Mark Carden makes an interesting observation that supports Jim Farmer’s calculations regarding Blackboard’s cost of sales:
I know something about the cost of sales issue, having sold library automation software for most of the past ten years (at Innovative and Dynix). I have long said that it costs the major ILS/LMS vendors an average of about US$50,000 per bid, which means that for a typical mid-sized university deal, five competing bidders will spend US$250,000 between them: and only one will win, so again that is US$250,000 per deal.
Of course an individual vendor’s costs per deal are very dependent on the win-rate, something Jim has not really looked into.
As a deal like this might only have revenues of US$250,000 anyway, it means the library community has paid US$250,000 to the library software vendors and none of this has gone into development � it was all spent on sales and marketing.
It is in everyone’s interest to lower that $50K per-bid cost of entry. Following up on my earlier post, Ken Udas and I have been participating on a thread on the OpenBRR forum. If you have an interest in the topic, please feel free to join in.
Michael Feldstein is the founder of e-Literate who currently works as the Senior Program Manager for MindTap at Cengage Learning. For more information, see his profile page.
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