Wanted: Software that helps you make money

http://softwarejim.blogspot.com/2008/01/wanted-software-that-helps-you-make.html

by softwarejim • 19 years ago

11 7 19 years ago

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gibsonf1• 19 years ago

The key is to provide software that helps business increase customer value :)

edw519• 19 years ago

"However costs are finite."

Probably doesn't seem that way to most business owners.

After all these years of applying IT to business, there is still a long way to go.

And don't forget the incredible effect of margin multipliers. If I'm running at 10%, then I could increase my profitability 2 ways, either by increasing revenue by $10 or decreasing costs by $1.

Say I sell $100 worth of stuff and earn $10. If I want to earn $11, I could either increase my revenue $10 and sell $110 worth of stuff. Or decrease my cost by $1 and earn $11. Without spending anything to increase revenue (people, marketing, fixed expenses, etc.)

The formula: IncrementalRevenueIncreaseNeeded * margin = IncrementalCostDecreaseNeeded. Pretty powerful stuff.

In many cases, it's still much easier to decrease cost than increase revenue. As one wise man once said, "It's all gravy (profit)."

skmurphy2• 19 years ago

"In many cases, it's still much easier to decrease cost than increase revenue."

It's also a more reliable sales focus, especially in an uncertain economy, to attack a cost stream that is real. Future revenues are a possibility, costs, especially recurring costs, are a tangible reality.

rhiltd• 19 years ago

That's easy. My wife has PhD in Statistics and works for a large bank. She spends her life building predictive models using archetypes. She has made hundreds of millions in revenue for the bank but now is working with the Australia Federal Police to detect both fraud and money laundering.

According to Mastercard her bank has one of the lowest fraud rates in the world.

Most large companies could increase their revenue by millions if they only knew how to understand the data they already have. It would only take 1 or 2 seriously smart people but the limiting factor is the political will to do it.

softwarejim• 19 years ago

gotta agree - the common problem for any serious BI implementation is getting the executive buy in.

henning• 19 years ago

Wanted: executives that want software that helps you make money.

skmurphy2• 19 years ago

I think that anything that accelerates the product development process would fit into this category: e.g. CAD/CAM, collaboration tools, prototyping or software development tools.

I accept Peter Drucker's thesis that a "firm has only two real functions, marketing and innovation, and everything else is cost," and would broaden the "make money" definition to include innovation.

As a side benefit many of these innovation tools also help to cut costs, although if there is unmet internal demand for a function you may actually get more usage and not affect total cost that much. Lowering the marginal cost of an activity can increase its frequency. In other words, even though the transaction cost is lowered, the total amount of time and dollars spent may stay the same or go up slightly because the firm is consuming more of it. Examples might be the amount of time spent on E-mail vs. hard copy letters, screen views vs. plots or printouts of a complex object, or daily builds of large systems with integrated regression testing vs. weekly builds two decades ago.

Wanted: Software that helps you make money

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