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The dawn of the tech revolution saw a partner community of VARs, resellers and ISVs selling and implementing the technology products provided by hardware and software vendors. As this community grew larger and more competitive, these companies sought to differentiate themselves, and grow by evolving into services companies, providing customized solutions and managed services around the software of the tech giants.
Now this services community is even larger and more competitive, so the quest begins for the next platform for growth—intellectual property development.
For most firms, making this transition is going to be more difficult than the transition to a services-based model, and not everyone should do it. For those that do, there are rewards to be had, including:
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New sources of profitable revenue
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Competitive insulation
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More relevant company differentiation
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Accelerated development time
- Offensive counterbalance to offshore competition
These benefits won't come easily, as there are hurdles and pitfalls unique to IP development, among them:
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IP not working without a specialized, focused services offering. Specialization is the foundation for effective IP development. Having a technology and vertical focus gives you the credibility and experience base for justifying your IP service offering.
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Not contracting for IP properly. IP development isn't your standard "work-for-hire" contract in which the customer who paid for the service owns the work. In order for you to reap the rewards of your IP, you're going to need to construct a contract in which you're the co-owner, along with your customer.
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Mistaking IP as a product. It isn't. The IP that's created will only be as good as the service you provide around it. It's why we call this a product-enabled service.
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Not knowing how to quantify and articulate the value of IP. Creating an IP service involves finding the right mix and balance of the existing code structure of the software platform—CRM or SharePoint—the new customized code that becomes your IP.
Once you’ve created a unique IP offering, the next phase is developing a new sales channel, enlisting others to sell the service. Right now, there are no hard and fast rules for determining the point at which you can realistically begin to market your IP to others.
That being said, we’re suggesting, as a good rule of thumb, you hold off approaching new channel partners until at least half your new customers have bought into your IP. You’ll need this base of acceptance to credibly demonstrate the appeal of your IP.
One last benefit, especially for those executives looking to sell their company at some point in the future, and who have effectively created and marketed a unique IP service offering, is that you become highly attractive to the acquisitive set—companies that will pay dearly for your company and be glad they did. |
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