Adding value through support
Some people believe that they should get scientific software for free. Other people believe that, if you pay for your software, at least you have someone to turn to for help in implementing it and someone has a responsibility if things go wrong.
Felix Grant's article in this issue discusses some of the dilemmas that a user faces in deciding whether or not to opt for 'free' statistics software. But, if the decision is to go for commercial software on the basis that support and help will be provided as part of the price, then this in turn presents dilemmas to the companies who provide the software.
Not all software publishers have the resources to provide in-depth support in every country in which their products are bought, which is why they operate through companies like Adept Scientific. In certain countries, such as the UK, it is the exclusive distributor for most of the publishers of science and engineering software that it sells. By representing many companies, it can offer them economies of scale and 'bandwidth' in the technical support department. But, being in the middle, it has to please both ends. If it does not please the customers, its sales drop; and if the numbers drop, the publishers will find someone else. The investment in training and technical expertise could be wasted if the distributor does not deliver, giving it a strong incentive to please the customers.
Some customers want help configuring a package to their application, while others are big corporations that want the best deal on site licences for popular packages. And, in the wired world, distributors face competition from grey imports and direct downloads that are no respecters of the national boundaries of distribution agreements.
Roger Bilder, sales and marketing director of Adept, accepts that the company has to work hard to make a living. But so far it has worked, and the company has been profitable every year since it began in the early days of packaged software.
Bilder said: 'We have exclusive distribution agreements for most of our products in the territories in which we operate; we offer training, consultancy, installation and configuration. Primarily what we are doing is operating on a large margin from our supplier but we are representing them in every way. We are a sister organisation to them. We make the market for the products but, once we have sold them, we offer a very high level of service. We can discuss the application and suggest the best way of implementing the solution, and once you have bought it, we offer a really high standard of technical support.
'Where you have mission-critical software which your project depends upon - which your whole corporate future depends on - you need someone that you can go to, to sort out your problems and point you in the right direction. You also want to be able to tell the developers what you want in the next version of the software, and we act as a conduit for that.'
- Support underpins sales. Adept's offices and warehouse operation.
Adept was founded in 1984 by Paul and Elaine Bragg. They first met as students at Edinburgh University, where Paul was a crop scientist and Elaine was a soil scientist. Paul Bragg had fallen in love with computers when he first saw an Apple 2, and had got a job with a north London technical publishing house that was venturing into marketing scientific software. The Braggs decided they could do it better, and set up their own small operation selling data-acquisition kits - a product line Adept still sells. They started adding a few chemistry software packages, which were then emerging. They did not make a profit in the first year - the founders admit they were easily distracted in the early days - but the company has done so every year since. One of its earliest products was Quality Analyst from Northwest Analytical, which it still represents today.
A few years later, the company was offered a good deal on offices in Letchworth, about 40 miles north of London, and it moved onto a more professional footing. The company has grown to about 60 people with annual sales of 6million with offices in the UK, Germany, Denmark, and even the USA. Bilder said: 'They learned very quickly, and adopted the philosophy that we work to today: the customers are important and, so we give them a good service, answer the phone quickly, deal with their enquiries, and don't try to sell them something that is not right for them, and so on.'
In 1988, Adept began a relationship with Mathsoft, becoming its exclusive UK distributor for the entire Mathcad product line, which has remained one of the core products. Over the years many products have come and gone, but Mathcad has kept going though all its own changes.
In 2000, Adept bought the distribution arm of Cherwell Scientific and with it came the distribution contract for the EndNote reference management package, which has become Adept's second-best seller after Mathcad. It also brought the company and office to Germany, which has served it well, although it has a slightly different product line, due to differences in distribution contracts.
About half of Adept's staff are devoted to marketing, which is all done in-house. Bilder said that because Adept is an exclusive distributor, its main efforts are directed at creating a brand identity and a market for the products it represents, rather than promoting the name of Adept. How marketing expenses are shared between Adept and the manufacturers is the subject of constant negotiation. In some cases, the manufacturers buy marketing materials from Adept and use them in other territories.
Adept sometimes loses sales to companies that can offer a lower price, but Bilder maintains these other companies offer that price only because they don't have the marketing expenses and don't have anyone backing up the sales people who know about the software and the technical environment in which it is going to be used. He believes that Adept would not have made it this far if it did not have something to offer that customers wanted.
He said: 'We have never been a "me too" business. We want products where we can build a relationship with the customer. People sometimes phone up having bought a product cheaper and looking for help. Officially we can't help them, but occasionally we do, because we are part of the community that we serve and maybe they will come to us the next time they need a piece of software, and they will understand that it is worth paying a little bit more.'
A high proportion of sales are to large organisations, which have strict controls over software use, and most of the time the negotiation is face-to-face with a lawyer poring over complex site-licences rather than sales of individual boxes. But the company is still happy to sell a single box.
When Adept began, most software publishers were garage operations, but the world has moved on and they have become major corporations. A small number of publishers are still small, usually academics who have commercialised their research. In these cases, Adept has to do much more of the work in packaging the product and producing supporting materials than it does with the likes of Mathsoft.
This sophistication has helped users gain long-term confidence, but it has also led to more demands being made on distributors. Bilder said: 'We are always looking for new products and being approached by publishers. We don't take on new products that often; we have strict guidelines because we only want products that have something to offer our customers, and the developers have to be people we can get on with - they have to listen to our customers. Traditionally, users outside the US don't get listened to, so we make sure our suppliers do listen.
'We know the market and we have invested a great deal in systems, customer service, and technical expertise. We have a company ethos that we are proud of what we do, and are proud of customers liking what we do. But in the end, the measure is success: nobody is going to do business with a company that does not produce the numbers. Customers don't have to buy our products, and we hope that customers like a package because they like dealing with us. If we were not getting the results, the suppliers would either scream or just terminate our contract.'
Adept has expanded into Germany, France, and Denmark. Bilder said that, in the future, there is every possibility of rolling out the sales model to other European countries. He said: 'We have a large web-site with lots of information, so we hear from people in other countries. Our model of working is exclusive distributorships, and maybe, one day, that model will break down because of the internet. We want to expand into other counties and the internet makes it easier for us to do that - there is less infrastructure to set up when you open a new office. We need to convince the suppliers that we speak the language of business in different countries.
'But we are cautious expanders. We don't want to double in size every six months, but we would like to double in size every few years. But there are plenty of opportunities to expand the market for our products, with new people coming into the field, and totally new markets, like the world of finance. There is no reason why we will always just be distributing to the science and engineering world.'