28.11.2015

Flexibility leads to optimal solution for client

Pirated copies of software pose a serious threat to the developers whose skills and financial assets are tied up in the products they create. Over the past 35 years since the first personal computers reached the marketplace, those developers have had to resort to ever more ingenious methods of preventing the less scrupulous in the community from taking improper advantage of their intellectual property.

Plug-in dongles were effective until the encryption was broken and these devices were copied along with the software. Online registration of licensed applications provided a more secure form of protection, but it has taken the widespread use of cloud computing to change the dynamics of IP security by an order of magnitude.

Despite the false perceptions about the security and resilience of cloud computing, it has the distinct advantage of being able to give users access to the latest updates without having to download and install new versions. It also provides revenue security to the extent that immediately a monthly subscription is not forthcoming, the plug can be pulled by the supplier and the service delivery ceases immediately. It means that the copyright owners can license their products anywhere in the world where the cloud is accessible without the risk of fraud or the need to hand-hold users over software installation.

Cloud computing opens new marketing horizons

At a stroke, selling business applications into geographically diverse regions like Africa become a commercial possibility – provided, of course, that there is a demand for the solutions on offer. With GDP growth rates in a number African countries outstripping those of China and India, many in West Africa in particular are seeing a steady rise in demand for property development and ownership.

Unfortunately, the management of those assets is already falling behind the curve. While there is a burgeoning marketplace for maintenance to match the pace of property development, most of the companies involved in that sector rely on paper-based systems which prevent them from working as efficiently as they might otherwise do.

A UK software company with a background in trading with Africa identified a valuable niche market for more effective property management systems. It has developed a cloud-based application to meet that requirement. The initial investment in the product was comparatively small, much of it financed by the development company itself. The project took off when it won a confirmed order from a West African property specialist, demonstrating that the demand was real rather than merely projected in a business plan.

The problem for the UK solution provider, however, was how to finance the order. Part of the development was being outsourced and the software writers involved had to be paid before the solution could be mounted in the cloud and made available to the customer.

Without the high marketing and support overheads usually associated with ‘packaged’ software applications, the costs of the cloud-based maintenance system are containable. Each copy licenced to a property management company is therefore set to yield a comfortable gross margin.

Confirmed order made funding by UK EXIM possible

With a confirmed order from the local property specialist (a company owned ultimately by a bank in the region) and a strong profit margin, the developer satisfied all the criteria for that order to be funded by finance specialists within the TAEFL group of companies. UK EXIM, a trade finance provider within that organisation, was able to offer a £20,000 facility on what is termed a Purchase Simple with Assignment deal.

Payments by the customer in West Africa are being channelled to UK EXIM until the deal is complete. And while there is no inherent requirement on either party to repeat the transaction, the availability of such a facility will do much to boost the liquidity the UK company as it helps notch up another export success.

Any finance company looking at funding software sales would be cautious about assets which could be copied, and the IP value made worthless. UK EXIM is no exception but was able to draw comfort in this instance from the cloud-based distribution and the degree of control it provided. Rarely does a different technology open up new business opportunities so effectively.

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