Selling software that sells itself: An interview with Matt Asay

Open source is changing not just how companies make software, but how they sell it. Alfresco's Matt Asay explains the new sales cycle and the skills that today's software sales people need to close deals.

Hi, I’m Don Marti, and I’m here with Matt Asay, general manager of the Americas for Alfresco. Welcome, Matt.

Thank you.

Matt, your company just came out with a survey called the "Alfresco Open Source Barometer."

We actually went out to the customers of Alfresco. We have about five thousand plus registered developers. And also it’s those who have come to the site to register for a white paper or in some way they’re evaluating Alfresco and they want more information. So we had a mix of people in deployment, both paid and unpaid deployment, and people who were just kind of kicking the tires in evaluation. That made for, I thought, pretty interesting data. We didn’t set out to create a report from it. We set out to learn more about what our customers want, that we would know which platforms we needed to be certifying.

In some ways we would do that already, just through customer interrupt mode, where big customer X would say, "I really need WebSphere and DB2 mixed with Alfresco," and we’d say, "Yes, big customer, we will do so." We wanted to get a more macro level view of what our customers were using. And out of that came, I thought, pretty interesting things. Frankly, some of the data that came out of it was surprising to shocking to me. I didn’t expect open source to fare as well it did in our ecosystem. Our user base, at least paid user base, skews toward the Global 2000. So I figured that they would be using "enterprise class databases" and app servers or whatnot, or what they perceived to be enterprise class, and so the big proprietary offerings. But it turned out that that wasn’t the case.

In your results it looks like most of the users prefer JBoss or Tomcat. Since you’re a java based product, the app server, or serlet container is your key dependency.

Right. So on the database side the overwhelming majority preferred, I think it was 52 percent. I don’t have the numbers in front of me, but the majority preferred MySQL and PostgreSQL. And again, I talked with customers, and so I’m thinking, I shouldn’t go through names, but I know that this customer uses Oracle and I know that customer uses Oracle, therefore we must have thirty percent or so of our implementations on Oracle. And Oracle did have a significant percentage. I would have thought (Microsoft) SQL Server would have been a bigger percentage, but it wasn’t.

Again, the lesson that I take from that is as I was sifting through the data and trying to make sense of it, the lessons that I got from it were manifold. One is that I think like attracts like, and if somebody is comfortable with Alfresco using an open source application, they’re going to be that much more likely to adopt Alfresco with an open source database, and open source app server. If they choose to deploy Alfresco in a portal environment, then they’re more likely to use Alfresco with an open source portal product, like Liferay or JBoss.

The second was, and the second I think is more a practical matter, if you’re going to be spending a tenth of the cost on Alfresco that you would spend on Documentum or Interwoven or something like that, then it almost seems incongruous to match that lower cost with a big, expensive database or a big, expensive app server. And so I think part of it also is just the cost thing where people say, "we like Alfresco, yeah we’re an Oracle shop or yeah, we’re an IBM shop, and so we’ve got DB2, we’ve got Oracle, we’ve got BEA, we’ve got whatever." Just from cost considerations I think that some companies, and I actually know, anecdotally I know in a few instances this was the deciding factor. They said well, it doesn’t make much sense with how much money we’re saving on Alfresco to match that up with a bloated price on the app server and database, and so they went with open source there as well.

Going beyond what Alfresco found, I’m on the advisory board for SugarCRM, and Jaspersoft and OpenBravo, and MuleSource and a few others, and the Alfresco experience is pretty consistent with what I see at these other companies. A lot of companies evaluating on Windows, because that happens to be what is sitting on the developer’s desktop. But then going live and going into production with Linux, that’s very consistent across the board with every open source company with which I’m familiar. And then this affinity for other open source pieces of the infrastructure that go with your open source application again. I see this in all the companies that I talk to.

So is this the end of proprietary software as we know it? I doubt it. I used to work at Novell, and as near as I can tell, Novell stopped selling new licenses for software about ten years ago. But it still makes a billion dollars a year on maintenance, so I don’t think the proprietary world is going out of business any time soon. But I do think that the open source world has a foothold that is much more significant than the proprietary world would give it credit for.

What kind of companies are represented in the list of people who responded to the survey?

There are a range of small to medium sized enterprises, but there are also companies like Electronic Arts, and I can’t give these names, but let’s just say four or five of the top financial services companies on the planet. So if you went to a list of the top ten, four or five of those. Boise Cascade and Sesame Street Workshop, Premier, Harvard, MIT, Michigan State on the education side, the FAA, NASA and European Parliament and Airbus and Renault and others like that. So a lot of big companies that you would recognize. And then of course, our business is not exclusively to big companies. We do have a lot of small to medium sized enterprises that use Alfresco, so there is a range of those that were represented in the study as well.

You’ve made some interesting points in your blog about the open source software sales cycle, where a company, instead of coming into a non-user, non-customer meeting, they’re coming into a meeting and the prospective customer is already a user. How far along are companies in actually putting Alfresco to use before they start going out and looking for paying services around it?

The short answer is it’s difficult to tell. We have between 12,000 and 15,000 active installations of Alfresco today of people using it on a daily basis. And how deeply into production, we don’t have any way of knowing. We have a heartbeat that gets sent back and so we know it’s being used. And that’s about the only data unfortunately that we’re able to collect. We have to respect the customer’s privacy, or the user’s privacy. But what we do find out from talking with companies that convert to paid use of Alfresco, that generally what happens is they download Alfresco and maybe they contact us, so they come up on our radar screen - - and this is the way we’ve been able to track a few of these, like Raley’s, the grocery chain in California, is an example of this. Contacted us, I think, like January of 2006. We had a few conversations with them over the phone and then they just disappeared and we had no idea what had happened. And so we took them off the pipeline and didn’t think any more about them.

Well, in February or March of this year, up they pop. And it turns out that during that time they hadn’t been evaluating Alfresco the entire time, but they had been considering it and then other project priorities had come up. And then it suddenly became a priority again and they contacted us, and I think within thirty days we had a contract, and away they went. So what tends to happen is as it becomes a priority again they've evaluated it, it’s a priority, they are taking it through testing and QA, and not usually into production. If they’re comfortable taking it into production without purchasing support from us then we generally will never hear from them; maybe on the forums or something like that we’ll hear from them, but certainly not on a paid engagement.

But usually what happens is they need that last mile of configuration, stability testing, etc. They contact us, they want our assistance. So my solutions engineering team will work with them and we'll do a WebEx demo to show them some of the possibilities about based on their requirements and what they could be doing with the system. Give them some pointers, introduce them to one of our SI partners, because we don’t actually do our services. We work with our SI partners to do those, and then they purchase. So our sales cycle of actually talking with the customer ranges from sixty to a hundred and twenty days, or two to four months. On average it’s about three months, which is phenomenal compared to a proprietary software company. You go to a proprietary software company and the sales cycles are nine months, eighteen months, if it’s a really big deal. We’ve just never had that because people have to come to us self-selected saying, "I already know the software works, I might still need a little bit of help configuring it to get it to work exactly how I want it to work, and therefore, Alfresco, I’m contacting you."

But generally speaking, the software has to sell itself. We don’t have anybody out knocking on doors trying to drum up business. All leads come to us. And it means the software really has to be good and has to stand on its own. It has to be easy to install, easy to understand. Documentation has to be good. We have to be able to get the customer off the ground without our assistance, and then we come in to provide that extra value to make sure that they get the most out of the software. But it’s very different from the proprietary model where you hire an expensive sales force to go out and knock on doors. The customer never gets to touch the software and really see what it can do and whether it will be good for them until they’ve paid. So all the risk gets shifted onto the buyer, which is, I think, a wrong model. Depending on the day I might even go so far as to say an immoral model of how to do business. But I’m somewhat biased in matters like that, so take that with a grain of salt.

So speaking of the software selling itself, just to share something from our LinuxWorld.com reader survey, the most likely action that a person will take in response to something they read on LinuxWorld.com is "download open source software." And that beats read a vendor white paper, contact a company for more information; every other action ranks below just grab the software and give it a try.

Yeah, well that’s fascinating because what I hope happens, and I’m sure it happens with Alfresco, is we had 600,000 downloads last year and we don’t have 600,000 customers. So what I hope happens is that people take that action. They go out and they download Compiere, or they download whatever you happen to be talking about, and they discover for themselves whether it can work for them. And maybe in Alfresco’s case, maybe nine times out of ten it’s not the right solution for them, or it’s not the right thing right now for them, or it wasn’t what they expected. But at least they know, at least they’ve been able to use and make an informed decision rather than reading--I don’t think I’ve ever read a white paper that actually had much meaningful information in it. Most of it is kind of marketing garbage that people like me write, and that’s not that useful.

So I’m really glad to hear that, that you guys are pushing people to use software rather than hear about it and think about it. Because using it is going to be a much better indicator of whether or not it’s going to be of use to them. As a case in point, and I don’t want to go off on a tangent, but I spent yesterday with a large prospect of ours. I happened to be going through the area and I wanted to meet with them. And they bought a proprietary content management system for several million dollars three years ago.

Three years later they don’t have that software working. The vendor has been unwilling to do much for them. I’m sure the vendor has said hey, you know what, pay us $300 an hour or whatever and we’ll come on site and help you. But this is a fundamental thing of installing and getting it working. And this is not a stupid company; this is a company on the Fortune 500 list that has a savvy IT department. Several million dollars and three years later, they don’t have anything besides shelfware. How much better would that have been had they discovered that it wasn’t going to work for them. And it may be that the product is great and it’s just not a good fit for their needs, but how much better to find that out at no cost up front.

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