It’s amazing when you browse mobile app stores or software comparison websites like Capterra or G2 Crowd to see just how many different apps there are. Capterra, for instance, lists more than 500 software categories — from AB testing and project management to yoga studio software. The latest research from Statista predicts global enterprise application software revenue, which was $115 billion in 2011, will eclipse $200 billion next year.
Certainly, this must be a saturated market, right? Not so, says Peter Lambert, who took over HAL Systems in 2014 and within a year converted it from a systems integrator to an ISV. “The company used to sell everything to get an IT system up and running, including hardware, software, and integration services,” he says. HAL Systems still focuses on many of the same key verticals it did before 2014 — food and beverage, medical, manufacturing, order fulfillment and tool and equipment tracking. But, what it’s selling to clients in these markets has changed significantly since Lambert took the helm and transformed it into an ISV. Below are highlights from my recent interview with Lambert, including several tips aspiring ISVs should heed.
The key to Finding a Software Niche: Interview Your Customers, Pay Attention to Trends
When Lambert took over HAL Systems, which has been around since 1983, one of the first initiatives he undertook during the first year was to talk with customers and look for common pain points.
“A common theme that emerged was WMS (warehouse management software)-related,” he says. “Lots of SMBs need a WMS, but they can’t afford a $500,000 enterprise solution from Manhattan Associates or RedPrairie. They need a solution that offers some of the key features of an enterprise WMS at a fraction of the price.”
SaaS Model Plus Real-Time Multilingual Support is a Winning Combination
Knowing that much of the cost of implementing a traditional WMS (i.e., on premises) comes from the hardware, HAL Systems focused on a SaaS offering. “We host our software in an Amazon Web Services (AWS) data center, so neither our customers nor we ever have to worry about making a large capital investment,” he says. “Plus, we eliminate the labor cost of installing software on multiple workstations. The software is accessed via the internet using a web browser, which also eliminates OS and device compatibility concerns.”
Another common challenge HAL Systems uncovered during its research was language barriers. “U.S. factories with Spanish speaking employees were having difficulty finding WMS systems that could switch between English and Spanish,” he says. “Fulfillment centers in the USA typically have to wait until a container arrives from an Asian supplier before they can confirm the container’s contents. With a simple internet connection and handheld device operating in local language at the Asian facility, the container contents can be barcode scanned as they are loaded, providing confirmation of the contents 6-8 weeks before delivery, and avoiding broken promises.”
HAL Systems solved the problem by adopting Google’s real-time translator technology into its WMS. “With a click of a button a user can switch from English to other languages, such as French, German, Chinese, or Spanish,” says Lambert. “We even built intelligence into the WMS to adapt to specific jargon used in each industry. For instance, retail uses SKUs whereas manufacturers care about part numbers, and pharmaceutical companies use NDC codes.”
A Smart WMS Needs a Smart Marketing Plan
After developing the WMS — HAL Traxx Inventory — Lambert realized that listing it on his website wasn’t going to light up the phone lines. “You can talk SEO all you want, but it’s not like someone is going to Google HAL Systems and spend $50,000.” Instead, Lambert attended industry trade shows looking for value-added resellers and hardware companies with which he could form partnerships. “Barcode printers are a low-margin product, but when they’re bundled with our software, it becomes a more lucrative sale,” he says. Rugged mobile computer manufacturer Janam (The XG3 series is a popular rugged scanner HAL Systems recommends with its software) is one example of a hardware company HAL Systems has forged a strong partnership with over the past few years. “Janam is a lot like us; they’re rugged and reliable, and priced where more deals are successful.”
Besides vendor partnerships, Lambert is also in the process of building a channel of resellers. “I’m not interested in onboarding just anyone — I’m looking for a limited number of really good resellers,” he says. “I’m adding resellers strategically by vertical and geography to ensure each partner doesn’t have local competitors trying to compete against them with the same solutions.”
Lambert admits he’s still in the early stages of building his channel program, but he’s still confident he’ll achieve double-digit growth in 2018. “We’re close to having 80% of our customers migrated to our SaaS offering, and we’re seeing an increase in customization opportunities.”
For one of its auto parts retailer customers, for instance, HAL Systems created an ecommerce website to give the retailer an online presence. Additionally, the software developer coded an eBay interface that gave the retailer a presence on the popular auction site. Both the ecommerce and eBay interface connect to HAL Traxx Inventory to ensure that online inventory availability remains current. “Customers need accurate real-time inventory and customized processes for working with eBay and Amazon,” he says.
Additionally, the software developer wrote a shipping component that interfaces with FedEx to allow the retailer to generate labels and access and share tracking information. Items picked or purchased at the brick and mortar storefront are scanned with Janam XG3 rugged mobile computers. Software customization is what enables retailers to handle all these nuances. “Delivering customizable software services at an affordable price is what makes us relevant to this market today,” says Lambert. “And as the market continues to evolve, we’re prepared to evolve with it.”