masterclass on software development

“If you don’t get to know the needs of your customers better, and check out their willingness to buy first, you’ll waste more money on developing new products than you will ever get back,” software millionaire Ben Finn OBE warned a masterclass for local computing companies last week.

When it comes to making money from carefully crafted software, Mr Finn – who received an OBE in 2007 for his services to the industry - knows what he’s talking about. Early last year he sold the international music notation company Sibelius to American media giant Avid Technology for $23 million.

The musically minded brothers started work on the specialist software – which was used to make movies including Billie Elliott and James Bond – when they were still at school. After twenty years of product development, clever pricing, and well chosen distribution partnerships, Sibelius is now the industry standard worldwide. The educational version of the package is also used in three quarters of the schools in the UK.

Mr Finn’s presentation converted two decades of experience into ninety minutes of expert advice. He explained how to develop radical new products and ideas, choose the right business model, set up the best distribution channels, and select the best strategies for pricing and copy protection, right through to the best way of demonstrating new products and how to pick a name for new software that customers will like and understand.

“Windows is short, evocative and memorable, and it translates well internationally,” he said. “It’s a great name for software. But the first name Microsoft came up with was ‘Interface Manager.’ It was clunky, too long, and dreamed by technicians unable to see the product from a general customer’s point of view. A bad name can kill an new and innovative product.”

He gave detailed advice on international sales, explaining that American buyers are the largest market in the world but they expect to pay half the price that software is sold for in London. “When you get a distributor in the States, you’ll still have to go there to do your own marketing,” he pointed out. “They are great at shifting boxes, but that’s all.” He also highlighted how difficult it is to make money from software sales in Asia. “You can buy Sibelius in every city in China,” he says. “The problem is, it’s all pirated. We’ve never sent a single box east, nor received a penny of income back.”

Mr Finn placed a huge emphasis on the need for companies to research the real needs of their customers, and to check that new features they are planning to add to software products really are wanted, will be purchased, and can be created at a profit before going ahead with expensive development work. He set out a detailed mechanism for prioritising the development of new features and a tested formula to analyse benefit-cost ratios (BCRs) of software development work.

“The latest trend, providing software as a hosted service, reduces the delivery costs of companies and lends itself to charging subscriptions,” he explained. “It’s cheaper to get a new software business up and running now than it was when I first started out, and that’s good. But it’s also easier to lose sight of what your customers want, and to make the same old mistakes.”

Mr Finn was speaking to a group of software architects attending a masterclass the Innovatory on Old Street, where he is an associate of the business advice team.

His words has a strong and immediate impact on the twelve companies taking part.

“I feel that the transfer of knowledge from software gurus like Ben to a company like mine is invaluable for someone like me, as I move from factory management to software development,” said Marcia Lazar, the director of F2IT in Great Eastern Street, which is designing software to manage production processes in the fashion industry.

“He was really well informed on all the key issues facing software companies which want to grow,” said Leon Tong, the manager of Bright Lemon, which builds social networking sites for the government and the British Council in its studio in Provost Street. “I’ll be putting some of his advice on marketing and pricing into practice straight away.”

"It was well worth attending," said Geoff Marchant of Coublis in Tabernacle Street. "I found Ben's comments about internationalisation, particularly differential pricing, interesting, the distribution discussion was very relevant and his views on brand names were entertaining."

The masterclass was sponsored by the Gateway to Investment, which has helped more than thirty new companies in London raise a total of £22 million of private equity investment over the last two and a half years.