Software, as you probably know, is a great business. Zero marginal cost, no inventory to monitor, and no goods to physically ship.
The key to selling business software is finding an easy act to follow. Microsoft (MSFT) Excel was successful because there were no personal spreadsheet applications at the time. QuickBooks gained massive market share because Excel wasn’t equipped to handle small business accounting. Oracle’s massive growth in the 1980s and ’90s occurred because it was selling databases to big companies that didn’t have any, but desperately needed them.
We have a saying in our office that when selling small business software, the best thing to replace is Excel, or pen and paper. You don’t want to be tasked with trying to replace another software system, because odds are that, even if the system is bad, it is probably “good enough” to do the job it needs to do. People will complain about software all day long, but getting them to switch to another product – from something they know, to something they don’t know – is a very difficult chore.
The analogy in the enterprise is that you want to replace mainframes. Which is exactly what Guidewire Software (GWRE) does.
Insurance: Mainframe Computing’s Final Frontier
When it comes to adopting new technology, managers of insurance companies must be among the slowest. Most of the industry is still running mainframes!