Waterstone Management Group Discuss Disruptive Technologies' Impact On Business And Pricing Models

GREENWICH, Conn. - May 30, 2013 - PRLog -- CHICAGO and SAN FRANCISCO— In a recent article, Waterstone Management Group (http://www.waterstonegroup.com/Main/Home.aspx), a boutique technology-focused strategic advisory firm, has highlighted the dramatic impact several key disruptive technologies are having on business and pricing models.

No company or industry is exempt from experiencing these pricing shifts, as discussed in Waterstone’s new article entitled "Is technology disruption making your pricing strategy obsolete?" (http://www.waterstonegroup.com/Main/Insights/81.aspx)  Drawing on the firm’s client, operating, and tech industry experience, Waterstone highlights that, irrespective of competitive dynamics at play in an industry, whether traditional incumbent or new challenger, all companies face the imperative to continually evaluate their pricing strategies in the face of new disruptive technologies.  Waterstone highlights key trends such as software and services supplanting hardware, cloud-based delivery models, “mobile first” offerings, and business optimization through analytics.

The Customer Relationship Management (CRM) space is just one example cited in the article: "Through the 1990s and into the 2000s, CRM was dominated by a few major enterprise software vendors, high-risk implementations cost many millions of dollars, and the results were often subpar," says Eric Pelander, Partner at Waterstone group (http://www.waterstonegroup.com/Main/LeadershipTeam/Eric_P...) and co-author of the paper. "Those major players had build up massive, highly-customized ERP systems, and became highly dependent on maintenance revenue streams as an economic driver.  Newcomers to the market like Salesforce.com and others disrupted this space with multi-tenant products delivered as-a-service and with new more flexible pricing models which provided greater access to enterprise, midmarket, and SMBs customers which had previously been priced out of the market."

The article traces the software-as-a-service (SaaS) model and how it has evolved.  Jonathan Zorio, co-author of the article and Principal at Waterstone Management Group (http://www.waterstonegroup.com/Main/LeadershipTeam/Jonath...), says: “Early-stage SaaS offerings were relatively limited in functional scope, and customers were often required to make trade-offs in what features or customizations they could live without.  In recent years, as SaaS models have gained traction and more innovative vendors have entered the space, the offerings themselves have become more full-featured and easily configurable out-of-the-box – without sacrificing system performance and attractive price points.  The net effect has been to put even more pricing pressure on ‘traditional’ on-premise software providers.”

From a provider standpoint, “Incumbents face a critical set of decisions – whether to develop cloud-based offerings, which customer segments to target, at what price points, and how to ensure new offerings co-exist with core products to minimize cannibalization of the installed base,” Zorio adds.

In addition to citing cloud-based delivery models, the article discusses in depth other disruptive technology trends such as: 1) the shift from hardware-led to software and services-based offerings, 2) enterprise mobility, and 3) analytics used for business optimization.  The article explores their impact on technology pricing models and highlights several key steps for incumbents, challengers, and newer entrants to consider in evaluating their pricing strategies.  Says Zorio: “Tectonic technology shifts like Cloud and enterprise mobility are upending traditional business models, and this in turn, is having a major impact on how companies price their products and services, given new realities at play in underlying technical architectures and associated economics.”

About Waterstone Management Group

Waterstone Management Group was founded in 2003 with the mission to transform technology and service businesses.  To serve business leaders and private equity investors who share our view of the technology industry, we formed a specialized, expert-led firm which combines strategic advisory services and executive-level operating experience.  We work collaboratively with senior management, corporate boards, and investors to address issues related to driving growth, margin improvement, and assessing incremental business expansion/investment opportunities.  For more information about Waterstone, please visit waterstonegroup.com (http://www.waterstonegroup.com/Main/Home.aspx) and follow the firm on LinkedIn (http://www.linkedin.com/company/waterstone-management-group?trk=top_nav_home) and Twitter (https://twitter.com/WaterstoneMG) (@WaterstoneMG).

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For more information contact:
David Schutzman
203.550.8551