Like almost everyone else in the IT industry this year, David McDonald wishes Microsoft had given him a little more breathing room.
In June, corporate enterprises across Canada and the United States were scrambling to deal with Microsoft’s revamped volume licensing program, which in some
cases significantly increased the amount they spend on software. To McDonald, president of Toronto-based SoftChoice Corp., the challenge lay in helping customers through that process. With little more than a month before the deadline, the company launched an online Licensing Wizard, which allows IT managers to plug into a calculator the number of current licenses, prior licenses, and unlicensed Microsoft products. This provides them a cost-free assessment, telling exactly how much license updates will cost.
Although most customers probably wish they could have put off the ordeal, McDonald simply would have liked to have provided the Licensing Wizard earlier.
“I think what Microsoft learned – and we communicated this back to them – is that customers need time to adjust and prepare for these changes,” he says, “(for) absolutely more time than Microsoft predicted. You need to consider budgeting cycles and fairly significant timeframes.”
While users were coping with Microsoft’s changes, McDonald was making some of his own. In July, he was promoted from chief operating officer to president and CEO, following company founder David Holgate’s decision to step down. “He was spending time on some key MIS strategies,” he says. “As time went on, I’d taken increasing opportunities to manage the overall operations of the business, and so it really was a pretty natural transition.”
Holgate had been a driving force since SoftChoice was launched in 1989, but McDonald says any changes he makes shouldn’t ruffle the feathers in its approximately 10,000 buying accounts.
“Most of our customers count on SoftChoice overall, including their customer sales rep – vis a vis their inside sales or outside sales – to deliver the service every day,” he says. “I think the question is more around the organization and key employees, and I developed that relationship with those stakeholders in the last 18 months.”
Since assuming the top spot, McDonald has kept busy by extending SoftChoice’s reach into existng markets and taking it in directions it hasn’t gone before. In August, for example, the company bought the government systems group of Beyond.com for US$3.1 million in cash.
“We leapfrogged a fairly long bureaucratic process that could have taken up to two years to accomplish,” he says. “It’s allowed us to capitalize the investments in technology the federal government is making right away.”
In September executives said the company would begin selling hardware through authorized relationships with leading manufacturers including Hewlett Packard, Compaq, IBM, Cisco, Samsung, and Toshiba. McDonald says the strategy is in direct response to customer requests. So far, it’s doing over 800 quotes a week.
“The reality is that the software business has to be more aggressive at promoting and provoking customers to take advantage of new versions of the software,” he says. “The hardware business has been doing that for a long time. Many years ago, IBM used to manage their whole lifecycle technology by reducing and eliminating support for products that were no longer available and supportable.”
Overall, McDonald says companies like SoftChoice need to help customers better manage their IT assets and reducing the amount of “shelfware” in many organizations.
“One of the biggest challenges facing Microsoft and a number of vendors is deployment – how to get people to take advantage of all the licences and software that they’ve put in,” he says.
“We really need to worry about that more than we are today, because in two three years if we go back to these customers when it’s time to renew and they haven’t deployed Office XP because everybody’s happy with Office 2000, that’s a problem.”
In November, SoftChoice reported third quarter fiscal 2002 revenues of $198.2 million compared to $149.0 million in the same period last year, an increase of 33 per cent. McDonald says he continues to see growth in 2003.
“One of our strengths is we don’t overly depend on any customers in any specific space,” McDonald said.
