In retrospect, I learnt things very early in my professional career that I only now realise (and appreciate) what they are and the significance of each. Here is one example that I have been involved in that turned a compelling product into something a whole lot more – a barrier to exit.
In 1994 the Reynolds & Reynolds’ ERA product was compelling as it provided dealers with integration and features that other providers didn’t have and more importantly, made them money. It had been in the market for some 6 years at this point and was quickly making Reynolds the clear number 1 DMS provider in Australia. This was no time to be complacent though as a competitor could very easily come in with something that was also compelling and compete hard. The answer was not only to provide more compelling reasons for the ERA system but to start creating barriers to exit; that is to provide features that were intrinsic to the way clients did business.
Around this time a system called Priority Orders was created in ERA where a stock order for parts could be created ad hoc by the front counter team directly out of the invoicing product. This was another compelling feature for ERA as it made a seamless link between selling and ordering parts, another first for dealers.
The next step though was the concept of dealers linked together to facilitate real time parts locating, ordering and picking. The idea was for the ordering of ad hoc parts between the two businesses to be seamless and semi-automated. With the push of a button a dealer could theoretically (and practically) check dozens of dealers for available stock and with another push initiate the order at both ends. The first a distributing dealer would know about an order from another dealer was a picking slip printing for their pickets to pick. This had the potential of taking Priority Orders past compelling to being a barrier to exit if we could get it right.
Being 1994 and pre-Internet in Australia made this cutting edge stuff. All that was needed was the communication infrastructure to make this happen. To start with we used 2400/3600/4800 baud modems where a call would be made between the systems each time some data was required between two dealers. It was clunky. We needed a more seamless approach, we needed semi permanent lines with TCP/IP for real time access. After much work the DealerLink network was born where dealers could be linked together via Reynolds in a “hub and spoke” model.
The new parts product that ran over the DealerLink network was called CLERA (Completely Linked ERA). Before long, not only was CLERA a barrier to exit for the ERA product, it also became a selling tool for Reynolds. Dealers who were distributor dealers would offer dealers who bought off them better pricing if they order through CLERA as it cut double handling, picking up phones, etc. For a dealer to order through CLERA they first of all had to have the ERA DMS and second of all had to be connected to the DealerLink network; a brilliant model and barrier to exit.
DealerLink and CLERA were both ahead of their time and another great example of leadership from Reynolds that set it apart from the rest.
All great software products that can stand the test of time are compelling to their users and have features that create barriers to exit by becoming an intrinsic way in which their clients do business.