Thus, as their customer continued to grow, RBS continued to collect additional revenues based on the number of users added to that company. In this "ongoing revenue is generated by additional users," (Roberts 1998 p 11). This was one of the stronger strategies in this process. The second, a high dependence on consulting and implementation revenue, was a little more risky. Here, RBS was relying on its customers to purchase ongoing services in order to keep the platform operating smoothly and to integrate most effectively into their current organizational set up. Yet, this was actually one of the most risky endeavors undertaken by RBS. The research showed that once customers had used their system for two years, demand for consulting services dropped dramatically. Thus, unlike the additional user strategy, consulting services eventually ended up a dead end revenue stream every time. RBS had been planning the implementation of SOFTRAX 5.0, which was thought to re-enter a number of existing clients into the fold of consulting services, yet prior projects show a similar timeline where eventually consulting services revenue will once again diminish as time goes by. Still, the implantation of a web order approach to SOFTRAX also hold some future benefits that will make it easier to add new customers to the fold, rather than relying so heavily on existing customers. It will be important for RBS to bring in a consistent stream of new clients as to avoid being too bogged down by the organization's dependence on consultation services. The new launch of a web-based approach to ordering its platforms will help streamline the process and maximize the efficiency of the new locations opening up around the country. Based on these prevalent issues, there are a number of steps which Walnut Venture Associates should take. Although the group has a cap of $250,000 for the first round of funding, this may limit its overall profit potential later, as this would prove...

Thus, Walnut would need to raise the cap in the first round of funding, to a number closer to $400,000, therefore matching the numbers set by the Bank of Boston (Roberts 1998). This would help RBS meet its short-term goals of opening up new locations and driving new customers into the clientele arsenal. It will be important to use this increased funding to direct the first few new locations to the regions with the highest concentrations of software companies. Thus, RBS should be looking to spend more money to open locations in more lucrative areas, like California, which holds 18% of the growing software industry (Roberts 1998). The closer proximity RBS can be to the highest share of the market, the easier it will be to grow with the market as it grows. Currently, RBS plans to open new locations on the East Coast. First round funding can be leveraged to help redirect strategy to opening more on the West Coast, where growth potential is higher.
The second round of funding will help give RBS the clout to achieve some of its more long-term goals. This will focus on empowering the organization with a more competent and innovative sales force. With a $1 million investment, RBS will be able to create the positions of VP of Sales and Director of Marketing, along with the teams under them which are needed to help spearhead RBS into a new direction of growth. These crucial positions will be needed to help RBS target its customers more efficiently. The research shows that enterprise software companies, with 500 employees or more, are the ones who spend the most on average for integrated platforms at around $450,000 per firm and a total market potential of over $87,000,000 (Roberts 1998). With a clear desire for growth in a rapidly developing software marketplace, it is clear that RBS will want to target more enterprise customers.

References

Roberts, Michael.…