The Digital Skeptic: Software Sales Are Over. We're All Concierges Now
NEW YORK (TheStreet) -- Chris Pyle has looked at cloud software from both sides now.
"We are developing a healthy cloud-computing business," Pyle told me during a long, marvelously frank phone interview. "But we are facing the new reality of consumption economics over the Web."
Pyle's view should matter to investors. He's CEO of Champion Solutions Group, a Boca Raton, Fla., business data management firm that has sold business computing software and tools for the past 15 years. It's a $75 million business he runs, with 110 employees. And his firm "considers it our heritage to integrate software and hardware for our clients," he said
Surprisingly, Pyle was willing to break down in tiny detail what it's taking to manage the transition from being a traditional business software reseller -- where customers buy products and equipment from makers such as Microsoft (MSFT), Dell (DELL) or maybe Oracle (ORCL) -- to today's fast-moving Web software market where businesses rent access to apps delivered over the Internet. A market will increase from $16.7 billion this year to $21.3 billion by 2015, predicts CMSWire, a publication service focused on information technology.Those are numbers Pyle trusts. "In fact, I am doubling down on my cloud offerings," he said. "We bought a neat Microsoft Office 365 management app called MessageOps." But if as I listened to Pyle details Champion's transition to selling business software over the Web, a sobering investor lesson emerged. "What you learn is," he explained, "What you did to get you here won't get you there."
The biggest change, Pyle said, is business customers no longer buy software, but essentially rent it by the month -- so clients can jump ship at any time. Therefore, the intense, upfront sales process that went into selling pricey computers or software packages has been replaced by a tricky ongoing, costly and culturally challenging client-service relationship. "I think, long term, it's very sticky," he said. "At the same time, it's very hard. Someone can move from Microsoft to Google (GOOG) in a heartbeat because there is no long-term contract." Pyle no longer markets features or hardware, but now tries to communicate a sense of service and a knowledge of a client's business that require a startlingly granular commitment to information.
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