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***** Computer Select, October 1992 : Doc #3387 *****

Journal: Soft-Letter August 29 1992 v9 n14 p1(2)
* Full Text COPYRIGHT Soft-letter 1992.
-----------------------------------------------------------------------------
Title: Productivity: let's put up or shut up.
-----------------------------------------------------------------------------
Descriptors..
Topic: Harvard University. Graduate School of Business Administration
Productivity
Performance Measurement
Management of EDP
Promotion of Product
Marketing Strategy.
Person: Loveman, Gary (Research).

Record#: 12 638 925.
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Full Text:

The other day we sat through a presentation by Gary Loveman, the Harvard
Business School productivity guru who argues that there's still no proof that
computers make people more productive. "When I started my research," Loveman
says, "I was convinced I would stumble across evidence everywhere I looked.
But we can't find a link between investments in information technology and
any measure of economic performance."

Loveman admits, of course, that it's easy to find individual companies that
have used technology to become more productive, more responsive to customers,
or more profitable. But the "macroeconomic" data suggests that most
companies have merely found "faster and cheaper ways to do dumb things."
These companies have traded armies of clerical workers for equally-large mobs
of managers, Loveman says, producing no gains in tangible output or average
wages.

Loveman's statistical techniques are controversial, but it's becoming
increasingly clear that users have come to think of "productivity" Claims as
just more marketing hype. At the latest PC Expo in New York, for instance, a
seminar on "Strategies to Guard Against Productivity Loss" attracted just one
lonely audience member (out of 80,000 PC Expo attendees). We've also noticed
that very few users seem to describe their personal computing experience in
terms of higher gross output, decreased employee headcount, or any other
classic productivity yardstick. (Of course, we hear plenty of warm fuzziness
about how new technology toys make people feel incredibly productive, but
never any word about how these good vibes trickle down to the corporate
bottom line.)

All of which raises an interesting question: Why do so many software
companies persist in stressing a flimsy benefit that most of their customers
apparently don't find either credible or compelling?

This is no longer an academic question, either. Much of the industry's
growth in the next decade depends on convincing users to adopt PC-based
workgroup applications. Unlike users of personal applications, workgroup
customers tend to ask tougher questions about how these new systems are going
to improve group productivity, reduce error rates, improve timeto-market
and cycle times, or otherwise show a measurable return on investment. If the
great artificial intelligence fiasco of the '80s proved anything, it's that
users won't make huge investments in new technologies based on what might be
called the Cod Liver Oil Sales Proposition--"swallow it because I say it's
good for you."

If Gary Loveman is right, of course, workgroup applications may in fact not
deliver higher productivity. Or, worse, users themselves may never agree on
what they mean by "productivity." Even economists have a hard time assessing
the output of white collar office workers whose jobs seem to consist of
shuffling paper and holding meetings; do we make these people more productive
by helping them generate more documents and more meetings?

But there are also a lot of workgroups that perform well-defined corporate
functions--they process orders, collect accounts receivable, design new
products, sell products, handle customer support calls, and the like. The
managers of these workgroups usually have very clear notions of how their
organization's output is measured, and-- increasingly--they have rigorous
ways to measure the payback of their automation and technology investments.
If the ROI looks good, the investment gets made.

In this vein, Lotus recently published a study of ten Notes applications in
such areas as customer support, bid processing, inventory control, and
quality assurance. The average payback on these real-world applications,
using ultra-conservative math, was 353% of installation costs. "Up to now,"
says Jim Henry, the study's author, "most Notes customers have been willing
to adopt it without much evidence on productivity--evidently they have bought
the vision. But if we really are going to tackle the productivity problem,
we need to make clear that this evocative new technology pays for itself in
many relatively mundane ways."

The challenge is really that simple. Either we accept Gary Loveman's
argument that productivity payback is a non-issue--or we finally start to
prove that software investments can make good economic sense.


***** Computer Select, October 1992 : Doc #3388 *****

Journal: Soft-Letter August 29 1992 v9 n14 p2(2)
* Full Text COPYRIGHT Soft-letter 1992.
-----------------------------------------------------------------------------
Title: How Approach pre-tested the market. (Approach Software Corp.)
-----------------------------------------------------------------------------
Descriptors..
Company: Approach Software Corp. (Marketing).
Topic: Computer Software Industry
Marketing Research
Marketing Strategy
Pricing Policy
Promotion of Product.

Record#: 12 638 927.
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Full Text:

Especially in a new category, product rollouts always involve lots of
guesswork about positioning, pricing, and other marketing variables. "But
many of the important hypotheses can be tested," argues Jaleh Bisharat,
marketing vice president of Approach Software Corp. So, when Approach
launched its new Windows database earlier this year, Bisharat's first step
was an extensive direct mail test campaign. The test compared the results of
five different mailing lists, three price points, and two selling messages.

"It's phenomenal what you can learn from this kind of research," she says.
"I sat there with a spreadsheet literally every day, seeing patterns emerge."
By reducing hit-or-miss marketing efforts, Bisharat adds, Approach could
crack the retail market with unusual speed: Less than three months after
Approach for Windows shipped, it showed up in the number two slot on
Ingram's bestseller list for databases.

Bisharat says her direct mail test was designed to answer three key
questions:

* Who's the target customer? Bisharat tracked response rates for each of
five different mailing lists, whose demographic profiles ranged from consumer
users to experienced database programmers. The variability was "fairly
stunning," Bisharat reports--the best list outpulled the worst by a factor of
nine. More importantly, Bisharat discovered that Approach for Windows
appealed primarily to -non-programmers who nevertheless often need to manage
and report on data that already exists somewhere in their company. As a
result, we learned the importance of stressing Approach's compatibility with
dbase, Paradox and SQL in all of our ads, brochures, and even stickers on the
retail package."

* What's the right price? "The popular wisdom was that sales would boom if
we offered an introductory price below $100," Bisharat notes (Approach
carries a suggested retail price of $399). But the popular wisdom turned out
to be wrong: When Bisharat tested price points of $99, $129, and $149, she
found that sales were strongest at the higher prices. Approach's direct mail
offers now quote a $149 price, and Bisharat has started testing an even
higher price of $197.50.

* What's the most compelling sales message? Based on focus group tests and
comments from corporate testers, Bisharat knew that customers seemed to
respond most strongly to two positioning messages--"ease of use" and
"compatibility with existing data." So she created two different test
mailings, each of which stressed a different selling proposition. "The
results for the two messages were dead even," she says. "We finally realized
that it was the intersection of the two that we should stress--even though
you always hear that audiences can only grasp a single message."


***** Computer Select, October 1992 : Doc #3389 *****

Journal: Soft-Letter August 29 1992 v9 n14 p3(2)
* Full Text COPYRIGHT Soft-letter 1992.
-----------------------------------------------------------------------------
Title: High growth, low productivity? (software industry)
-----------------------------------------------------------------------------
Descriptors..
Topic: Growth
Productivity
Computer Software Industry

Industry Analysis.
Feature: illustration
table.

Record#: 12 638 929.
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Full Text:

After looking at this year's Soft.letter 100 data on growth rates and
sales-per-employee ratios (Soft-letter, 4/7/92), a friend of ours posed an
intriguing question: Do the numbers suggest that high growth and high
productivity are mutually exclusive? Common sense suggests that it's tough to
double or triple sales without some inevitable loss of efficiency. But, much
to our surprise, high-growth software companies don't seem to come up short
on productivity.

For purposes of comparison, we first extracted the top 20 growth leaders from
the current Soft.letter 100. Since sales-per-employee ratios vary by company
size, however, we couldn't simply compare our top 20 growth leaders against
the entire Soft.letter 100. Instead, we tried to compare average
productivity levels in like-sized companies:

TABULAR DATA OMITTED

When we sifted through these numbers, we found that average productivity
among our growth leaders fell within 3% of the averages for our 1st and 2nd
Quartiles (the 50 largest companies)--a statistically insignificant
variation. Lower down on the list, we found somewhat greater differences: In
the 3rd Quartile, high growth companies ended up 38% more productive, while
the three growth leaders in the 4th Quartile were about 15% less productive
than average. Clearly, there's no important trend here.

We often hear that productivity comparisons shouldn't be applied to
high-growth companies, who tend to hire extra people in anticipation of
future sales and focus most of their management attention on maximizing
growth rather than "counting paperclips." Maybe so--but, somehow, the
industry's most successful growth leaders apparently haven't had to make this
tradeoff.


***** Computer Select, October 1992 : Doc #3390 *****

Journal: Soft-Letter August 29 1992 v9 n14 p5(2)
* Full Text COPYRIGHT Soft-letter 1992.
-----------------------------------------------------------------------------
Title: Spreadsheets: big-picture views. (product development)
-----------------------------------------------------------------------------
Descriptors..
Topic: Spreadsheets
Product Development
Computer Software Industry
Software Packages
Future of Computing
Future Technologies.

Record#: 12 638 931.
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Full Text:

Spreadsheets have become so ubiquitous that it's hard to imagine how people
handled large sets of numbers in pre-VisiCalc days. But it's apparently even
harder to imagine how to extend and improve the classical spreadsheet
metaphor. In the last decade, we've seen at most four
innovations--integrated graphing and charting, macros, graphical displays,
and three-dimensionality--that genuinely transformed the market's definition
of what a mainstream spreadsheet should look like.

So what's left to invent? Lately, we've been looking at a group of rather
exotic products--Improv (Lotus), Compete! (Computer Associates), SpreadBase
(Objective Software), eSSbase (Arbor Software), and Hi-Sheet (BASEC)--that
offer clues about where next-generation spreadsheets might be headed. We're
not sure which of these products--if any--will survive the brutal realities
of the spreadsheet marketplace, but the concepts behind these products are
probably important enough to affect the direction of the mainstream
spreadsheet market.

First of all, we'd argue that all of these products make sense primarily as
tools for analyzing very large, very complex data models that usually end up
on mainframes, not desktop PCs. (For example, consumer products companies
like Procter & Gamble have to track the dynamics of sales promotions on
market share for dozens of product lines across hundreds of local markets.)
In theory, all of this data could be downloaded from mainframes and analyzed
piecemeal, but that's a lot like trying to follow a football game by watching
one player at a time. Sometimes there's no substitute for a big-picture
view.

The neo-spreadsheets we've seen manage big-picture data with the help of two
related innovations--multi-dimensional and hierarchical data architectures.
Both models solve kinds of problems that are relatively painful for
traditional spreadsheets, but both have some shortcomings as well. Our guess
is that the long-term winners probably will be products like SpreadBase and
eSSbase, which manage to combine elements of both architectures.

* The multi-dimensional model: Traditional spreadsheets have an almost
unlimited capacity for building complex models--for example, economic
forecasts, corporate budgets, and market analyses--that are based on
elaborate data interdependencies. But these models tend to be restricted to
a single perspective on the data, which is defined by the user's choice of
rows, columns, and 3-D layers. Even though the worksheet may contain all the
relevant data and variables, there are often questions the model can't answer
without restructuring all the relationships.

To help explore this problem, Lotus began experimenting with a
"multi-dimensional" spreadsheet called Improv, which was developed first for
the next machine and is now promised for windows. Improv users can view data
and relationships from a variety of views simply by switching row and column
choices; for instance, an Improv user might look at weekly sales trends for
a line of breakfast cereals by product type, box size, price, geography,
supermarket chain, coupon program, sugar content--or any combination of
these variables.

Improv solves a potentially important class of problem, but Lotus apparently
hasn't hit on a solution for how to sell Improv itself. (The original
developer of Compete!, another multidimensional spreadsheet, ran into the
same problem and ended up selling the product to Computer Associates, which
hasn't done much better.) Part of the problem, we suspect, is that
developers of multi-dimensional spreadsheets tend to gloss over a critical
question: Where does the worksheet data come from? Our breakfast cereal model
only works if the user has access to literally hundreds of thousands of
store-level data points, which don't just show up magically in a SQL file.
To make this external data meaningful, users also need control over some
fairly complicated consolidation and filtering processes..

* The hierarchical model: Control over external data is exactly the problem
that hierarchical spreadsheet architectures help to solve. Unlike classical
spreadsheets that rely on static linking and consolidating, a hierarchical
spreadsheet understands that data rollups are usually dynamic. Companies add
new products, realign sales territories, or decide to "drill down" to
details that once were discarded. Thus, the three hierarchical products in

this group are designed to manage big-picture data that exists outside a
user's personal spreadsheet. Hi-Sheet (created by a group of Latvian
developers) sits on top of a chain of Excel worksheets, managing lower-level
linking and consolidation relationships. eSSbase (created by a group of
mainframe veterans) puts large amounts of tagged data on an OS/2 server,
which users can access through various client spreadsheets. And SpreadBase
(created by a pair of ex-VisiCorp marketers) applies category-based
parent-and-child logic to external data files.

For the moment, the big-picture spreadsheet category consists almost entirely
of vaporware: The only shipping products are the NeXT version of Improv and
CA-Compete! Everything else is still in various stages of testing or in
limited distribution. But the spreadsheet giants are already reacting.
Borland and Microsoft have promised that they'll find ways to integrate
multi-dimensional and hierarchical data models into existing products, and
Lotus seems reasonably serious about turning Improv into a mass market
product. So big-picture data management may start showing up in mainstream
spreadsheets surprisingly fast.

James Dorrian, president, Arbor Software Corp., 3211 Scott Blvd., Santa
Clara, Calif. 95054; 408/727-7166. Ron Scott, president, BASEC (Baltic
American Software Corp.), 1 Constitution Plaza, Boston, Mass. 02109;
617/242-4444. Marc Sokol, director of product strategy, Computer
Associates, One Computer Associates Plaza, Islandia, N.Y. 117887000;
516/342-5224. Jeffrey Anderholm, group manager/Improv Product Line, Lotus
Development Corp., One Canal Park, Cambridge, Mass. 02141; 617/693-7733.
Richard Melmon, president, Objective Software, 248 Homer Ave., Palo Alto,
Calif. 94301; 415/324-3333.


***** Computer Select, October 1992 : Doc #8173 *****

Journal: Soft-Letter July 31 1992 v9 n13 p1(3)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Platforms: a multi-segment market model. (the battle between
Microsoft Windows, OS/2, Windows NT, Unix, Geos, PenPoint, reduced
instruction set computer platforms, hand-held computer software,
and DOS) (Cover Story)
-----------------------------------------------------------------------------
Descriptors..
Topic: Computer Software Industry
Industry Analysis
Outlook
Operating Systems
Market Analysis
Competition
Software Selection
Comparison
Trends.

Record#: 12 558 927.
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Full Text:

We don't spend much time at the race track, but we've always managed to bet
(and mostly lose) a few dollars on the Kentucky Derby. This experience
taught us one not-so-obvious lesson: When every horse in the race is a great
runner, picking a likely winner becomes really, really tough.

That's pretty much the problem that software developers face in the current
Platform Derby. Virtually every one of the contenders--Windows, OS/2, NT,
Unix, Geos, PenPoint, the new RISC platforms, the various palmtop and
"personal digital assistants," Taligent, and even DOS--has a reasonable shot
at ending up in the money; there are a few longshots but no obvious scratches
in this year's race.

The trouble is, software companies do have to place bets with their R&D
budgets. The market share projections we've seen so far don't offer much
guidance; typically, they sum up the whole PC marketplace with a single
undifferentiated pie chart, when in fact operating systems and platforms
usually compete in very distinct segments.

So we've tried to put together a different view of the Platform Derby-- in
effect, segmenting the market into a series of smaller races that are easier
to handicap. We don't pretend that what follows is based on rigorous
methodologies; we've just tried to pick out a few relevant trends and numbers
that we think shed some light on where the market is heading:

The 32-bit segment: The high end of the PC market--defined primarily by
32-bit, quasi-workstation machines--probably represents an installed base of
less than ten million machines worldwide. But these machines are "strategic"
in the sense that they're used by early adopters, developers of
mission-critical and downsizing applications, and power users who will
influence future mainstream markets. Thus, it's not surprising that Apple
(Taligent), IBM (OS/2), Microsoft (Windows NT), Sun (Solaris), NeXT and
others are investing heavily to build share in relatively low-volume markets.
Even if ordinary users never need a 32-bit, object-oriented word processor,
there's likely to be a high-end trickle-down effect that will help shape the
next generation of mainstream applications.

So who's winning in the 32-bit segment? Arguably, OS/2 has the strongest lead
today, with close to a million high-end users. IBM's notoriously inept
marketing and sluggish development process don't inspire confidence that OS/2
will hang on to this lead, once Windows NT and other object-based
environments debut. But an installed base counts for a lot in the software
world, and IBM has at least another year to lock in key customers before
serious competition arrives.

The desktop mainstream: The classical desktop PC is a standalone machine (or
a LAN client) that's used mostly by desk-bound office workers. Here, it's
clear the race is effectively over; Windows has won. Especially among
Fortune 1000 customers and hardware OEMs, Microsoft has established Windows
as a de facto standard for new machines (the 286 installed base is more
problematic), and--perhaps most importantly--the sexiest thirdparty
applications now routinely show up on Windows rather than on the Macintosh.
We're not convinced that there are currently more than 3-4 million hard-core
Windows users, but these users tend to be extraordinarily active software
buyers; they've contributed to a bandwagon effect that will eventually carry
Windows onto most of the right desktops. However, the total desktop
market--which includes home, small business, and clerical workers--is so vast
that even the 10 million Windows users that Microsoft claims are little more
than a niche market. (In fact, we don't expect Windows to reach 50%
penetration of the total installed base until the next decade.) Much of the
current character-based DOS installed base consists of users who are slow to
upgrade their machines or buy new software, so they're less attractive as
customers. But the nonWindows installed base remains so large that we doubt
any company will achieve market dominance with a Windows-only product
strategy.

* Mobile machines: According to our colleagues at the California

Technology Stock Letter, 42 million U.S. employees (almost 40%

of the workforce) spend much or all of their time in the field,

away from traditional offices and desks. These mobile workers--

for example, service technicians, sales reps, plant managers,

lawyers, architects, and scientists--have created an explosive

new market for portable and small-scale computing devices.

* Go Corp. (PenPoint), Apple (Newton), GeoWorks (Geos) and several other
system vendors have predicted--correctly, we think--that the mobile market
creates a major opportunity to establish new platforms. But it's less clear
how fragmented this market will be. Windows, because of its expensive
hardware requirements, probably won't be a significant factor--but our guess
is that pen-only machines and special purpose "personal digital assistants"
also won't be the big winners in this segment. Our crystal ball is a bit
cloudy here, but we think a current dark horse--the GeoWorks Geos
environment--could end up as the one truly generic platform for mobile and
small-scale machines.

The service frontier: Retailing and other service industries aren't usually
considered part of the PC mainstream, but we've started to see a dramatic
shift from proprietary hardware platforms to generic PC-based systems in
almost every major service automation category (Soft.letter, 5/11/92). So
far, only a handful of software companies have found ways to exploit these
markets, but there is clearly an emerging opportunity for massmarket
applications that will run on electronic cash registers, customer service
workstations, and similar devices. Again, it's tricky to predict which
operating systems will prevail (currently, the market is a hodgepodge of DOS
and Unix derivatives). But we don't see much customer interest in graphical
platforms; initially, we expect that the most successful applications will be
character-based and optimized for low-end hardware. It's worth noting,
incidentally, that these segments do not share the same marketing channels.
The desktop mainstream is well served by resellers and direct response
channels; buyers tend to understand and trust mass-market products. By
contrast, mobile users seem to expect software to be bundled with hardware,
so the front-runners are likely to be developers who understand OEM channels
and fleet sales (Soft.letter, 5/26/92). The service automation market is
another distribution bottleneck: Customers tend to be cautious and
unsophisticated, and they deal primarily with vertical market vendors. But
the most difficult marketing conundrum is probably the 32-bit segment. We're
not sure anyone will ever figure out a quick and efficient way to reach large
numbers of high-end platform influencers--but we're pretty sure this race
can't be won without a pretty hefty corporate sales force.


***** Computer Select, October 1992 : Doc #8174 *****

Journal: Soft-Letter July 31 1992 v9 n13 p3(2)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: How to audit service and support quality. (customer service and
technical support audits for technology companies)
-----------------------------------------------------------------------------
Descriptors..
Topic: Customer Relations
Support Services
Analysis
Business Planning
Strategic Planning
Training of Employees
Management of EDP
Consultants.
Person: Kilton, Rick (Attitudes).

Record#: 12 558 929.
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Full Text:

"My analyses always seem to startle management," says Rick Kilton, a
consultant who specializes in customer service and technical support audits
for technology companies. "Often, managers sit up in their ivory towers,
setting company strategies, but then they're surprised to find that people
who talk to customers every day have no idea what the company's goals really
are."

When Kilton undertakes a service audit, he says there are several key
questions that are likely to inspire "unexpected answers"'

What do employees think is important? In the absence of a clear message about
company goals, says Kilton, "employees will just go off and do their own
thing." Often, they take their cues from performance measurement
systems--"which may have absolutely no relationship to corporate strategy."

What do employees think the customer wants? "Service employees know a lot
about the customer's state of mind," Kilton notes. "They know whether the
customer is really satisfied, and they'll pick up on marketing and revenue
opportunities that an untrained person wouldn't recognize."

How does the company measure service quality? "I've seen companies that
produce six-inch printouts of data that no one can make any sense out of,"
says Kilton. "The real questions are much simpler: What are your quality
standards, and are you doing well or badly according to those standards? If
you're collecting data that you can't relate back to these questions, you're
just collecting trash."

What does the company sound like to a customer? "Call your own business
anonymously and see what you get," Kilton suggests. "If you get lost in a
voice mail system that wasn't well thought out, or if the service reps don't
have time to answer your questions thoroughly, you'll have a better idea
about why your customers might be a little irritated."

What gets in the way of a good job? Kilton makes a point of asking service
employees about small but annoying obstacles that interfere with efficient
work--for example, important reference files that are located in another
room, or "goofy" rules and paperwork that serve no useful purpose. A more
subtle obstacle is lack of empowerment, he adds. "Empowerment is a popular
buzz word these days, but it's important to watch what happens when employees
make mistakes. If they're penalized--even gently-- they'll never make a
decision on their own again."

What's the turnover rate? "When service employees are hired, a lot of times
they're warned that people burn out in 18 months or two years. That becomes
a self-fulfilling prophecy. In fact, people don't get burned out doing
things they like," Kilton notes. "And if the employee's needs are being met,
there's a pretty good chance the customer's needs are also going to be well
met."


***** Computer Select, October 1992 : Doc #8175 *****

Journal: Soft-Letter July 31 1992 v9 n13 p4(2)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Europe: "Prices have totally crashed." (distribution consultant
Global Touch Pres Denise Sangster on the European software and
peripherals markets) (Interview)
-----------------------------------------------------------------------------
Descriptors..
Company: Global Touch Inc. (Officials and employees).
Topic: Europe
Computer Software Industry
Industry Analysis
Peripherals
Trends
Price Cutting
Distributors
Market Analysis.
Person: Sangster, Denise (Interviews).

Record#: 12 558 931.
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Full Text:

Denise Sangster, president of Global Touch, is a distribution consultant for
U.S. software and peripherals firms that are building overseas markets. She
has spent most of this year in Europe, talking with publishers, developers,
and resellers; we asked her to summarize the trends she discovered:

We keep hearing reports about "softness" in the European market. True?

"The market is very soft, and one reason is that buyers are finally reacting
to high price levels that were set in 1985, when the dollar was extremely
strong. Since last November, hardware prices have totally crashed in Europe,
from 30%-40% above U.S. retail levels to about 5% higher. Now that hardware
prices have come down, all of a sudden buyers are saying, 'We're not going
to pay these exorbitant software prices any more. '"

Has price sensitivity affected the whole European market?

"Yes--there's been a fundamental change in buying patterns. People are
buying much more through direct channels, and they're willing to travel
further to get more variety and better prices. In addition, distributors and
multinationals are putting pressure on vendors to come up with one price that
applies across the board in Europe. Right now, there's not a lot of price
parity from country to country. Microsoft in particular is trying to bring
all its various European prices--except for those in the U.K.--to within 15%
of each other within a year. That's going to be a very distinct competitive
advantage."

Has price competition affected European resellers, who were supposed to be
delivering extra support in return for high margins?

"The European channel is working with extremely anemic margins. Merisel says
that 18% of dealers in France went bankrupt in 1991, and that means
somebody--primarily local distributors--got left holding bad invoices. The
situation is made worse by the record high interest rates in Europe these
days, which put a terrible financial burden on the channel. Analysts are
saying that 80%-90% of distributor gross margins are tied up in providing
financing to dealers. So there's really no money left to provide local
support."

Do you expect that U.S. companies will begin to play a larger role in local
support?

"The truth is, there's been very little reinvestment of revenues in the
European market--as little as 1% for companies outside the top ten. Today,
when U.S. software companies are generating almost half of their sales from
overseas markets, that's not reasonable. The key to being successful in the
future will be to work more in partnership with local resellers to provide a
higher level of support."

Denise Sangster, president, Global Touch, 398 51st St., Oakland, Calif.
94609; 510/601-7573.


***** Computer Select, October 1992 : Doc #8176 *****

Journal: Soft-Letter July 31 1992 v9 n13 p5(1)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: IBM Personal Systems Division assistant general manager Lee
Reiswig. (on reports that IBM sales reps lack the technical
expertise required to sell OS/2) (brief quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 558 933.
-----------------------------------------------------------------------------
Full Text:

IBM Personal Systems Division assistant general manager Lee Reiswig on
reports that IBM sales reps don't have the technical expertise to sell OS/2:
"We do see a need for a more technical marketing force and so we are putting
things in place to bring them up to speed." (Quoted in Infoworld, 2/3/92)


***** Computer Select, October 1992 : Doc #8177 *****

Journal: Soft-Letter July 31 1992 v9 n13 p5(1)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: James Cannavino. (IBM Personal Systems Div VP James Cannavino on
OS/2) (brief quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 558 935.
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Full Text:

IBM Personal Systems Division vice president James Cannavino on OS/2: "It's a
real live operating system, not just a face-lift on DOS. I've been here 29
years, and I've never seen so much excitement." (Quoted in Computerworld,
4/6/92)


***** Computer Select, October 1992 : Doc #8178 *****

Journal: Soft-Letter July 31 1992 v9 n13 p5(2)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Digital Equipment Corp. vice president of software engineering
David Stone. (on predictions that Microsoft will use the
Microsoft-DEC alliance to get at DEC's proprietary technologies)
(brief quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 558 937.
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Full Text:

DIGITAL EQUIPMENT CORP. vice president of software engineering David Stone on
predictions that Microsoft will use the Microsoft-DEC alliance to gain access
to his company's proprietary technologies: "Microsoft is not going to pick
my pocket." (Quoted in PC Week, 4/27/92)


***** Computer Select, October 1992 : Doc #8179 *****

Journal: Soft-Letter July 31 1992 v9 n13 p6(1)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Userland Software president Dave Winer. (on why developers are
abandoning the Macintosh) (brief quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 558 939.
-----------------------------------------------------------------------------
Full Text:

USERLAND SOFTWARE president Dave Winer on why developers are abandoning the
Macintosh: "The pendulum has swung to Windows. The Macintosh is no longer
the premier platform." (Quoted in PC Week, 5/11/92)


***** Computer Select, October 1992 : Doc #8180 *****

Journal: Soft-Letter July 31 1992 v9 n13 p6(1)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Sun Microsystems chief executive Scott McNealy. (on why he does
not feel threatened by the Open Software Foundation alliance)
(brief quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 558 941.
-----------------------------------------------------------------------------
Full Text:

SUN MICROSYSTEMS chief executive Scott McNealy on why he didn't feel
threatened by the Open Software Foundation alliance: "It confused the market
and created the perfect opportunity for our focused, deliberately belligerent
strategy to win. I'm just afraid that when OSF runs out of money next year,
IBM, DEC and HP won't ante up again. They might take all that money and put
it on real products." (Quoted in Computerworld, 5/18/92)


***** Computer Select, October 1992 : Doc #8181 *****

Journal: Soft-Letter July 31 1992 v9 n13 p6(1)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Apple Computer vice president Lawrence Tesler. (on the company's
Newton portable pen-based technology) (brief quotes) (Brief
Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 558 943.
-----------------------------------------------------------------------------
Full Text:

APPLE COMPUTER vice president Lawrence Tesler on Newton, his company's new
portable pen-based technology: "We realized there is probably no room left on
the desktop to redefine computing again, so let's look somewhere else."
(Quoted in The New York Times, 5/31/92)


***** Computer Select, October 1992 : Doc #8182 *****

Journal: Soft-Letter July 31 1992 v9 n13 p6(1)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Public Service Electric & Gas senior engineer Melvin Hinton. (on
why he thinks developers of pen-based hardware are not producing
systems his company will buy) (brief quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 558 945.
-----------------------------------------------------------------------------
Full Text:

PUBLIC SERVICE ELECTRIC & GAS senior engineer Melvin Hinton on why he thinks
developers of pen-based hardware aren't producing systems his company will
buy: "Right now, they're doing what GM did in the '60s. They're building
those machines without asking the people what they need." (Quoted in
InfoWorld, 6/15/92)


***** Computer Select, October 1992 : Doc #8183 *****

Journal: Soft-Letter July 31 1992 v9 n13 p6(1)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Microsoft chairman Bill Gates. (on Microsoft's operating system
strategy) (brief quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 558 947.
-----------------------------------------------------------------------------
Full Text:

MICROSOFT chairman Bill Gates on his company's operating system strategy:
"Microsoft is betting its entire future on one approach-- Windows. We are
putting all our wood behind one arrow." (Quoted in Computer Reseller News,
7/13/92)


***** Computer Select, October 1992 : Doc #8184 *****

Journal: Soft-Letter July 31 1992 v9 n13 p6(1)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: August 15-18. (the GeoCon/92 conference in Cambridge, MA) (Brief
Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 558 949.
-----------------------------------------------------------------------------
Full Text:

* August 15-18: GeoCon/92, Royal Sonesta Hotel, Cambridge, Mass. An
international software product exposition and conference for European,
Canadian, and other overseas developers seeking U.S. publishers and
distributors. $95/attendee fee.


***** Computer Select, October 1992 : Doc #8185 *****

Journal: Soft-Letter July 31 1992 v9 n13 p6(1)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: September 14-17. (the OpCon East conference in Boston) (Brief
Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 558 951.
-----------------------------------------------------------------------------
Full Text:

* September 14-17: OpCon East, John Hancock Conference Center, Boston, Mass.
The East Coast session of Soft.letter's twice-yearly conference for
operations and marketing managers. Segments include Customer Service &
Support (Sept. 14-15, $595); Manufacturing & Fulfillment (Sept. 16, $395),
and The Upgrade Marketing Summit (Sept. 17, $395). Call 617/9243944 for
complete schedule and registration information.


***** Computer Select, October 1992 : Doc #8186 *****

Journal: Soft-Letter July 31 1992 v9 n13 p6(1)
* Full Text COPYRIGHT Mercury Group 1992.
-----------------------------------------------------------------------------
Title: March 1-4. (the OpCon West conference in Menlo Park, CA) (Brief
Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 558 953.
-----------------------------------------------------------------------------
Full Text:

* March 1-4: OpCon West, Menlo Park, Calif. The West Coast session of
Soft-letter's twice-yearly conference for operations and marketing managers.


***** Computer Select, October 1992 : Doc #11346 *****

Journal: Soft-Letter July 7 1992 v9 n12 p1(8)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Benchmark survey: support & service productivity.
-----------------------------------------------------------------------------
Descriptors..
Topic: Automation
Support Services
Computer Software Industry
Productivity
Survey
Benchmarks
Performance Measurement
Customer Relations.
Feature: illustration
table.

Record#: 12 387 046.
-----------------------------------------------------------------------------
Full Text:

In the early days of the telephone industry, every phone call had to be
placed through a switchboard manned by a live operator. As the number of
phones and connections grew, telephone companies found themselves recruiting
and training vast armies of operators--at a rate (one analyst predicted)
that eventually would force telephone companies to hire the entire U.S.
population to staff all those new switchboards.

These days, the trend in tech support and customer service staffing look
strikingly similar. Every shipment that leaves a loading dock triggers a
fresh round of support and service inquiries. New technologies and features
bring more calls for help from baffled customers; at the same time, the shift
to direct response channels has added more order processors,
trouble-shooters, and expediters to software company payrolls. If the
present trend continues, it's possible that software companies eventually
will have to hire the entire U.S. population to handle the flood of support
and service calls.

Of course, the trend won't continue. The telephone industry solved its own
manpower crisis by replacing most of its human operators with automated
switching systems (in a sense, everyone who now dials a phone has become a
switchboard operator, so the prediction wasn't so far off the mark). We're
not sure if the software industry will discover an equivalent automation
solution, but it's clear that developers can't just keep throwing bodies at
the problem. Somehow, support and service departments will have to become
dramatically more efficient, more productive, more capable of supporting
larger numbers of users without equally large growth in staffing levels.

The trouble is, industry-wide productivity benchmarks are surprisingly hard
to find. For that reason, we recently surveyed a broad sample of software
companies about some key service productivity issues. In particular, we
looked for overall productivity levels (measured in transactions per
employee), the percentage of employees who actually work in "line" positions,
and the impact of automation solutions on productivity. We also explored
several variables--revenue size, product price, and application
category--that affect company-to-company comparisons.

Our total survey sample (after discarding incomplete questionnaires)
consisted of 148 companies, of which 45 reported annual sales of less than $1
million, 45 had sales in the $1-$5 million range, and 44 exceeded $5
million (14 provided no revenue data). We also asked about the "total number
of customer service and tech support employees, including managers, as of
March 31, 1992 (full-time equivalents)." Here, the breakdown of the sample
was 40% with 3 or fewer service employees, 30% with 3.5 to 9 employees, and
30% with 10 or more; the median number of service employees in our sample
universe was 4.

Several conclusions emerged from the data:

* Productivity levels: Companies with revenues over $5 million-- which tend
to have specialized service and support staffs-- typically handle about 1170
tech support and 1540 customer service transactions per quarter per employee.
Small and midsized firms by comparison achieved significantly lower levels of
productivity.

* Overhead ratios: Both in tech support and customer service, we found a
good deal of consistency in the ratio of line employees to
management/supervisory and administrative/staff positions. Typically, about
80% of tech support staffing consists of line employees, compared to about
77% of customer service staffing.


* Automation trends: Not surprisingly, we found that automation
technologies--which our survey defined as "fax-back, bulletin board,
automated voice, customer-initiated database search, and other responses that
do not involve a live employee"--still haven't achieved wide penetration in
service and support departments. But the early adopters seem to be achieving
very promising results. Among companies with some form of service
automation, 11% of tech support and 12.5% of customer service transactions
are now handled with no human intervention. Moreover, these companies
achieve dramatically higher levels of employee productivity--often twice as
high as their nonautomated counterparts.

ORGANIZATION AND STAFFING RATIOS

Increasingly, software companies these days seem to be drawing a distinction
between product-related "technical support" and salesrelated "customer
service." Most of our respondents (124 companies out of 148) were able to
break out staffing levels for each of these functions, and we found some
significant differences between the two groups in such areas as call volume
and automation.

However, tech support and customer service groups were very similar in one
area: the ratio of line employees to management and administrative staff.
This is an important percentage for analyzing group productivity; clearly, a
support department that suffers from too much overhead will be inefficient,
even if its individual technicians perform adequately.

Predictably, overhead ratios are not especially meaningful for service and
support departments with just a few employees. The smallest companies in our
sample reported that 100% (median) of their tech support and customer
service employees performed line functions. However, once a company passed
the $1 million level in revenues, or employed more than two support
technicians, the ratios changed considerably:

Tech support staffing ratios (medians)*

Manage- Adminis

- Line ment trative

All respondents (148 companies) 80% 14% 0%

By annual revenues:

Under $1 MM (45 companies) 100% 0% 0%

$1-$5 MM (45 companies) 75% 17% 0%

$5+ MM (44 companies) 80.5% 14% 5%

By tech support staffing:

Less than 2 emps (45 companies) 100% 0% 0%

2-5 emps (55 companies) 75% 25% 0%

5+ emps (48 companies) 81.5% 13.5% 5.5%

* Totals of medians do not always add up to 100%.

A similar pattern emerged in from our customer service data, although the
typical customer service headcount tended to be lower than in tech support
departments:

Customer service staffing ratios (medians)*

Line Management Administrative

All respondents (124 companies)77% 13.8% 0%

By annual revenues:

Under $1 MM (35 companies)100% 0% 0%

$1-$5 MM (45 companies) 67% 17% 0%

$5+ MM (44 companies) 75% 16.2% 3.6%

By customer service staffing:

1 or fewer emps

(46 companies)100% 0% 0%

1.2-4 emps (44 companies) 67% 25% 0%

5+ emps (34 companies) 77.4% 15% 9%

* Totals of medians do not always add up to 100%.

PRODUCTIVITY LEVELS

"Productivity" is never an easy quality to measure, and we've seen some
heated arguments over what yardstick is most appropriate. (One survey
respondent sent back a questionnaire with an angry comment: "This survey is
100% meaningless because it does not ask for installed base or units
sold/month.") Ultimately, the most efficient companies are going to be the
ones that eliminate the reasons for service and support calls, leaving their
technicians as idle as the famous Maytag repairman.

But until the telephones stop ringing, probably the most useful way to
monitor support productivity is simply total calls (and related inquiries)
divided by total support employees. The value of this standard is that it
measures the short-term impact of the real-world productivity investments in
training, automation, and management skills. If the average technician ends
up handling more transactions (with no burnout or loss of customer
satisfaction), then certainly service productivity has improved in a
measurable way.

To develop a common baseline for calculation transaction volume, we asked our
respondents for the total number of tech support and customer service
transactions their departments handled between January and March 1992. We
also asked them to break out how many of these transactions they handled by
telephone, by automated systems, and by "other" methods (including "in-bound
faxes, letters, and sales orders, including upgrade purchases").

Surprisingly, even many large companies don't seem to collect this kind of
data in any systematic fashion; 87% of our respondents said the numbers they
supplied were based on estimates rather than actual transaction counts. But
our statistical sample was large enough to provide a reasonably accurate
picture of overall industry performance standards and trends.

Thus, we found that larger software companies typically reported the highest
transaction volumes per employee in both tech support and customer service.
Small and mid-sized firms were dramatically less productive; however, we
found in earlier surveys (Soft-letter, 2/18/90 and 7/31/91) that service
employees in smaller companies typically perform a broader range of tasks
than technicians in large companies. Thus, smaller companies aren't
necessarily less efficient, but it is more difficult to measure their
efficiency in terms of standard performance benchmarks.

Tech support transactions per employee, Q1 1992

Median 50% Range

By annual revenues:

Under $1 MM (45 companies) 142 60-440

$1-$5 MM (45 companies) 664 335-1175

$5+ MM (44 companies) 1173 667-1839

By tech support staffing:

Less than 2 emps (45 companies) 458 116-912

2-5 emps (55 companies) 360 100-825

5+ emps (48 companies) 1210 658-1831

Customer service transactions tend to be relatively brief, so service reps
are typically able to achieve higher productivity levels:

Customer service transactions per employee, Q1 1992

Median 50% Range*

By annual revenues:

Under $1 MM (35 companies) 192 50-650

$1-$5 MM (45 companies) 850 473-1700

$5+ MM (44 companies) 1543 440-3450

By customer service staffing:

1 or fewer emps (46 companies) 447 30-938

1.2-4 emps (44 companies) 487 140-1167

5+ emps (34 companies) 1867 536-3543

Support and service performance is also affected by such factors as product
complexity and customer expectations within individual market niches. We
asked our respondents to identify the product category for their "most
popular title," and that breakout shows major differences in productivity
across various market segments. (In the case of accounting and financial
software companies, the data also shows how a seasonal spike in transaction
volume can temporarily skew the numbers.)

Productivity by product category*

Tech Support Customer Service

Accounting/

finance/tax 1979 (11 companies) 3333 (9 companies)

publishing/

presentation/fonts 1311 (5 companies) 3250 (4 companies)

Communications/

networking 933 (10 companies) 271 (7 companies)

General business 886 (33 companies) 1000 (27 companies)

Utility/add-on/desk

accessory 800 (15 companies) 800 (13 companies)

CAD/graphics 700 (5 companies) 1168 (4 companies)

Programming tool/

language 540 (15 companies) 850 (11 companies)

Vertical/industry- or

job-specific 458 (29 companies) 487 (20 companies)

System/environment 325 (1 company) n/a

Consumer/entertainment246 (14 companies) 360 (12 companies)

Education 158 (10 companies) 142 (9 companies)

* Based on total transactions per employee, Qi 1992.

Finally, we also found some interesting correlations between service
productivity and the list price of a company's flagship title. Here, the
most productive companies turned out to be those that supported software in
the $151-$500 price range, while the least productive were firms with titles
priced at the $1000+ level (whose customers apparently expect more extensive
hand-holding). But low productivity was also characteristic of companies
with the least expensive titles--who, because of their low revenue per sale,
presumably should be most aggressive about support efficiency.

Productivity by price category*

Tech Support Customer Service

Under $150 (46 companies) 568 659

$151-$500 (52 companies) 898 900

$501-$995 (28 companies) 654 775

$1000+ (21 companies) 325 175

* Median transactions per employee, QI 1992.

THE IMPACT OF AUTOMATION

Recently, we noted that automation technologies in other service
industries--such as retail, banking, travel, and hospitality--have enabled
employees to process much higher numbers of transactions without compromising
the quality of "personal" service (Soft-letter, 5/11/92). Software
companies, the perennial shoemaker's children of productivity technologies,
have only begun to explore the potential of service automation. Customer
tracking systems, knowledge bases, automated call distribution systems,
fax-back systems, and electronic bulletin boards are certainly penetrating
support and service organizations, but only at

To be sure, it's not always easy to measure the payback from support
automation. Rapid company growth and increasing product complexity make
year-to-year comparisons almost meaningless, and many commercial automation
products have been evolving at an even faster rate. Large corporations are
still debating whether desktop computing has had any effect on the
productivity of white-collar office workers, so it's perhaps premature to
expect much hard data about service automation.

Still, we did try to create a rough measure of the impact of automation on
software service and support organizations. We asked our respondents to
break out the number of "automated" transactions they handled during the
first three months of the year, and compared these numbers to overall
transaction volumes and to productivity levels. (Automated transactions
included "fax-back, bulletin board, automated voice, customer-initiated
database search, and other responses that do not involve a live employee.")

When we tabulated the responses, we found that 54 companies (36%) reported
at least some automated tech support transactions, and 29 companies (23%)
reported some automated customer service transactions. Within this group of
automation pioneers, we found a surprisingly high percentage of transactions
have been offloaded from live technicians and service reps--11% (median)
for tech support transactions, and 12.5% (median) for customer service
transactions. To the extent that these percentages translate into decreased
demand for new employees, there's clearly going to be an attractive role for
automated support systems.

When we compare the overall productivity level of automated companies against
those that reported no automated transactions, moreover, the results are even
more dramatic. Depending on company size, automated respondents in our
survey sample were able to handle between 7% and 165% more transactions per
employee than their non-automated counterparts:

Automated vs. non-automated productivity levels

by company size

Automated Non

- Automated Improvement

Under $1 million

Tech support* 300 113 165%

Customer service* 350 151 132%

$1-$5 million

Tech support 700 655 7%

Customer service 1700 700 143%

$5+ million

Tech support 1311 974 35%

Customer service 2333 1230 90%

* Median transactions per employee, QI 1992.

In a sense, these numbers demonstrate an obvious point: In almost any
industry, companies that actively pursue productivity gains almost
invariably end up the most efficient competitors. Automation by itself
doesn't necessarily produce big productivity improvements, but even a
toe-in-the-water automation investment is usually a sign that a company's
management is looking for smarter ways to work.

And the bottom line seems to be that software companies can improve their
service and support productivity in very substantial ways. No single
automation or management solution is likely to transform the economics of
handling thousands of customer transactions, but we suspect that the industry
could achieve an overall doubling of support and service productivity in the
next few years. Certainly, that scenario makes a lot more sense than the
open-ended hiring binge of the last decade.

A FEW OTHER NUMBERS...

As part of our data collection process, we compiled a few other statistics
about current service and support productivity trends:

* The paperwork shuffle: Software companies handle customer inquiries
primarily by telephone, but many requests come in by mail or by fax. Since
these transactions tend to be more time-consuming to handle, we asked how
many total transactions fell in this "other" category. The results suggest
that large companies handle a relatively smaller share of paper transactions
than small and mid-sized firms:

In-bound faxes, letters, and sales orders

by company size

Median 50% Range

All companies

Tech support* (67 companies) 7% 3%-13%

Customer service* (62 companies) 27% 9%-47%

Under $1 million

Tech support (15 companies) 9% 5%-20%

Customer service (16 companies) 29% 20%-47%

$1-$5 million

Tech support (17 companies) 9% 4%-17%

Customer service (18 companies) 36% 12%-62%

$5+ million

Tech support (30 companies) 4% 2%-9%

Customer service (24 companies) 10% 4%-38%

* As a percentage of total customer transactions, Qi 1992.

* Upgrade processing: Large upgrade campaigns tend to disrupt even the most
efficient customer service department, so we've found that even companies
with strong in-house order processing capabilities are beginning to explore
the use of outside fulfillment services. This approach seems to be most
common among large companies:

How do you process upgrade orders?

All companies

"Mostly through in-house customer service group"83%

"Mostly through outside vendor or fulfillment service"12

"Outside service for peak periods, otherwise in-house"5

Under $1 million

"Mostly through in-house customer service group" 92%

"Mostly through outside vendor or fulfillment service" 4

"Outside service for peak periods, otherwise in-house" 4

$1-$5 million

"Mostly through in-house customer service group" 89%

"Mostly through outside vendor or fulfillment service" 7

"Outside service for peak periods, otherwise in-house" 5

$5+ million

"Mostly through in-house customer service group" 60%

"Mostly through outside vendor or fulfillment service" 28

"Outside service for peak periods, otherwise in-house" 12


***** Computer Select, October 1992 : Doc #11347 *****

Journal: Soft-Letter July 7 1992 v9 n12 p8(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Electronic edition. (Benchmark Survey available in a data disk)
(Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 387 058.
-----------------------------------------------------------------------------
Full Text:

Electronic edition: This Benchmark Survey summarizes the highlights of our
research findings. For readers who wish to explore our survey data in
detail, we also provide a data disk that contains all our raw questionnaire
data (except for company names). Data disks may be ordered from Soft.letter
for $75 prepaid; available formats include Lotus 1-2-3 (DOS) 5.25" and 3.5",
and Excel (Macintosh).


***** Computer Select, October 1992 : Doc #11348 *****

Journal: Soft-Letter July 7 1992 v9 n12 p8(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Postscript. (OpCon East operations conference) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 387 066.
-----------------------------------------------------------------------------
Full Text:

* POSTSCRIPT: OpCon East, our twice-yearly operations conference, will
devote two days (Boston, Sept. 14-15) to an extended discussion of
productivity strategies for technical support and customer service groups.
The schedule includes four plenary session on performance metrics,
forecasting, the measurement of "quality," and service innovation, plus a
dozen highly-focused workshops on management, marketing, and technology
issues (such as training, compensation, scheduling, multi-vendor resources,
outsourcing, knowledge bases, customer tracking, fax-back systems,
interactive voice, audits and surveys, fee-based programs, and techniques
for fine-tuning service offerings). As usual, we've recruited a faculty of
top speakers, and there will be plenty of occasions for personal networking
and peer-to-peer discussions. If you're serious about looking for ways to
improve service productivity, OpCon East is where you'il find the solutions,
the ideas, and the data.

For a detailed schedule and registration information, please call Allison
Byck at Soft.letter, 617/924-3944.


***** Computer Select, October 1992 : Doc #22016 *****

Journal: Soft-Letter May 26 1992 v9 n11 p1(2)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Electronic distribution makes a comeback.
-----------------------------------------------------------------------------
Descriptors..
Topic: Software Packages
Trends
Distribution Management
Computer Services
Management of EDP
Market Analysis
Forecasting.

Record#: 12 236 232.
-----------------------------------------------------------------------------
Full Text:

Every time a brand-new electronic software distribution scheme pops up, we're
reminded of those endless Hollywood movie sequels, whose characters keep
slogging through adventures that become less convincing with every new
release. Electronic distribution has come back from the dead more times than
Jason, absorbed more technology transplants than Robocop, and suffered more
knockouts than Rocky. (The big difference, of course, is that movie retreads
make piles of money; electronic distribution still has an unblemished record
as a financial black hole.)

So here we go again. It's back. It's bold. It's Software Without The Box.
This time, though, the story just might have a happier ending. Infonow
Corp., a company built on the remains of two failed electronic distribution
predecessors, recently floated a $6 million IPO and already has several pilot
customer sites. Lotus will unveil Lynx, a Notes-based software distribution
system, at a splashy PC Expo event next month. And Ziff-Davis has several
new ventures--a recently-acquired shareware catalog, a CD-ROM demo disk
library, and an on-line buying service--that are likely to coalesce into a
true electronic distribution business.

Much of the reason for this influx of money and talent, we suspect, is that
electronic distribution increasingly fits the needs of a corporate
marketplace dominated by sales to installed base customers. The traditional
retail box still works as a merchandising tool for reaching new software
buyers, but fancy packaging is largely irrelevant to the installed base
customer (who mostly buys upgrades, incremental network licenses, or perhaps
a few extra fonts or add-on utilities). The retail channel has become
swamped with thousands of low-volume SKUSs that appeal primarily to installed
base buyers Soft*letter, 2/22/92); in many ways, on-demand distribution is a
much better delivery medium for these SKUs.

Moreover, electronic distribution solves one of the corporate world's most
annoying problems--how to keep track of PC software. MIS managers don't know
how much software their companies own, how much is pirated, how much has been
upgraded, and how much is simply erased from hard disks when employees move
on to new assignments. If nothing else, electronic distribution is the only
software delivery system that provides a reasonably comprehensive audit
trail.

So there's a good chance, we think, that electronic distribution will finally
carve out a significant place for itself in the distribution channel. (Worst
case, on-demand distribution will be hard to ignore, since at least three
electronic services--InfoNow, Lotus, and Ziff--will be out there pitching
developers and corporate customers.

We've been looking at the latest round of electronic delivery systems, and
it's clear that the developers of these systems have remarkably similar
notions about how on-demand distribution will work. Typically, a user
browses through a catalog of available titles, then fills out a purchase form
that is either stored on the system (to record the sale) or is transmitted to
an external reseller. In some cases, the software is downloaded directly
from a CD-ROM disk, a local server, or a phone line--or, alternatively, the
package itself is shipped to the buyer.

At the same time, electronic vendors already have found ways to differentiate
their systems. InfoNow provides strong comparison tools for evaluating
products, Ziff's Select Demos provides a huge collection of demos, and
Lotus's Lynx seems to assume that electronic buyers already have a pretty
good idea of what they want to order. Lotus also is eager to place its
systems in the hands of independent resellers (a necessary strategy, since
competitors like Borland and Microsoft won't want to give Lotus direct access
to their customers), while InfoNow and Ziff aspire to be resellers
themselves.

Our guess is that these differences in design and strategy will become key
success factors as more electronic vendors--especially the major dealer
chains--move into the on-demand business. Corporate buyers aren't going to
install six or eight rival electronic distribution systems; they'll adopt
only those that have the richest product selection (including the most
up-to-date selection of free patches, upgrades, DLLs, add-ons, templates, and
drivers) and the most "usable" features.

There's one other success factor that we're convinced is critical to the
future of electronic distribution: competitive pricing. Even if corporations
install on-demand systems, it's inevitable that their purchasing agents will
still make day-to-day buying decisions based on price. That leaves the deck
stacked in favor of conventional resellers, who--by virtue of volume
discounts and incentives--will almost always start with a price advantage
over start-up electronic vendors. And if electronic vendors can't build
sales volume with price-competitive titles, it's hard to see how they can
grow beyond the boutique stage.

Ultimately, then, the fate of electronic distribution may depend a lot on the
willingness of publishers to create separate electronic SKUs" that carry
slightly deeper wholesale discounts. Retail dealers are bound to complain
that these discounts are unfair. But in fact electronic distribution
squeezes out real costs of packaging, manuals, diskettes, and fulfillment.
Trim these production costs from a good chunk of a sales and a few extra
points of profit could fall to the bottom line.

InfoNow Corp., 3004 Arapahoe Ave., Boulder, Col. 80303; 303/442-6666; Lotus
Development Corp., Michael Mitsock, senior marketing manager, networked
applications, 55 Cambridge Parkway, Cambridge, Mass. 02142; Ziff Desktop
Information, Michael Kolowich, managing director, 25 First St., Cambridge,
Mass. 02142; 617/252-5000.


***** Computer Select, October 1992 : Doc #22017 *****

Journal: Soft-Letter May 26 1992 v9 n11 p2(2)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Portables: 'the beginning of a mainstream.' (portable computers)
-----------------------------------------------------------------------------
Descriptors..
Topic: Portable Computers
Market Analysis
Trends
Growth
Demand
Competition
OEMs.

Record#: 12 236 234.
-----------------------------------------------------------------------------
Full Text:

Last fall, Lotus quietly put together a Portable Computing Group that took
over responsibility for an apparently haphazard portfolio of products,
including LotusWorks, the Hewlett-Packard LX95 palmtop (which contains an
"embedded" version of 1-2-3), Lotus Write (a junior edition of Ami
Professional), Agenda, and, recently, a Windows-based PIM called The
Organizer that Lotus acquired from a U.K. developer. Although this
collection looks like the Lotus spare parts department, it actually reflects
some interesting insights about the emergence of portables and other
small-scale machines as a new computing platform. We spoke with Leon
Navickas, who heads Lotus's computer appliances" development efforts, about
some of the issues Lotus faces with portable platforms:

How big is the market opportunity in portables?

"One out of every three PCs sold today is a portable, and we're seeing 25% to
30% compound annual growth for the portables category, compared to at most
10% for desktop PCs. This category isn't just an interesting trend--it's the
beginning of a mainstream that can't be overlooked."

But aren't the applications that run on portables largely an extension of the
desktop market?

"Not entirely. For example, we've found that half of our LX95 customers use
their machines primarily as a personal organizer, even if they bought it
originally for number crunching. Yet when you look at sales of desktop
applications at retail, PIMs rank near the bottom of the list, somewhere
around tenth or twelfth place in popularity. There's a very different
pattern of usage here.

"In many ways, portables represent a new design center. They don't
necessarily have a hard disk, a fast processor, or a color display--all the
things developers assume are standard on a PC. You also deal with
applications that may be occasionally connected to a client-server
environment. In particular, we're doing a lot of work trying to build
software that's tuned to wireless data communications."

Your channel strategy for portables seems to downplay the retail channel in
favor of OEM bundling deals and embedded" applications. Why this approach?

"Our customers are really the people who build the computer. We're in there
working with these customers when they make decisions about which chips to
use. We expect to see a whole range of special purpose machines in this
category--spreadsheet machines like the LX95, personal organizers, personal
digital assistants, personal communicators, maybe even devices to drive your
TV. Then there are all kinds of information delivery mechanisms. we also
think the portable category will go upscale with machines that are more
DOS-like, and that can run Windows. In the long run, we hope to be a
supplier of software that a whole host of manufacturers will license."

How competitive is this market likely to be?

"When hardware OEMs go out to cut software deals they don't talk to just one
developer. The negotiations involve complicated calculations of variables
like product quality, brand awareness, volume, and price-- which usually
boils down to about 10% of suggested retail price. But deals have been known
to turn into bidding contests."

Leon Navickas, general manager, computer appliances division, Lotus
Development Corp., One Rogers St., Cambridge, Mass. 02141; 617/693-7670.


***** Computer Select, October 1992 : Doc #22018 *****

Journal: Soft-Letter May 26 1992 v9 n11 p3(2)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: The best of Europe. (software applications)
-----------------------------------------------------------------------------
Descriptors..
Topic: Software Packages
Achievements and Awards
Europe
Foreign Competition
Computer Software Industry
Top Rating.

Record#: 12 236 236.
-----------------------------------------------------------------------------
Full Text:

Who creates the best European software? Earlier this year, we teamed up with
Ziff-Davis Europe to help showcase little-known "best of breed" European
products. The Ziff-Davis European Software Excellence Awards attracted 192
nominations, which the judges-senior technical editors from Ziff's French,
German, and U.K. magazines--whittled down to 60 finalists and 15 category
winners.

Somewhat to our surprise, most of this year's winners (who will collect their
trophies during the SPA Conference in Cannes, France) turned out to be
American companies (or European republishers) that nominated localized
versions of U.S. products. That's dramatic evidence of how effectively U.S.
developers have penetrated the European market, despite cultural and
logistical obstacles. At the same time, however, it's worth noting that a
respectable number of European products managed to win awards head-to-head
against the best U.S. titles. (The distinction between U.S. and European
software isn't always obvious; for example, several winners--including
Superbase 4, Omnis 7, and Timeworks Publisher--were originally developed in
Europe and later acquired by U.S. publishers.

Anyway, here are this year's winners:

Grand Award for Technical Excellence:* DR DOS 6.0 (Novell Desktop Systems)

Finalists:* DOL (CCP Software GmbH, Germany);* Automator for Windows (Direct
Technology, U.K.);* Fox Pro 2.0 (Fox Software);* Visual Basic (Microsoft);*
QEMM 386 (Quarterdeck)

Grand Award for Design Excellence:* Geoworks Ensemble (GeoWorks)

Finalists: * Quattro Pro 4.0 (Borland);* Ami Pro (Lotus); * Windows Draw
(Micrografx);* Word for Windows (Microsoft);* Norton Utilities (Symantee)

Best Consumer Product:* Autoroute Express (NextBase, U.K.

Finalists: * Total Chess with Fritz (Boeder AG, Germany);* GeoWorks Ensemble
(GeoWorks); * myHouse (RAIR Computer, Hungary);* Symantec Game Pak
(Symantec)

Best Education Product:* Mathead 3.1 (MathSoft)

Finalists: * PC Mensch (M&T Software Partners, Germany);* TINA (RAIR
Computer, Hungary)

Best Communications Product:* LapLink Pro (Traveling Software)

Finalists:* BitFax for Windows (Bit Software);* WinLink (East Coast
Software, Ireland);* cc:Mail (Lotus);* Carbon Copy for Windows (Microcom);*
Major BBS (Online Store, Liechtenstein)

Best Network & Workgroup Product:* Lotus Notes (Lotus)

Finalists: * Packrat (DAT Informationssysteme, Germany); * Lansmart (D/Link
Systems, Taiwan); * cc:Mail (Lotus);* WordPerfect Office (WordPerfect);*
Quetzal (Workgroup Systems Ltd., U.K.

Best Utilities Product: * Norton Utilities 6.0 (Symantec)

Finalists: * PC Tools 7.1 (Central Point Software);* LapLink Pro (M&T
Software Partners, Germany);* QEMM 386 (Quarterdeck); * Dr. Solomon's
Anti-Virus Toolkit (S&S International Ltd., U.K.); * XTree Gold 2.5 (XTree
Company)

Best Environment Product: * Windows 3.1 (Microsoft)

Finalists: * GeoWorks Ensemble (GeoWorks); * PFS:Window Works (Frame
Informatique, France); * DOS 5.0 (Microsoft); * N/JOY (Vienna Software,
Austria)

Best Publishing Product: * Timeworks Publisher 2 (GST Software Products, U.K.

Finalists: * Publisher for Windows 4.0 (Microsoft); * Page Plus (Serif Europe
Ltd., U.K.); * Ventura Publisher 4.0 for Windows (Ventura)

Best Presentation & Graphics Product: * Micrografx Designer 3.1 (Micrografx)

Finalists: * Aldus FreeHand 3.1 PC (Aldus); * Animator Pro (Autodesk); *
Freelance Graphics 4.0 (Lotus); Renderstar (Modern Medium B.V., Netherlands);
* Harvard Graphics for Windows (Software Publishing Corp.

Best Text Management Product: * Ami Pro (Lotus)

Finalists: * Adobe Type Manager 2.0 (Adobe); * Facelift (Bitstream); * Word
for Windows (Microsoft); * WordPerfect for Windows (WordPerfect)

Best Data Management Product: * Fox Pro 2.0 (Fox Software)

Finalists: * Paradox 3.5 (Borland); * dbase IV 1.5 (Borland); * Forest &
Trees (DAT Informationssysteme, Germany); * Excel 3.0 (Microsoft); *
Superbase 4 Windows (Software Publishing Corp.

Best French Product: * Winfax (BVRP Software, France)

Finalists: * Decisionnel Cartes et Bases (A.D.D.E., France); * Larousse
Frangais (Softissimo, France)

Best German Product: * Star Writer 6.0 (Star Division, Germany)

Finalists: * Screen Machine (AST Electronic GmbH, Germany); * Europa 3000
(Rotron Software AG, Switzerland); * Multiterm 2 (Trados GmbH, Germany)

Best U.K. Product: *WinMail (Finansa Ltd., U.K.

Finalists: * Omnis 7 (Blyth Software, U.K.); * Designworks (GST Software
Products, U.K.); * RM Net/LM (Research Machines Ltd., U.K.


***** Computer Select, October 1992 : Doc #22019 *****

Journal: Soft-Letter May 26 1992 v9 n11 p5(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Microsoft senior vice president Mike Maples. (Federal Trade
Commission investigation) (Industry Quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 236 238.
-----------------------------------------------------------------------------
Full Text:

1

MICROSOFT senior vice president mike maples on the Federal Trade Commission's
investigation of unfair practices at Microsoft: People can make up
complaints about anything. I don't see that we are doing anything illegal,
immoral, or irrational, and it is certainly in our interest to have a lot of
Windows ISVs As soon as the ISVs believe the playing field's not level
they'll pick another platform." (Quoted in InfoWorld, 1/6/92)


***** Computer Select, October 1992 : Doc #22020 *****

Journal: Soft-Letter May 26 1992 v9 n11 p5(2)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Software Publishers Association research director David Tremblay.
(market for Microsoft Windows) (Industry Quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 236 240.
-----------------------------------------------------------------------------
Full Text:

SOFTWARE PUBLISHERS ASSOCIATION research director David Tremblay on the
growth of the Windiows market: "By our calculations Windows applications
growth accounted for two-thirds of the total revenue growth for 1991."
(Quoted in The Wall Street Journal, 3/27/92)


***** Computer Select, October 1992 : Doc #22021 *****

Journal: Soft-Letter May 26 1992 v9 n11 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: International Data Corp. analyst Mary Conti Leffredo. (market for
Microsoft Windows) (Industry Quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 236 244.
-----------------------------------------------------------------------------
Full Text:

INTERNATIONAL DATA CORP. analyst Mary Conti Loffredo on the Windows market:
"In the Windows application segment, microsoft has a total lock. The smaller
software companies are not making money on Windows, and Windows 3.1 is not
going to change that." (Quoted in PC Week, 3/30/92)


***** Computer Select, October 1992 : Doc #22022 *****

Journal: Soft-Letter May 26 1992 v9 n11 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Creative Strategies president Tim Bajarin. (market for Microsoft
Windows) (Industry Quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 236 246.
-----------------------------------------------------------------------------
Full Text:

CREATIVE STRATEGIES president Tim Bajarin on the real size of the Windows
market: We certainly believe that [at least) 9 million have shipped, but
when it comes to usage, weld say it's about 55%." (Quoted in Computerworld,
3/16/92)


***** Computer Select, October 1992 : Doc #22023 *****

Journal: Soft-Letter May 26 1992 v9 n11 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: IBM Personal Systems senior vice president James Cannavino.
(Microsoft Corp.'s competition with OS/2) (Industry Quotes) (Brief
Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 236 248.
-----------------------------------------------------------------------------
Full Text:

IBM Personal Systems senior vice president James Cannavino on the Microsoft
"terminator" program that crashes OS/2: "To crash OS/2 you have to stay up
night and day to build a terminator disk. Windows comes with that built in."
(Quoted in Systems Network Integration, 4/6/92)


***** Computer Select, October 1992 : Doc #22024 *****

Journal: Soft-Letter May 26 1992 v9 n11 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Borland chairman Philippe Kahn. (on developing programs for OS/2
and Microsoft Windows) (Industry Quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 236 250.
-----------------------------------------------------------------------------
Full Text:

BORLAND chairman Philippe Kahn on his company's decision to support OS/2 as
well as Windows: "While we liked developing Windows applications, we never
inhaled." (Quoted in InfoWorld, 4/13/92)


***** Computer Select, October 1992 : Doc #22025 *****

Journal: Soft-Letter May 26 1992 v9 n11 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: IBM Personal Systems assistant general manager Lee Reiswig. (OS/2
users) (Industry Quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 236 252.
-----------------------------------------------------------------------------
Full Text:

IBM Personal Systems assistant general manager Lee Reiswig on the paperwork
that IBM required for an automatic" OS/2 upgrade: "Somehow, we could not
locate or could not retrieve the registration database for the existing OS/2
users." (Quoted in PC Week, 4/13/92)


***** Computer Select, October 1992 : Doc #22026 *****

Journal: Soft-Letter May 26 1992 v9 n11 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: August 15-18: GeoCon/92, Royal Sonesta Hotel, Cambridge, Mass.
(Expositions and Conferences) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 236 254.
-----------------------------------------------------------------------------
Full Text:

August 15-18: GeoCon/92, Royal Sonesta Hotel, Cambridge, Mass. An
international software product exposition and conference for European,
Canadian, and other overseas developers seeking U.S. publishers and
distributors.


***** Computer Select, October 1992 : Doc #22027 *****

Journal: Soft-Letter May 26 1992 v9 n11 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: September 14-18: OpCon East, John Hancock Conference Center,
Boston, Mass. (Expositions and Conferences) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 236 256.
-----------------------------------------------------------------------------
Full Text:

September 14-18: OpCon East, John Hancock Conference Center, Boston, Mass.
The East Coast session of Soft-letter's twice-yearly conference for
operations managers. Day-long sessions on customer service and tech support,
software manufacturing, and upgrade marketing. $395/day.


***** Computer Select, October 1992 : Doc #22028 *****

Journal: Soft-Letter May 26 1992 v9 n11 p6X(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: International Data Corp. analyst Lee Levitt. (IBM's marketing of
OS/2) (Industry Quotes) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 236 260.
-----------------------------------------------------------------------------
Full Text:

INTERNATIONAL DATA CORP. analyst Lee Levitt on IBM's new employee incentive
program for OS/2: "IBM created its own Amway program, having its 344,000
employees sell to neighbors, friends, family. If they announced it on April
Fools' Day, I would have only half believed it." (Quoted in PC Week, 4/6/92)


***** Computer Select, October 1992 : Doc #25276 *****

Journal: Soft-Letter May 11 1992 v9 n10 p1(5)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: The next frontier: service automation. (automation of service
industries will be next major market for software companies; major
application areas and models for reaching customers are discussed)
-----------------------------------------------------------------------------
Descriptors..
Topic: Service Industry
Computer Software Industry
Automation
Forecasting
Market Analysis
Trends
Applications
Marketing Strategy
Models.

Record#: 12 182 074.
-----------------------------------------------------------------------------
Full Text:

This issue looks at what is arguably the most challenging question that
software companies face in the 1990s: Where will they find new users? We see
troubling signs that the industry's core markets, office automation and
consumer applications, are reaching near-saturation levels. So far, high
growth in international markets and the recent feeding frenzy in the Windows
market have provided a reprieve--but what happens when the growth curves in
these markets also begin to flatten? One hope, of course, is that
next-generation technologies--pen-based systems, multimedia, groupware,
hypertext, virtual reality, etc.--will attract new users. It's reasonable to
expect that these technologies will generate some incremental growth within
the current installed base, but we're nevertheless skeptical that talking
spreadsheets or infra-red meeting planners will lure many brand-new users
into the PC marketplace.

Instead, we now believe the next big round of growth will come from a market
that is still almost invisible: service automation. The premise we offer in
the following pages is that there are literally millions of service
workers--in retail stores, restaurants, hospitals, customer service
departments, travel agencies, field service organizations, consulting firms,
and the like--who are about to move into the mainstream of the personal
computer revolution. As these workers make the difficult transition from
proprietary hardware and software platforms to PC-based environments, we
predict they will generate a wave of new applications, new entrepreneurial
opportunities, and new market leaders.

HARDWARE: CROSSING THE PC BRIDGE

As economists and politicians keep reminding us, the U.S. economy is
increasingly service-driven. Skim the pages of Fortune's annual "Service
50011 issue and this point becomes much less abstract: The corporate world is
full of giant companies in areas like retail, communications, banking, and
transportation that are chiefly sellers of services, not of tangible
products. At the other end of the size spectrum, the small business market
is dominated by retailers, restaurants, consultants, real estate firms,
insurance agencies, and other service businesses.

In addition, most good-sized companies, regardless of their primary business,
now have internal service organizations that may account for a large
percentage of total headcount. (In the case of software companies, for
example, tech support and customer service employees typically represent
about 20% of total staffing.)

All of these various service organizations share at least one common
characteristic: They invest heavily in service automation technology. Even
small, undercapitalized retail shops almost always own at least one
electronic cash register. (In fact, the installed base of electronic cash
registers and networked point-of-purchase terminals in the retail segment
alone currently exceeds 20 million machines.) Banks, mail order houses,
supermarkets, travel agencies, and brokerage firms often end up spending more
than the equivalent of a year's salary per employee on terminals and
workstations.

Historically, almost all of this investment in automation technology has been
spent on proprietary hardware platforms--machines based on custom processors,
running non-standard operating systems and machine-specific applications.
These systems typically cost two to three times as much as comparable
PC-based systems, and (by PC standards) usually have serious shortcomings in
such areas as interoperability, analytical features, and end-user programming
capabilities.

But the service automation market is changing. within the last two years,
PC-based systems have begun to edge out older, proprietary systems in almost
every segment of the service automation market-- sometimes, in large
organizations, thousands of machines at a time. The penetration of PCs is
moving much faster in some segments than in others, but the overall trend is
absolutely clear: Within the next decade, PCs will almost certainly become
the dominant computing platforms in virtually all major service automation
markets.

How fast will this transition occur? That's a tough question; if there's any
trustworthy research, we haven't found it. Moreover, current PC-based
systems still have some limitations. Important devices like cash drawers and
bar-code scanners aren't well supported by office-oriented operating systems
like DOS and OS/2, development tools and applications don't always exist, and
distribution channels are relatively primitive. Moreover, we suspect that a
fair number of customers will be reluctant to give up the security blanket of
having one proprietary vendor take responsibility for their entire
information systems package.

But even if we can't measure the absolute velocity of the service market's
migration to PCs, there's no question that the pace is rapid and bound to
pick up speed soon. The biggest vendors of service automation hardware,
notably IBM and NCR, already offer PC-based platforms, and smaller hardware
companies are jumping on the bandwagon because they see no real alternative.
The result should be an immense installed base of tens of millions of new PCs
and new users--an installed base that we believe ultimately will rival (and
perhaps exceed) the potential of Windows as a new software market.

THE SHAPE OF APPLICATIONS TO COME

It's been said, only somewhat tongue-in-cheek, that the Big Four productivity
applications for desktop PC users are "word processors, word processors,
spreadsheets, and word processors." Desktop PC users tend to produce
documents; service workers, by contrast, deal primarily with one-on-one
customer transactions--answering questions often over the phone), processing
sales, interviewing, making repairs, and the like. The service automation
mainstream is thus defined by applications that directly enhance transaction
efficiency and productivity.

Moreover, "productivity" is not a fuzzy concept to the people who manage
service organizations. Automation solutions are judged explicitly by how
they increase output per employee (measured in terms of transaction volume,
sales, inquiries, etc.) without sacrificing service quality. A travel agent
is expected to book more flights with an airline reservation system, a
supermarket clerk should ring up more groceries with a bar code scanner,
and--closer to home--a software support technician should field more calls
with an on-line knowledgebase.

Most of the classic examples of service automation products are tied closely
to specific industries, but these examples help define the general
application categories that are likely to dominate future service automation
markets:

* Transaction support: A large part of most "service" transactions is
actually mechanical work: looking up and recording data about the customer or
the transaction itself. Some service workers-- bank tellers, retail clerks,
telephone operators--do very little except handle mechanical transactions.
But even restaurant waiters, support technicians, medical professionals, and
auto mechanics (all of whom provide more personalized kinds of services)
spend a good chunk of time retrieving and recording information; in fact, one
recent AMA study shows that doctors devote almost 40% of their time to
writing up patient charts.

* Not surprisingly, service organizations tend to embrace automation
solutions that shorten the amount of time spent on mechanical transactions.
(Banks have pushed transaction automation especially far with ATM cash
dispensing machines, leaving human tellers to handle less-routine customer
transactions.) Customer service databases, bar code scanners, electronic
forms, and point-of-purchase systems are especially relevant to a broad range
of service environments. Our guess is that accounting software companies
will take the lead in most of these niches; in fact, Great American, Dac, and
State of the Art have all just rolled out point-of-purchase modules that are
integrated with the rest of their PC-based accounting lines.

* Knowledgebases and expert systems: Service employees are frequently
knowledge brokers": They answer questions about products, troubleshoot, and
make judgment calls based on knowledge of corporate procedures. To handle
these functions, service workers often have to spend a substantial amount of
their time on essentially non-productive training and research tasks. Large
service organizations--for example, American Express and Fidelity
Investments--have begun to address this problem by giving hundreds of their
service representatives access to on-line knowledgebases and expert systems.
In some cases, customers who want information are able to navigate the
corporate knowledgebase themselves, further reducing the need for human
intermediaries. Borland, Lotus, and other software companies have found that
3%-4% of their tech support calls can be offloaded to an automated fax-back
system. Similarly, Fidelity recently began offering its brokerage customers
a PC-based product from MECA Software that retrieves stock quotes and
executes trades directly through Fidelity's mainframe computers, with no
broker involved.

* Scheduling and forecasting: Service organizations rarely have much control
over their workflow: When a customer walks in or calls, it's assumed that the
retailer, restaurant, or tech support group will have enough people on hand
to provide reasonably prompt service. At the same time, when demand is low,
it's equally important not to have lots of expensive employees doing nothing.
Thus, a critical problem for service organizations is to be able to forecast
fluctuations in demand (for a Christmas selling season, a new product
release, or a Friday happy hour) and then to schedule employees appropriately
to match these levels of demand. The productivity payoffs from automated
scheduling turn out to be surprisingly high: for example, hospitals,
retailers, and customer service groups have been able to reduce payroll costs
by as much as 10%-30% simply by computerizing the labor scheduling process.

* Transaction analysis and modeling: Besides the problem of forecasting
demand, most service organizations ultimately will need better tools for
analyzing such issues as price elasticity, seasonal trends, and profit and
cost ratios. Right now, most proprietary systems offer analytical features
that are inflexible and poorly designed, and it's often impossible to
transfer raw transaction data to third-party spreadsheets or graphing
programs. (Sometimes the system's only output is a paper cash register
tape.) Once enough service organizations make the transition to open PC-based
systems, however, users will suddenly gain access to huge volumes of raw
transaction data. As users begin to sift through this data to find ways to
fine tune products and operations, it's likely that a robust market for
analytical and modeling software will emerge.

REACHING THE CUSTOMER

For the moment, the service automation market is highly fragmented.
Distribution channels are dominated by "vertical market" developers and
hardware vendors; the typical customer is strikingly unsophisticated and
risk-averse. PC software companies have always been wary about entering such
markets, because of the high cost of sales and low unit volume. We believe
that eventually mass-market opportunities will open up, but it seems clear
that the early winners in service automation will have to do more than just
get shelf space at Egghead. So what will it take to establish a beachhead
in these markets? We've seen at least two good models:

* The direct sales model: Rosh Intelligent Systems (Needham, Mass.) is a
venture-funded developer of knowledgebase development tools for field service
applications. We met recently with Mike Levinger, Rosh's marketing vice
president, who explained that his company sees itself in a direct sale,
large-deal business." Rosh currently has about 30 large corporate and
government customers--organizations with at least 300 field service
engineers, who typically support complicated or fast-changing product lines.
For these blue chip" buyers, Rosh provides extensive hand-holding,
customization, and implementation help; 30%-50% of the price of a typical
sale represents services, says Levinger. A key ingredient in Rosh's direct
sales model, he adds, is a pricing structure that is geared toward corporate
adoptions rather than single-unit, shrink-wrap sales. We're seeing customers
now who are willing to make half-million dollar commitments to us."

* The alliance model: MECA Software (Fairfield, Conn.) recently developed a
$120 electronic access program, Fidelity On-line Xpress, that Fidelity
Investments markets to its brokerage customers. By creating a product for
the customers of a single service organization, says MECA president Dan
Schley, his company was able to open up a large special-interest market that
it couldn't otherwise reach. MECA and Fidelity have been "absolutely
flooded" with sales, he adds: In the first 30 days, we got 22,000 requests
for information about the product." But Schley points out that Fidelity's
enthusiasm for its alliance with MECA wasn't based on possible software or
connect-time revenues. Instead, Fidelity saw On-line Xpress as a way to
boost its brokerage transaction volume without hiring more customer service
reps--a strategy that Fidelity hopes will improve its own productivity the
same way ATMs help banks cash more checks without adding extra tellers to the
payroll.

What's interesting to us about both of these models is that they suggest ways
to achieve high growth and sales volume in service automation markets without
requiring much investment in building a distribution infrastructure.
Moreover, by working closely with large customers, Rosh and MECA have been
able to leverage generic product design and marketing skills rather than have
to develop grassroots expertise in individual industry segments. Clearly,
the barriers to entry in service markets aren't too difficult for PC software
companies to overcome. The toughest barrier, we suspect, is probably the
perception among developers that electronic cash registers and customer
service databases aren't sexy technologies. Granted, service automation
isn't especially glamorous--but it is a market that's likely to reward
innovation and risk-taking in a big way. For software entrepreneurs, in
fact, service automation could be be the single biggest frontier of the
coming decade.


***** Computer Select, October 1992 : Doc #25277 *****

Journal: Soft-Letter May 11 1992 v9 n10 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Microsoft senior vice president Steve Ballmer. (software industry
quotations) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 182 076.
-----------------------------------------------------------------------------
Full Text:

MICROSOFT senior vice president Steve Ballmer on IBM'S alliance with Apple:
"I could not say this a year ago, but they are even less clear than we are on
their future direction." (Quoted in Byte, 1/92)


***** Computer Select, October 1992 : Doc #25278 *****

Journal: Soft-Letter May 11 1992 v9 n10 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: WordPerfect senior corporate disk jockey Barbara Lee. (Brief
Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 182 078.
-----------------------------------------------------------------------------
Full Text:

WORDPERFECT senior corporate disk jockey Barbara Lee on her role as a tech
support hotline entertainer: It's ironic, but unlike most disk jockeys, who
are constantly trying to build their listening audience, we are trying to
eliminate ours." (Quoted in Computer Reseller News, 1/6/92)


***** Computer Select, October 1992 : Doc #25279 *****

Journal: Soft-Letter May 11 1992 v9 n10 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Author Guy Kawasaki. (software industry quotations) (Brief
Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 182 080.
-----------------------------------------------------------------------------
Full Text:

AUTHOR Guy Kawasaki on Apple Computer's decision to shift support from
TrueType to Adobe's Postscript standard: "Do I think Truetype's dead? Well,
was it ever born? Two years ago, everybody said, 'Adobe's doomed.' Well, here
it is two years later, and the world has reversed. So I guess the lesson is,
if you wait long enough by the side of the river, all of your enemies will
come floating by." (Quoted in Byte, 1/92)


***** Computer Select, October 1992 : Doc #25280 *****

Journal: Soft-Letter May 11 1992 v9 n10 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
-----------------------------------------------------------------------------
Title: Lehman Bros. analyst David Readerman. (software industry
quotations) (Brief Article)
-----------------------------------------------------------------------------
Descriptors..

Record#: 12 182 082.
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LEHMAN BROS. analyst David Readerman on why he's skeptical that many PC
manufacturers will conspicuously identify their machines as being
Windows-certified: "How does a computer maker differentiate between the
relative goodness of their Windows machine vs. someone else's Windows
machine?" (Quoted in The Wall Street Journal, 1/31/92)


***** Computer Select, October 1992 : Doc #25281 *****

Journal: Soft-Letter May 11 1992 v9 n10 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
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Title: Videosign partner Jeff Constantino. (software industry quotations)
(Brief Article)
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Descriptors..

Record#: 12 182 084.
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VIDEOSIGN partner Jeff Constantino on the angry reaction of Amiga owners to
Commodore's lackluster promotion of their favorite machines: We will fight
in the expos, we will fight in the press, we will fight on the bulletin
boards." (Quoted in Business week, 3/16/92)


***** Computer Select, October 1992 : Doc #25282 *****

Journal: Soft-Letter May 11 1992 v9 n10 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
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Title: Microsoft Sr VP Mike Maples. (software industry quotations) (Brief
Article)
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Descriptors..

Record#: 12 182 086.
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MICROSOFT senior vice president Mike Maples on his company's decision to
become more focused: We need to invest in higher-payback projects and not
work on projects that are less valuable. Instead of adding 100 features,
we'll add 50 features, and maybe we'll hold 1,000 seminars instead of 1,200."
(Quoted in PC Week, 2/17/92)


***** Computer Select, October 1992 : Doc #25283 *****

Journal: Soft-Letter May 11 1992 v9 n10 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
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Title: August 15-18. (software industry conferences: GeoCon/92 in
Cambridge, MA) (Brief Article)
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Descriptors..

Record#: 12 182 088.
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Full Text:

* August 15-18: GenCon/92, Royal Sonesta Hotel, Cambridge, Mass. An
international software product exposition and conference for European,
Canadian, Latin American, and other overseas developers seeking U.S.
publishers and distributors.


***** Computer Select, October 1992 : Doc #25284 *****

Journal: Soft-Letter May 11 1992 v9 n10 p6(1)
* Full Text COPYRIGHT The Mercury Group 1992.
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Title: September 14-17. (software industry conferences: 1992 OpCon East
in Boston, MA) (Brief Article)
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Descriptors..

Record#: 12 182 090.
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* September 14-17: OpCon East, John Hancock Conference Center, Boston, Mass.
The East Coast session of Soft*letter's twice-yearly conference for
operations managers. Day-long sessions on customer service and tech support,
software manufacturing, and upgrade marketing. $395/day.


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