it makes and the installations that its partners effect. As a matter of fact, offering this kind of service, which only makes the end customer more productive, should drive demand for the products themselves. Looks like a smart and virtuous circle to me, as well as a new kind of on-demand service.
I believe the era we are entering will be constraining for many companies in several ways, not the least of which will be transportation. As fuel prices resume their rise with the recovery, companies will need to find ways to take travel costs out of their value propositions. That should mean a need to enhance marketing -- how can we use marketing rather than face time to close more deals?
The answer to that question goes beyond email marketing and probably beyond the meager efforts that so many SMBs now make to sell their products. Centralizing key services that can be delivered at scale via the Internet will enable SMBs to continue to compete in select markets against larger competitors. It is also a growth market. Who doesn’t like that?