Methodological Toolbox (cont)

Product life cycle analysis in residential markets may appear complex to some, but industrial markets life cycles beat the former off hands down. The example shown in figure 23 is taken from a Gartner report on the storage market. This report is aimed at CTO’s and CIO’s (whose 40% of their IT budgets are devoted to storage hardware and software by the way). In such examples of extreme complexity, marketeers’ role become really difficult as well as highly specific. On the one hand, marketeers have to extract whatever valuable information is available from that technical chaos, to derive sound marketing intelligible conclusions and to simplify technical details as much as possible. But there is a fine line between that work and pure abstraction, whereby all marketing work is disconnected from technical reality and therefore becomes unintelligible.

When ICT marketing becomes that complex, only multi-disciplinary teams can handle such subjects. Very often, such teams are created through strategic partnerships, which combine different companies, each of them providing experts in their own domain.

Software products and their recurring revenues.

Software is definitely different from other ICT products. On the one hand, software keeps evolving all the time, either because it is being patched (‘patches’ being the technical term for software corrections) or upgraded (i.e. improved through the inclusion of new functionality), mostly because of customer feedback and suggestions. Software products are ‘living organisms’ so to speak by dint of the piling of software layer upon software layer[77]. 70% of software cost is derived from its maintenance, which explains why behaviour of such systems may become so complex and even incomprehensible to users and experts alike.

Another characteristic of software products is that they are sold – in B2B environments mainly – through licence agreements, which span over several years and bring recurring revenues. A top of the range software vendor[78] will certainly be able to maintain revenues for at least three years – without additional revenues – thanks to such recurring revenues.