Selling Solution and Being Vertically Focused
Date: Thursday , June 01, 2006
It does not hurt to enter a crowded market place if you have the guts to compete. Deepak Singh sensed the opportunity for integrating various software applications while working for 3Com. He took no time in launching his company—Adeptia—and convincing the venture capitalists on how he would attack the market.
“The various integration products in the market were hard to use and required custom coding. This would mean long project cycles. Customers were looking for ease of use and shorter implementation cycles,” recalls Singh. This is where he could bridge the gap and win the customer mindset. Singh went a step ahead and combined business process management (BPM) with integration.
A BPM application monitors business processes, automates workflow or serves as an enterprise application integration (EAI) tool. These products can help identify areas of business that need to be automated, enforce business rules and even help integrate the existing IT infrastructure. “So our tool manages, automates and optimizes business process. That is where we can provide competitive advantage to our customers,” says Singh.
The Chicago, IL-based company is focusing on the mid-market space— companies having $100 million to $1 billion in revenues. Adeptia’s solution allows companies to leverage the Internet by deploying enterprise processes that link partners, suppliers and customers. Even business users can utilize workflow capabilities to interact with processes, view business information and make decisions all via a web-browser.
The India Story
With only $8 million of VC funding Singh had a tough job. “The funding we received was just not enough for us to develop the product we had in mind. We had to make sure that the we maximize the returns of whatever we invested.” He sensed the India opportunity and decided to build the product entirely in India. In 2000, there were hardly any product startups in India yet Singh believed in the India story.
Singh says if the same product had been developed in the U.S., Adeptia would have had to raise $40 to 50 million—something unthinkable in the post-bubble era. The India angle also enabled Adeptia to offer its product at a price difference of about one-third to one-fourth from their competitors’ price range.
Sell Solution not Technology
As Adeptia was trying to build its sales force, the company hired sales people who understood the BPI space. They did not have in-depth domain knowledge in any specific vertical like healthcare or insurance.Very soon, he realized that customers do not have time to help vendors and customers do not fully understand the capability of the product being offered. “So here we had a product and looking for a problem to solve! As a result sales cycles were very long. Product is hard to sell. The cost of sales was escalating beyond proportions.” Singh quips.
Luckily for Adeptia, over a period of time it had built a good traction of insurance clients. It seemed that the sales team understood the insurance domain quite well. So there was a shift in the go-to-market strategy: Focus on a single vertical. Adeptia was selling technology tools for the first four years to companies across various verticals. Now, it offers vertical-focused solutions. The BPM technology was wrapped to suit the insurance industry. This has helped Adeptia to build sales pipeline much more quickly and further gain good customer traction. “Now we have a very well defined solution. We can clearly articulate the value proposition we bring to the customer table, “ says Singh.
The vertical focus and shift towards offering a solution is helping Adeptia. The sales cycles have reduced by half. Going forward, Adeptia plans to wrap its technology to other verticals and offer specific solutions. “Our goal is to capture at least $2 million in revenue per vertical and have enough domain knowledge before we move to other verticals,” says Singh. Adeptia has a footprint in the automotive industry as well. It has deployed its solution in General Motors and Daimler Chrysler.
Address the Pain Points
Singh says some of the entrepreneurs have cool technology. They do not realize that customers don’t really need to buy that cool technology to solve their pain points. It’s very important for entrepreneurs to distinguish what you sell– is it a must-have or nice to have. “You need to know whether you are selling aspirin or vitamin,” jokes Singh. “When someone has a headache, they will buy aspirin at whatever cost. It is a must-have. However, vitamin is nice to have.”
Luckily for Singh the element of risk was significantly reduced with a VC backing his idea even before he left 3Com. Singh grew up in an environment where risk taking was encouraged. His dad was an entrepreneur and his uncle had started many companies in the U.S. The desire to be an entrepreneur was within him since the school days.
Even before Singh enrolled himself for management school, he tried his hands on being an entrepreneur. He founded a company in 1996—2BuySell—that developed software for media companies to sell Internet classifieds. Though it wasn’t venture funded, Singh and his team managed to sell the software to a few customers including the San Francisco Chronicle. However, the company was dissolved due to lack of sufficient sales. “We were a bunch of guys—all engineers. We had a product ahead of the time. Though we had expertise in technology we didn’t know how to grow the business and how to sell.”
That is the big lesson that is helping Singh run the show at Adeptia now. Singh says, any technology company has three components, “You have to make, sell and deliver the product. Everything else—HR, Finance, Legal—are administrative operations. Entrepreneurs do well in the first (make) and the last (deliver). The missing element—sales—is the most crucial one.”
“Sales are critical than even the product or the technology. Most of us have the notion that if we have a great tech idea, with a demo we will be able to sign deals. That is not true,’ says Singh. When he started Adeptia, his priority was to form a strong experienced-sales team. So had a winning sales team from the first day itself. Within one year, Singh gave up his CEO position to accommodate Lou Ennuso, who has over 30 years of sales experience.
After the stint at 2BuySell, Singh went on to do his MBA and then joined 3Com. “A strong technical background coupled with business education and then supplemented with management education will set you off on the right trajectory. This is further give you necessary credentials to raise the funding,” notes Singh.
There are over 100 BPM software vendors, all selling something different. “Most BPM products in the market are still not complete. In the BPM space we are in the early stage of the adoption cycle. Next evolution of the BPM space is to have focused solutions to be on top of the technology,” he says. “That is where we are heading. Anybody who is just selling technology will not survive. Large players will acquire them. When you are vertically focused, there is lesser competition from the big players.”