What: “Celebrating Product Management – Looking back, pressing forward”
When: Wed, Dec 23, 2009, Noon ET / 9AM PT
Full description
Register here

Jim Holland will moderate a special RYMA holiday discussion with Rich Mironov, Scott Sehlhorst and Michael Hopkin. Join us for a year in review, as we Celebrate Product Management. In this season of friendship and relations, we bundle up from the cold and let our thoughts of gratitude move toward the shared experiences of Product Managers everywhere.

This has been an eventful year indeed, at RYMA and around the world. Some of our friends to product management will drop by and reminisce about the changes we’ve experienced this year. Questions and observations from attendees will be most appreciated.

The focus of the Mini ProductCamp RTP is “Innovation.”  Jason Tanner from Enthiosys will lead a game for the group to participate in.  This is an exciting event that will help you hone your innovation skills and work in a team – the best team will win a great prize and as always the event is free and open to the Triangle community of Product Managers, Product Marketers, Program Managers, and Engineers.  We hope to see you at the event!  Please register at the Registration Page.

If you have any questions please send an email to netcooper@yahoo.com.

When: Saturday, February 27, 2010
Where: Student Center at the University of California, Irvine
Registration and Information

Learn more about Product Camps!

ProductCampSoCal is:

• Grassroots organization – Your participation will make or break the event!
• Highly engaged & creative exchange increasing each individual’s skills & knowledge.
• Building and strengthening professional relationships while having a whole lot of fun.

ProductCampSoCal isn’t:

• A pre-determined set of speakers and topics.
• Polite attention & passivity in sessions nor does sole responsibility rest with presenters for successful sessions.
• Networking only at formal icebreakers and scheduled breaks.

Spread the word! Use #pcSC in tweets, and tag online posts with “ProdCampSoCal”.

What: P-Camp 2010, the world’s largest Product Camp/Product Management Unconference
Where: Yahoo! Headquarters, Sunnyvale, CA
When: March 13, 2010, 8AM to 4PM

P-Camp event website

Registration page

Session proposals and voting

Postings and photos from last year’s event are here.

During the engagement, the client’s sales team identified some real-world messiness that we (as product managers) would prefer to ignore: high-end customers who demand enterprise-wide licenses – instead of limited-use licenses tied to volume. These are sometimes called “all you can eat” or AYCE deals. Let’s describe the situation, then explore a few of the messy conclusions.

PRICING FOR VOLUME

We always try to price our products based on customer value, but enterprise software is ultimately tied to some unit of measure: the thing we count to compute what customers owe us. (See Disruptive Pricing Units and Pricing for Start-Ups). Oracle favors per-CPU pricing; SalesForce focuses on per-seat-per-month subscriptions; Symantec counts desktops; VeriSign and RSA track tokens or certificates.

To protect the innocent, let’s imagine a fictional product that scans each customer’s software and magically identifies obscure coding mistakes. Our uniquely fictional pricing model is to charge only for the mistakes our product finds. Scanning clean code is free, but users will pay us for each error that this is detected and explained.

Being deeply analytical product managers, we’ve carefully built a tiered pricing structure which gives deeper volume discounts as customers buy more. For $500 per month, the customer can identify up to 100 mistakes. (That’s $5 per error). $800 per month to find up to 200 problems (at $4 each), $1500 for 500 mistakes ($3 each) and so on. It turns out that a perfectly designed pricing model will appear linear on a log/log chart, so we build some very impressive scatter charts. We feel great, having brought order to a complex problem.

.

YES, BUT…

All is going well until the deals start to get big, and enterprise customers assign their purchasing agents to negotiate contracts. Suddenly, customers start to toss the following at our sales teams:

• “We write a tremendous amount of software, and have no idea how to count the errors that come out of Development. Just give us a one-time ‘all-you-can-eat’ price for unlimited use, and we’ll consider it.”

• “If we make you part of our standard software process, we’ll be scanning billions of lines of code each month. That could turn up tens of thousands of very minor errors. You’ve priced yourself out of being a strategic solution that we use everywhere. We shouldn’t bother with a proof-of-concept test if we know we can’t afford to choose you.”

• “We preconfigure all of our servers the same, with copies of every software package we might need. That way, everyone in the Engineering and Operations groups has identical tools. All of our other vendors have agreed to site-licenses and unlimited installations.”

Sales people hear this all the time. Product managers, though, are buffered behind layers of Sales Ops and SEs and Marketers. As product managers, though, we’re surprised that our carefully designed pricing plans don’t fit every situation. And we want to take these demands at face value – assuming the customers are communicating clear pricing requirements. Customer input is our credo. (“Gee,” says the PM. “I guess we need a site license for deals above 20,000 errors detected per month.”)

So, to get some perspective, Enthiosys polled some Sales VPs at other enterprise software start-ups. How do they think about customer demands for site licenses and ‘all-you-can-eat’? What’s real and how can you tell? Here’s what I learned:

SELLING IS A MESSY, INEXACT PROCESS

[1] Customers try to get the best deal from us. Some have well-designed buying processes to force down prices. This includes purchasing agents paid based on the discount they negotiate; buying from multiple vendors; demands for unreasonable service level agreements; product bake-offs; painstaking reviews of license agreements; upgrade guarantees; pay for performance; etc. Some prospects demand ‘most favored nation’ pricing, where they are entitled to the lowest price you offer to any customer, ever.
So the enterprise buying process often includes a demand for site licensing, regardless of whether it’s truly required by the customer.

Good sales reps can usually sort out whether the customer has a legitimate need for AYCE or is simply using it as a negotiating tactic. (Often, there’s a champion on the customer side who clues in our sales team.) And good Sales VPs push hard to minimize special deals.

[2] Taking the deal off the table. If you have competitors (and everyone has competitors), the market sets an upper limit for some deals. Large customers can get your competitors to chop prices, and you’ll be forced to follow. Sales teams are paid to discover how much money the customer will actually spend, and which are mostly motivated by saving money. Eventually, your Sales VP has to decide which deals are important enough to throw away the price list and agree to something unique.

[3] Some customers have a legitimate need for enterprise-wide licensing. There may not be a reasonable way to track usage, or it may be extremely hard to predict volumes before deployment. Or perhaps your customer is bundling your cool-new-thing into a package that incorporates many different pieces, and is pricing that on an entirely different basis.  Etc.
It’s your job as a product manager, though, to generalize these deals. What if fifty more customers presented the same reasons for AYCE? Have we created a convenient way to undercut our pricing strategy and revenue stream?

SO WHAT SHOULD WE DO?

Our panel of Sales VPs offered two thoughts for managing individual deals and limiting the impact of AYCE licenses.

• Is this one of our top 10 deals for the quarter? If not, then we shouldn’t spend our energy chasing a one-off with unique terms and conditions. The sales team needs to refocus on selling the value of our solution, or identifying champions within the account to push our agenda. And we might just lose this one.

• How can we put limits on this initial sale, and come back later for additional revenue? Maybe we offer an ‘all-you-can-eat’ for three years, and postpone renewal terms for a while. Maybe we set a very large volume cap (up to 50,000 errors per month) and revisit usage after the first year. Maybe this license only covers one division of a huge company, and we’re free to sell more elsewhere. We should avoid unlimited perpetual licenses whenever we can.

Back on the product management side, it’s important to watch for trends without letting a handful of deals whipsaw our pricing model.  Part of PM’s value is to provide strategy and stability in the face of daily events.

SOUND BYTE

High-end selling is a messy, complicated, people-intensive process. Every deal appears to be a special case. Sales teams are hired, trained and paid to sort it out and find the revenue. Product managers should be humble, helpful and ready to spot the trends.

What: “Creating Breakthrough Products Through Collaborative Play” presented by Luke Hohmann
When: Weds Nov 11th, 10am to 10:30am
Where: Westin Market Street Hotel, 50 Third Street, San Francisco
Registration and more information

The conference brings together attendees and speakers interested in building long-term, sustainable and profitable software businesses. Fifteen speakers over two and half days will talk about how to succeed in the business of software.

What: “Transitioning to Agile Product Development – Lessons Learned”
Where: The Olympic Collection, 11301 W. Olympic Blvd. at Sawtelle Blvd. / West Los Angeles
When: Weds, Nov 11th, 6-9PM
Register here
Members $35 in advance / $45 day of event. Non-members $45 in advance / $55 day of event. Students $30 with ID

Learn about the benefit of agile product development as well as the pitfalls and best practices from agile experts and practitioners about transitioning to an agile product development environment. Experts panelists include:

• Scott Downey – Chief Scrum Master from MySpace.com Scott has been active in the Software Industry for more than 18 years, holding positions at nearly every level of organizations, and in a wide variety of organization sizes. He is currently the Head Agile Coach for MySpace.com and is a Certified Scrum Practitioner, a member of both the Scrum Alliance and the Agile Alliance. He conducts regular Scrum Master Certification courses in Beverly Hills.

• Scott Gilbert – President of Enthiosys Scott is an expert in Agile software product management, business planning, project management and business development. He has worked in a variety of high-tech sectors including enterprise software, aerospace and defense, satellite communications and interactive media as an independent contractor and co-founder of start-up companies. Scott holds BBA degrees in marketing management and international management from the University of New Mexico, received his ScrumMaster certification in 2006, and Scrum Product Owner and Scrum Practitioner certifications in 2008. He is a generous PDMA volunteer.

• Ricardo Aguirre, Consultant Ricardo has over ten years experience creating, developing and delivering innovative web-based and mobile software application products featuring web 2.0 concepts and technologies using both traditional and iterative (Agile) methodologies. He brings experience from Sony, AT&T and Qualcomm to his current position as Sr. Product Manager with Trimble Navigation.

What: “Battle of the PM Bloggers” panel and competition
Part of: PMEC 2009, AIPMM’s Product Management Education Conference
When: Tues, Nov 17th at 4:00 – 5:00 PM as part of a two-day event
Moderator: Rich Mironov
Participants: top 10 PM bloggers
Where: The Fairmont San Jose, 170 South Market Street, San Jose, CA
Registration and fees: www.aipmm.com/pmec

AIPMM has taken AllTop’s list of the top 10 product management blogs, and invited each of those bloggers to join a panel. Each will have a few minutes to explain why he/she should be selected at the #1 PM blogger.

Should be fun, hope to see you there!

What: “The Agile Product Manager/Product Owner Dilemma”
Part of: PMEC 2009, AIPMM’s Product Management Education Conference
When: Tues, Nov 17th at 1:00 PM
Where: The Fairmont San Jose, 170 South Market Street, San Jose, CA
Rich has championed discussions within the Agile community about the need for product strategy and business-level planning – and how it needs to wrap around the software development process. He is one of very few people bridging the PM and Agile communities.

Here’s a SlideShow of the content.

Agile Product Manager/Product Owner Dilemma (PMEC)

View more presentations from Enthiosys Inc.

What: San Francisco QRCA Technology Day
When: Nov 6th, 10:00 AM to 2:00 PM
Where: Schlesinger Associates, 150 California Street, Suite 800, San Francisco
Cost: $25 for members and $40 for qualified non-members* and includes lunch.
RSVP to Ellen Schaefer at ellen@groupworks.net.

The Qualitative Research Consultants Association’s San Francisco Chapter (SF QRCA) is holding its annual SF QRCA Technology Day on Friday, November 6th at Schlesinger Associates in San Francisco. The line-up of presentations and demonstrations includes:

• Social Networking: Social networking includes things like Facebook, LinkedIn and Twitter. This presentation will explain what Social Networking is and how to use it to build your business.
• Innovation Games Online: This is a new tool that allows product managers, researchers, and others to collaborate with customers and find what they really want.
• Livescribe: Livescribe is a Bay Area company with a new device that could change how you take notes at meetings, brainstorming sessions and even qualitative research
• On-line Qualitative research: This presentation will focus on what is new in the world of on-line qualitative research.

Members are invited to bring/present other new technologies that they are especially excited about.

*Qualified non-member = Practitioners who specialize in the conduct and analysis of primary qualitative research and who function as research suppliers and/or consultants. Qualified non members may attend a lifetime maximum of four (4) regular Chapter meetings before joining the organization.