The Second Derivative
1538 Winding Way
Belmont, CA 94002
Phone: +1 650 631 3694
PCohan@SecondDerivative.com
www.SecondDerivative.com
www.DemoGurus.com
Peter E. Cohan, Principal


The Database "Breakeven Point"

How long does it take before a newly installed database becomes useful?

Corporate knowledge management systems, customer relationship management tools,
sales-force automation tools, business information management platforms and related tools
all depend on the quantity and usefulness of the content in the database in order to provide
value to the customer.

How long will it take before value is realized? Are there mechanisms to speed up the
process?

The time from licensing a tool until achieving pragmatic, day-to-day use of a database
generally depends on the amount and utility of the data in the new database.
Understanding the database "Breakeven Point" - the point at which a growing database
becomes truly useful - is a remarkable tipping point for achieving vendor and customer
objectives.

Zero Is Less Than Zero

A freshly installed database is (most typically) empty - and the value of the database
content is similarly zero (since there is nothing there!). As new users enter content into the
database, its value begins to grow.

With a new database, the user community is typically entering information either
altruistically or based on a workflow driven by management. Users are most likely not
performing searches or generating reports based on the content - the amount is insufficient
- and the value perceived by the user community is zero or even negative.

A simple test one can apply to a growing database to gain a sense of its day-by-day utility
is as follows: A user will ask himself, "What is the likelihood that I will find what I am
looking for in the new database, as opposed to finding that information the way I
previously have?"

When there is little data in the database, users know that it is likely a waste of their time to
invest in searching the database, since the answers are probably not yet present. Instead,
they will continue to seek to find the information they want using their old, established
processes (which, while they may be inefficient, users perceive that at least they work).

Page 1 of 3 Copyright 2006 The Second Derivative. All Rights Reserved 3/20/2006Breakeven - The Tipping Point

As the database grows, the probability of finding relevant, useful answers to questions also
increases. At some point in time, the probability of a user finding the desired information
in the database is effectively equal to that of the traditional process - this is the database
"Breakeven Point" - and users will begin to consider it worthwhile to try the database first.

From the database Breakeven Point forward, the path to reaching your deployment and
ROI objectives becomes substantially more achievable.

To Breakeven� And Beyond!

As a vendor, how can you use this concept in your sales, marketing, and deployment
efforts?

1. Set and manage expectations:

As a vendor, you can use your experience with the growth of databases in other
customer implementations to help your new customers predict and manage their
situations. Setting reasonable expectations for value realization and tangible
payoffs for users can make the difference between a happy customer and one that is
frustrated.

2. Fill the box before delivery:

If you can deliver your database pre-filled with useful, relevant content, you will be
able to accelerate the time it takes to reach the database Breakeven Point. One
example of this is to include publicly-available information in your database at the
time of installation at a customer - they can then add their own proprietary
information on an ongoing basis. The public data can provide sufficient content to
get beyond the Breakeven Point for users.

Even better, you may be able to charge for the public data as catalogued and
rd
archived using your tools. Another, similar approach is to partner with 3 parties
who can provide content that enables the database to be delivered pre-filled with
useful content.

3. Collect and curate:

Depending on the nature of the database and its intent, there may be substantial
content existing in other forms or formats that can be loaded to fill the database
faster. In the best cases, this effort can take the form of a database migration
project from one or a few tools into your new repository. In other situations,
relevant data and information may be scattered in a range of formats and tools
throughout the organization.

Page 2 of 3 Copyright 2006 The Second Derivative. All Rights Reserved 3/20/2006Either way, if you leave the capture and archiving of this information to the
customer, it may take a long time for them to begin the effort and even longer to
move substantively closer to the database Breakeven Point. After all, it is likely
that you, as the vendor, know the most about how to find, capture, organize and
store data in your tools. Consider including appropriate services in your
implementation plan (paid for by the customer, but of course!) that accelerates the
process and moves the customer towards Breakeven as rapidly as possible.

4. Focus on early wins:

Identify and focus database growth in areas that will yield rapid wins for the
customer - these may be small victories, but their importance can be huge. If there
are specific departments or projects that can achieve Breakeven quickly, you can
guide your customer's attention to these specific areas.

Once the customer has achieved Breakeven for one of these targets, you and your
customer champion may be able to use these early victories to promote use of the
database in other efforts at that customer.

Winning the Business - and Gaining Reference Customers

These ideas can be used to your advantage, both before and after the sale takes place.
Vendors who can provide clear guidance to customers on how best to achieve a successful
implementation have a competitive sales advantage over those who can not. The ability to
offer a "transition vision" - the path from where the customer is today to where they want
to be tomorrow - can make a substantial difference in winning the business.

Similarly, getting past the database Breakeven Point and achieving a successful
implementation faster provides vendors with referencable customers more rapidly, as well.
Small, quick wins can offer the fastest route to referencing.

Use the database Breakeven Point concept to increase your success rate in selling and
deploying database offers. The faster the box gets filled, the more likely you will have a
referencable account on your hands.


Copyright © 2006 The Second Derivative - All Rights Reserved.

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Page 3 of 3 Copyright 2006 The Second Derivative. All Rights Reserved 3/20/2006