Getting to market: Interview with Ken Bado

Written by Martyn Day

Published Sun 9 Nov 2008

Martyn Day: Autodesk has typically sold its products to customers through Value Added Resellers (VARs). The biggest change to this model has been the introduction of Subscription and yearly releases. What’s the value to customers of this model?

Ken Bado: What Autodesk is spending a lot of time on right now is establishing exactly what customer’s value. Having just completed a survey on this, the plan is to re-launch subscriptions and focus on developing a business model to support that input. So we are also evaluating what our selling model to resellers will be and how can we more effectively capture feedback from our customers through the online support function to improve the experience.

The question for all our channel partners is how do we produce a model that customers say ‘this is valuable to me’? The support needs to be valuable, providing things customers really need, especially customers in the manufacturing market who need a 24/7 support model.

MD: With yearly updates, subscribers on lengthy projects can’t upgrade and often miss out on new functionality they have paid for. Getting the boxes of software just helps remind them. I hear Autodesk will be moving towards downloadable upgrades, so customers can opt in at any point. Is this going to happen?

KB: Absolutely. We need to take our subscription out of the 1980s.This is why Autodesk is looking at the whole concept of subscriptions as a more holistic model: a selling model and a model to be upgraded. Underneath, though, there’s a whole infrastructure of IT that needs to be addressed, which is one of the hardest things in the world that we are working on right now.

This massive part of our revenue is a very important part of our future business. What complicates this on-line upgrade program is the impact on the channel partners. What we want is to incorporate them into this process. Whichever way we improve Subscription, we want them to be part of this.

We’re going to work on it in the next 12 months. It’s one of the hot items in my list of ‘to do’s’ right now.

MD: What about selling products over the web? It seems that this is the way that software is going. In my conversations with Autodesk CEO, Carl Bass, he indicated that Autodesk would be looking at different products to sell online?

KB: Indeed, we’ll see some more online offerings from Autodesk. It’s really an interesting market for us but it will be Suggested Retail Price only, so if dealers want to sell the same product at a price below that they can. But customers will be able to buy everything.

MD: So what will be the advantage of buying direct from you? I could maybe download the software?

KB: Yes. That’s the plan. Absolutely. What we’re also looking at is in the low budget market, how do we effectively do software as a service? In emerging markets for instance, we could offer some design tools that are relatively inexpensive, a pay as you go type of product. So it’s both new technology and a new business model. The technology to do that and do it well has still to be determined but we are working on that right now but it’s possible. What the business model will look like is more of an issue and the global requirements and impact, we have to think about implementation from America, through Europe to East Asia. We have to take everything into account.

MD: With people buying on demand, what kind of changes do you have to make at Autodesk to enable that?

KB: We need to convince people that this is not a zero-sum game; that this will be an incremental business and will not be taking business away from existing resellers. You may remember when we announced the 40:40:20 sales model (ed: this was the split of where the company saw Autodesk’s percentage of future sales coming: online, dealer and direct sales) that negatively impacted the relationship with our dealers because, at the time, the dealers’ business was totally based on Autodesk products.

Autodesk had a tendency of introducing new products which were not fully functional or tested in specific vertical markets. While the products were being rapidly developed, customer buy-in usually led to an extended sales-cycle which most dealers are not geared up to accommodate.

So the reality is that a large number of resellers don’t engage through that long sales cycle. Autodesk will take the lead and do the heavy lifting of new products to market. If the product isn’t ready, the market’s not ready for the value-added channel.

MD: So Autodesk has the established Value Added Resellers and online is coming but there are also direct sales teams in specialised areas like Automotive?

KB: There are three areas where we will go direct. The first is if the product’s not ready but the market is. In this case, even if the resellers want to sell the product, at the end of the day they still have to go back and help fix the product. When cashflow is their biggest business problem, the last thing they need is to spend time supporting a customer with a product from us that’s not ready yet. We have done this in the past and it doesn’t work. Our solution is to ask them to let us do the heavy lifting until our product is ready. We want the resellers to be healthy and they want products that work ‘out the bag’ that they can sell right now.

Secondly, if the product is available but the market isn’t ready, customers may invite resellers in to talk about the product, as they are interested to hear more, but have no real intention of buying. We will work with self-selecting customers who want to be early adopters.

And finally, the third area is the world’s largest customers that simply have very long sales cycles. Dealers don’t want to invest three to four years on an extended sales cycle. I’m glad to get their business if we get it but it’s a different model. We started targeting the automotive sector about 18 months ago and I’m glad to report we are making some progress. The thing with this specific market sector is that I’m not looking for immediate results – it could take five years.

MD: So what kind of things have you learned about these large customers so far?

KB: We have discovered that we have more product penetration out there than we thought; it’s just that no one knows much about our company. We do have some inroads with the Alias Studio product, automobile companies are using that a lot. So the question is around leveraging that in other areas. Another potential opportunity for us is getting into plant design, not only with the AEC part but also getting better at the total system design. So those are the areas we’re focused on right now, and we are getting considerable traction. Whereas some companies perceived us as “toy CAD” or just 2D, they now understand the power of our 3D modelling solutions and consider Autodesk a real player. Our financial results are also getting the attention of companies, causing them to consider Autodesk as a company they should be talking to.

MD: Autodesk’s Manufacturing team has done a stunning job over the last five years, entering the market late and fighting to get Inventor to where it is.

KB: I think you’re right. The other thing that Buzz Kross (VP Autodesk Manufacturing Division) has done is close some great acquisitions and, along with other visionaries at Autodesk, has taken advantage of the impressive engineering talent we have based in China. In China, we’re not just going after localisation of existing products – the teams we have there are developing new applications too for areas such as mould design and plastic parts. We are doing a lot more in CAE development in China.

MD: Your role involves establishing consultancy services for Autodesk customers. This is a marked difference from being the largest-volume CAD developer out there. What are the challenges?

KB: The Autodesk model is around delivering synchronous technology and fulfilling demand. What we need to do now is get closer to our larger customers, and we need to add value for them, and that’s what my job is about. We need to help customers make the transition to new 3D technologies. We’re not IBM and we didn’t say ten years ago we were going to be a service provider company, however, we do have a consulting group. I don’t know whether or not this is the right approach, but it’s my idea so I’ll take the credit or the blame! How do we do consulting in a box? Is it a hosted methodology that a channel partner can actually demonstrate to their clients via an online experience? Or do they go to their customer and offer a prescriptive solution? It’s relatively new. I tried to apply the same methodology used for training, where you have training materials and the dealers go and deliver it, so now we have to provide consulting methodology.

I don’t want the consulting group to be geo-centric or even division-centric but customer-centric, managing a portfolio of products and enabling the customer to get the best return from using that specific combination of products those products.

MD: What are your biggest challenges ahead?

KB: Well, there’s of course an economic headwind which I worry about a lot quite frankly. Another challenge is taking care of the troops. There are 10,000 people out there, that don’t actually work for Autodesk, selling our products and supporting our customers everyday – it’s incredible to think that. When the executive team come in to work we face the scale of the business, it’s the biggest job we have ever done and everyday it just gets bigger!