How to turn an IT system into an external product

CIOs share how they are learning to package, market and price their services. Add your opinion and advice below.

This article originally appeared on CIO.com.

Scenario: Selling the USTA's Event Management System

Larry Bonfante, CIO, U.S. Tennis Association

Anything and everything can happen at an event as large as the U.S. Open. Whether there’s a disagreement among spectators, a medical emergency on the grounds or a logistics hiccup hampering service, responding to incidents requires that everyone coordinates and communicates. Our command center includes representatives from organizations as diverse as beverage providers and the FBI and NYPD. We looked for a commercial solution that could meet all of our needs, but there just wasn’t anything out there with the whole package. So we built our own, the Event Management System (EMS). Following fantastic response from our partners at the event, we decided to start marketing and selling the system to external users.

Of course, while my team and I have demonstrated the product to some interested parties, we in IT aren’t actually sales people. We’ve also done some competitive market analysis, but we aren’t experts on pricing or licensing, either. To move forward, we have to address both of these issues. EMS has been a great success for us since we first deployed it in 2008, and we believe it could provide the U.S. Tennis Association (USTA) with even more value as a product bringing in top-line revenue.

Advice: Get to Know Your Customers Yourself

Richard Thomas, CIO, Quintiles

At Quintiles, we in IT are leading the effort to take our Infosario clinical trials management system from internal solution to commercial product. We also aren’t experts in this, so we contracted an external market research firm to help us determine the opportunity, create a brand and demonstrate the product. I selected staff who are excited by the opportunity and dedicated money to this, and we’re treating it as an innovation project. My job is to run interference with the company, and I’m working closely with our heads of marketing and sales to get their input and perspective.

Now that we’re toward the end of the research, finding the first customer is critical, and not because they’ll be paying us. If you believe in something, you have to find a customer who is going to be prepared to take the rough with the smooth as you refine your internal solution into a polished product. This “angel customer” will help refine your final offering and packaging. To fill this role, we’re looking at several existing partners and customers; it helps to already have that trusted relationship. As we polish the offering, we’ve taken the view that the customer is indeed always right, and we’re determined to present a product that will satisfy them. Take the time to use that angel customer as a kind of beta tester, until you are comfortable that what they have will fully represent the USTA in the market. Only then should you give it over to your sales group to sell it to the masses.

Advice: Know Your True Costs and Seek Recurring Value

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.

Bonfante, Thomas and Uva are all members of the CIO Executive Council, a global peer advisory service and professional association of more than 500 CIOs, founded by CIO’s publisher. To learn more, visit council.cio.com

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