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How to turn an IT system into an external product

CIO Executive Council | Jan. 27, 2011
CIOs share how they are learning to package, market and price their services

Tom Uva, CIO, Sensis

When determining pricing and licensing options for a new commercial product, you may not know what the market will bear, but you do know what your costs are. Deciding what margins to aim for gives you one lens to look through. We know what it’s costing us to bring our predictive analysis solution to market, but we’re also looking at a support model with ongoing professional services for configuration, upgrades and maintenance, and we are still determining what kind of investment that is going to require. This isn’t something we can just fit on a couple of DVDs and hand over; because of the product’s complexity, it’s going to require a small implementation team to help customers with configuration. You have to think about this kind of potential for both an initial and recurring revenue stream. Once you’ve established all the parameters, then you can start having conversations with other top-level executives about margins, and that will determine your pricing strategy.

Like the USTA, we have a product that provides new functionality and value compared to what’s currently on the market, but the core is not completely new. So it’s been particularly important to take steps from day one to protect our intellectual property. If there’s something you can patent, do so. As soon as you start having conversations—anything beyond the basic PowerPoint—get your non-disclosure agreements in place. Because if no one out there has this, it won’t take somebody long to figure it out and come up behind you.

 

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