November 15th, 2009

Before you do that BPO, Audit, Consulting or other services deal, check out these costs

Posted by Brian Sommer @ 8:25 pm

Categories: Contracting, ERP, GRC - Governance Risk Compliance, Implementing Technology, Notable Research, Outsourcing, PSA - Professional Services Automation, Professional Services, Selling Professional Services, Service Providers, Sourcing, The Application Software Buyer, expense management, expense reporting

Tags: Rental Car, Hotel, Audit, BPO, Consulting, Business Services, Business Process Outsourcing (BPO), CAD, It Operations, Software

Is your services partner wisely spending its/your money????

I’ve spent a lot of money on travel. Over one 10-year period, I went through $2.5 million just on airline travel alone. I think I understand travel well.

I always look through the annual Business Travel News top 100 travel spending report. Companies are ranked by the amount of air travel spend they incur annually in the U.S.

In reviewing the latest issue, I was pleased to see several systems integrators, software companies, hardware vendors and other technology related firms have instituted some great practices in recent years. I even compared this year’s report with data in a prior year (see graphic).

Where the Money Goes

Now, some firms are spending more on air travel and total T&E (travel and entertainment). Why? Well, last year’s fuel costs drove air fares up demonstrably and that got reflected in higher travel costs. Some firms grew organically and some took on substantial acquisitions (e.g., SAP buying Business Objects, HP buying EDS, etc.). Growth should trigger higher travel costs as more headcount usually translates to more travel cost.

But, buyers of services need to look a bit deeper and question potential service providers as to the measures they are taking to ensure that the money they spend on travel and T&E is worthwhile and cost-effective.

Here are some areas to probe:
- Are training trips booked with 21-day advance purchase fares?
- Do employees use the lesser of the integrator or the client’s negotiated rates with carriers, hotels, rental car companies, etc.?
- Do employees car pool/share rental cars on long-term out of town engagements?
- Do employees stay in apartments or extended stay facilities in lieu of hotels for long-term engagements?
- Do employees use 7-day advance (or longer) fares for internal meetings?
- Are internal meetings scheduled for days when employees would normally be in their home office location (e.g., Friday)?
- Does the integrator/software firm aggregate travel spend globally to maximize its pricing power?
- Do the integrators/software firms utilize closer-in personnel so as to avoid air travel altogether?
- What percentage of trips are booked for travel that will not be chargeable/billable? How can this number be reduced further?
- What class of travel is being booked for short-haul, long-haul and international travel?
- Are service workers allowed to choose the carrier? How can a client be assured that the lowest fares are being selected?
- Does the service firm discipline employees who violate travel policies? Does the client have to pay for these excesses?

Beyond airfare, the size of the T&E numbers is what really gets my attention. Admittedly, I’m surprised when my rental car bill or my hotel bill exceeds my airfare. It happens more frequently these days as rental car rates have shot up in many markets. You’ll really see it when you stay more than a day in a given market (I rarely get that luxury).

I’ve seen service people charge in some whoppers on their time reports. Usually, they get nailed for it. You know what I’m talking about. Staffers taking clients out for mega-expensive dinners and charging it in. Lazy staff who don’t book travel until the last second. Staffers who insist on staying in resort hotels, use valet parking, etc. I have a name for those folks: ex-employees.

I once had a boss who insisted on only staying in the absolute finest hotels and dining in restaurants that only the most well-heeled gourmet could afford. And, of course, he only flew first class.This person was an empirious cad without empathy. This ultimate narcissist was hell to work for and a major expense control problem for his clients.

I spend a lot of time in software and service negotiations outlining the rules of the road, so to speak, on how service providers will operate when engaged with my clients. Trust me, if you don’t have these conversations, you will lose a lot of money.

So, what are the most egregious T&E sins of service providers you’ve seen?

October 14th, 2009

Customer Intimacy wins in SAP SI's and Channel Partners

Posted by Brian Sommer @ 10:25 am

Categories: Current Affairs, ERP, Implementing Technology, India & Services, Professional Services, Selling Professional Services, Service Providers, The Application Software Buyer, The Applications Market, sales

Tags: Customer, SAP AG, Firm, Channel Partner, Business Services, Strategy, Supply Chain, Product Development, Management, Business Operations

Yesterday, several bloggers at the SAP TechEd conference in Phoenix had an opportunity to speak with Zia Yusuf, EVP, Global Ecosystem & Partner Group of SAP.

I asked Zia what characteristics typify the best SAP partners. He rattled off five qualities that the best systems integrators and channel partners possess. These qualities and my comments on each include:

1) Have individuals that are deeply involved/connected with SAP’s product direction. We had a great conversation on this point. It’s obvious that implementers who know where the product roadmap is going are better able to serve customers. What too few implementers may do is the extra step to connect themselves to the product development side of a vendor like SAP. Software buyers need to review potential systems integrators on this point. They should see evidence of the implementer’s presence at venues like TechEd, their participation in forums like SDN, etc.

2) Ensure all their SAP implementation professionals are getting the training and product knowledge they need to be successful. Software buyers should insist that their implementers are certified on the products they install. Better still, see what the implementer’s overall level of certification is for their practice. Those firms who don’t invest in their people probably have a low-cost orientation and/or experience high turnover. Either way, firms with lightly trained individuals can’t possibly deliver the same level of value as one who invests in talent. Who do you want installing your software – people who know the product well or people who want to learn about the product on your dime?

3) Can adapt, quickly and easily, to ever-changing markets and market dynamics. When the marketplace demands a systems integrator possess a global delivery model, can the local, New Jersey firm you’re considering deliver a mixed mode solution? If it can’t, it better have some compelling other reason for your firm to use them (e.g., intimate industry knowledge). Markets move and move frequently. Integrators must move resources to different verticals (e.g., is anyone still selling new work in the Automotive sector?) and different labor markets (e.g., shifting more offshore work from India to China). Adaptability to changing markets is a proxy to illustrate how well a vendor can adapt to changing customer needs, too.

4) Are focused on customer service/value delivery – I’m still surprised at how many firms say words like ‘We deliver outstanding value to clients’ but can’t really prove it. Saying and doing are two different things. Smart services buyers get this difference and will ask for proof.

5) Tie their revenues to the delivery of value to customers – Better firms don’t front-load a lot of costs while value delivery is back-ended. Better implementers can craft plans, cost structures, etc. to align these two concepts. Customers will expect and demand this.

A few years ago, Michael Treacy and Fred Wiersema wrote the book The Discipline of Market Leaders. They posited that firms need competency in three key disciplines but they must excel at one of these if they are to be successful. Those disciplines include:

- customer intimacy
- product innovation
- process excellence

In their book, they highlighted companies like Nordstrom as an example of a customer intimate firm. Product innovators would be firms like Intel. Process excellent firms do something better than anyone else in their segment. Those firms could be like Dell and its supply chain or WalMart and its logistics (i.e., cross-dock, low inventory focus) or attention to cost reductions. Quality producers and low cost leaders in a market sector often are process excellence firms.

I pushed Zia to then pick one of these three market disciplines. I wanted to know which one is key for systems integrators/channel partners. Without a moment’s hesitation, he said customer intimacy.

That’s really no surprise as most consultancies sell work and sell follow-on work due to the long-standing relationship they have with their clients. Some firms bend over backwards to place their ex-employees into key clients. If a service provider has ‘customers’ instead of ‘clients’, then they probably aren’t customer service focused.

The best integrators really try to understand their clients. They know what the value drivers will be for a given initiative and will construct an implementation plan that aligns with it. Integrators who take a one-size-fits-all approach to projects lose some deals and don’t delight some of the customers they have.

Customer intimate integrators know the client’s industry, know the personal/career/political/economic agenda and needs of each client executive. These integrators win because of their client knowledge.

Customer intimacy alone will not carry the day. If an integrator is customer intimate but not winning 60+% of their proposals, then they probably aren’t doing enough in the other two disciplines. For example, knowing a client’s needs well won’t be enough if your cost structure is way too high. It also doesn’t help if your firm has nothing new, original or proprietary to add to the standard SAP solution sets. Better integrators bring their own intellectual property into a deal. These added extras are the competitive differentiators implementers must possess.

My view is that implementers need to be something like 40% focused on customer intimacy, 30% focused on product innovation and 30% focused on process excellence. If an integrator is overly skewed in just one discipline, they may be unable to win the work they need to be a sustaining or growing service provider.

October 5th, 2009

The troubling thoughts re: outsourcing

Posted by Brian Sommer @ 4:35 pm

Categories: Contracting, Current Affairs, India & Services, Mergers & Acquisitions, Notable Research, Outsourcing, Professional Services, SaaS and Beyond, Selling Professional Services, Service Providers, Think About IT, deal

Tags: Solution, BPO, Outsourcing Company, Customer, BPO Deal, Business Process Outsourcing (BPO), Outsourcing, It Services, Managed Hosting, It Operations

Watch this space for future problems!

There’s a lot going on in the outsourcing world lately. Things like:

- Perot Data Systems being acquired by Dell

- ACS getting bought by Xerox

Add to these deals, consider that:

- Accenture is providing guidance suggesting zero growth

- Accenture cutting back its executive ranks

- A colleague telling me that outsourcing, traditional & BPO outsourcing, is on the way out

Let’s look at that last supposition. BPO, business process outsourcing, is built on the idea that an outsourcer can assemble a great collection of technologies, design & enable them with a specific set of business processes and deliver a step-change improvement in a customer’s business operations. Generally, BPO providers can take a customer experiencing 3rd or 4th quartile performance levels to 1st or 2nd levels and at a lower cost than the customer was able to deliver on their own.

BPO deals are tough, though. Customers fight the urge to adapt standardized processes and often end up with processes that have some best processes and some of their old bad habits (and cost structures) embedded within them.

BPO solutions have traditionally been built around older ERP solutions. They’ve been constructed with the stuff your firm was using before it went to BPO. Many use older client server software and not newer SaaS (software as a service) products. These solutions may or may not have a SOA (service oriented architecture). They may be built from the parts of several ERP and specialty software firms. Sure, the vendors are selling an outsourced process and not a technically elegant solution. But, what happens when BPO buyers are looking under the hood and see a solution that’s long in the tooth technically? Just last week, I spoke with a vendor whose firm is still selling a COBOL-based, HR Payroll product with a runtime compiler in it. Oh, did I mention it was a green-screen solution that an outsourcer is using.

There’s another issue with the traditional BPO solutions. They may not be economical for the solution providers and their customers anymore. True SaaS products can be great deals for the provider and the customer as they have multi-tenancy properties. Multi-tenant solutions permit the provider to operate one-version of the code for all customers while logically (not physically) separating each customer’s data. In contrast, many BPO solutions are not multi-tenant. Actually, they are far from it. Each customer has their own configuration and version of the code. Their data is logically and physically separated. BPO solutions in this fashion are more expensive to update and operate. Every time an old-school BPO provider needs to update their software (e.g., scheduled maintenance, new functionality, security patches, etc.), they have to do it one customer at a time. It’s expensive and, ironically, it’s inefficient.

Buyers are going to look at other solutions. Solutions that come with best practices built in and are capable of instant updating. They can be updated simultaneously for all customers. New processes can be enabled immediately. Buyers will want solutions built for cloud platforms and offered by vendors who can really get their cloud costs down. They’ll want a solution provider who uses Linux and not some proprietary operating system. They’ll want a provider who builds their own servers using commodity parts. Likewise, they’ll want a provider who offers disk storage at prices closer to the sub-$100/terabyte prices you and I pay at mass retailers and not prices form factors higher from brand name hardware vendors.

Pricing will fall for the hardware, software and services in the mostly back office enabled BPO world as these are all commodities now. SaaS will just exacerbate the drops.

Traditional outsourcing, that space where clients transfer entire data centers to a third party, may be on the way out, too. Non-core applications will go to the cloud as more and more of the hardware in a data center is scheduled for retirement. It’s a predictable route given the need to free up capital and labor. Customers will continue to move troubled, non-strategic apps to outsourcers or SaaS solutions. They will do so just as many of us trade-in our messed up old cars for newer ones. Problem is, too many traditional outsourcing solutions aren’t too different from the old cars…

Traditional outsoucing made sense when labor arbitrage was a key value driver. It isn’t anymore.

Today –
Today, outsourcers are taking calls from acquirers, private equity firms and others. They know tough times are ahead and are looking for an exit strategy for their investors. Who wins? Well, the investors in the outsourcer might see a bump in their stock price but it won’t be long lasting. Structural changes introduce turmoil in markets and we should see some here.

Gartner recently published an analysis of this space and predicts 25% of outsourcers are going to disappear.

That’s a lot of change and it will disrupt a number of firms. Just make sure yours isn’t one of them.

I’m concerned that some of the buyers of outsourcing firms may have rose-tinted glasses on and their employees (and clients of these firms) could get hurt. Let’s hope not.

September 25th, 2009

Shouldn’t services firms have their own ERP?

Posted by Brian Sommer @ 9:41 am

Categories: CEO Interview, Future of Application Software, HR, PPM - Project Portfolio Management, PSA - Professional Services Automation, Professional Services, Selling Professional Services, The Applications Market, software. applications

Tags: Staffing, ERP, Services Firm, Service Firm, Enterprise Resource Planning (ERP), Sales Strategy, Enterprise Software, Software, Sales, Brian Sommer

I caught up this week with Morris Panner, CEO of OpenAir (now part of NetSuite). One aspect of our wide-ranging conversation concerned the continuing evolution of businesses, the economy, etc. towards a greater services orientation. Drawing on that, we discussed how services firms need their own version of ERP.

Here are just some of the ways I believe a Services ERP would differ from a traditional ERP:

1) Services firms need visibility in their ‘resources’ so that the best/optimal staffing decisions can be made. If the best resource (as measured by value delivered) is available in one country but the work is sold in another and eventually delivered in a third, can these resources be optimally scheduled? ERP/MRP solutions optimize capital resources (e.g., stamping machines, extruders, CNC machines, etc.), customer orders, inventory and other assets. But, in services firms, the optimization software is still in its infancy or non-existent. Sadly, this staffing is often controlled (not optimized) by individuals whose allegiance is to a local sales or operations person and not to the service firm or its shareholders.

2) The CRM component of ERP is also structured to serve Industrial Age firms. Service firms need information about people, availability, real-time pricing data about people, etc. and this is different from products. For example, if your service firm knows it will soon offload a very large number of SAP implementers from a big project, would you want to offer some discounted pricing to prospects to soak up all of that upcoming bench time? And, would you want to be selective in offering these discounts for only some personnel while actually boosting the rates of others who have distinguished themselves as real experts in this subject matter? ERP solutions don’t do that.

3) Sales commission calculations are/should be different in services firms. Some sales people would prefer to sell only domestic work as they are paid a percent of total revenues. Selling a mixed mode project (i.e., where some work is performed offshore and some on shore) results in a lower total fee estimate and lower sales commissions for the sales person. Shouldn’t the sales commissions be driven on which projects drive the greatest margin for the employer or greatest value to the client (and not greatest income to the sales person)? Do ERP systems address this? Do ERP systems show a local sales person the staff availability of personnel in another country? Do ERP systems recommend the best value people for a project regardless of location?

4) ERP systems (still) don’t integrate non-accounting data into their software well. Service firms need to capture, reuse, modify and expand prior work plans, intellectual property, ideas, etc. into their projects, deliverables, work plans, etc. They need a flood of information about people so they know who to staff and where. That sort of information changes daily and is rarely found in the standard HR system. This is why resource managers exist in service firms and knowledge management components are essential in service firms’ IT solutions. ERP providers have tried to bolt on project tracking and some PPM capabilities to their ERP offerings but it doesn’t work well. ERP was designed first for accounting transaction data and then updated for Industrial Age firms. Overlaying ERP on service firms is an unnatural act and not optimal for these firms.

PSA (professional services automation) firms did some great things to get services firms more productive and efficient. We all owe them a big thank you just for making time entry a one-time event and eliminating all the reconciliation work (between the project tracking module, payroll and budget/estimating systems). PSA vendors also made billing, collaboration and other project work easier, too.

The initial focus of PSA has been to stitch together a number of service functional needs into a smaller collection of better integrated solutions. Service firms now have better, larger, more robust and more efficient systems. They still have islands of service automation software and data that include: PSA, spreadsheets, accounting software, HR/Payroll software and BI/Analytics. It’s time for that to come together as a more unified solution set.

These larger solutions will likely form the nucleus of a SRP (services resource planning) offering but won’t initially deliver the full capability of SRP until someone adds the unique business functionality that only service firms have and need. Functionality like support for global service delivery models, billing and currency reconciliation for global projects with globally sourced team members, resource staffing optimization models, etc. That may be a few years off but it’s what will eventually come. The question is which vendors will deliver it?

I’m pleased NetSuite kept Morris after they acquired OpenAir. It speaks volumes to their support for the service industry. The question now is will NetSuite create a full, robust SRP for the services space?

September 21st, 2009

Dell and Perot: What this means

Posted by Brian Sommer @ 2:22 pm

Categories: Current Affairs, India & Services, Mergers & Acquisitions, Outsourcing, Professional Services, Selling Professional Services, Service Providers, Think About IT, deal

Tags: Acquisition, Dell Computer Corp., Perot, Mergers & Acquisitions, Corporate Law, Investment, Finance, Business Operations, Brian Sommer

Look at more than the upside to any acquisition

Dell and Perot are getting married. This acquisition puts approximately 23,000 Perot services employees in with Dell. (see Larry Dignan’s detailed post on the transaction ) (here’s an InfoWorld post, too)

From the macro view, here are my observations:

1) This deal is the latest where a hardware vendor moves up the technology stack and acquires a major IT services vendor. HP did it with EDS. IBM did it with PWC. Services margins can be solid but not all services and services firms deliver great margins. In fact, for sheer gross, gross margins look at the margins coming from application software vendors.

2) Interestingly, some software vendors are starting to move up and down the technology stack, too. Oracle’s acquisition of Sun is one example. What’s driving acquisitions appears to be this: many tech sectors are experiencing slow to no growth. They need to get hitched to players in more robust spaces. On-premise vendors of software are in trouble. SaaS vendors are not. Some BPO services are not growing.

3) Competing on hardware alone is hard and low-margin work. With more technology going to the cloud, the need for on-premise data center gear may have peaked for a while. If a hardware vendor is to grow its top line revenue, it needs to move into the high growth spaces.

4) Some services firms are more interesting deal partners than others. The late BearingPoint wasn’t huge yet it could not attract a buyer for the whole enterprise during its last days. BearingPoint was carved up into pieces. Some services firms aren’t ever considered for an acquisition. Accenture, my old alma mater, may be too big to be acquired. Others have poor fitting cultures. Others have reputation damage. Others still are priced at too great of a premium to be acquired. Cognizant (full disclosure: I own a few shares of this firm) and some of the Indian-based services firms are not bargain priced at this time.

5) Managing services firms is different from managing a manufacturing concern. The language of services (e.g., bench time, utilization, target chargeability, unplanned fee adjustments, etc.) has no parallel in manufacturing circles and vice versa.

For Dell, my advice is:

1) Find/Use great talent to run this part of your firm. Get the best services (not hardware) executives you can for Perot.

2) Get realistic on the potential synergies this union will spawn. Use the executive contacts that Perot personnel have to extend your presence in the accounts. Use Perot people to work the upper levels of client management in the existing Dell customer base. But, don’t expect your Dell people to sell Perot services and Perot people to sell servers.

3) Culture is a big thing in a services firm. Understand Perot thoroughly before you start to change it. Hopefully, this was a part of your due diligence but don’t be surprised if it comes back to bite you repeatedly. People-centric businesses are really touchy about this.

4) Understand that every sales call Perot people make today and in the near future will be tougher as a result of this deal. Your competitors will feed clients and prospects a lot of questions that may embarrass or stymie the Perot sales professionals. Competitors will position themselves as more stable, more secure, etc. Sure, this happens in lots of acquisitions but in a services deal, it really stings when the customer is questioning whether any of the people in a proposal will still be with the combined firm in the next few days. Dell must provide absolute certainty to the employment, proposals, staffing, etc. of the Perot people or business development will suffer. Dell will also need to communicate this message of stability publicly to all prospects and customers.

5) Watch for brain drain. The best and brightest don’t like the apple cart getting turned over. They’ve invested a lot of time, energy, etc. into getting promoted within Perot. Now that Dell is the new owner, the best and brightest are going to question where their career is (or isn’t) going. There’s a reason service firm acquisitions often get low multiples: unlike capital, machinery and patents, people leave these firms. And, after an acquisition, they can leave in great numbers. If Dell doesn’t move very fast, defections will occur and Dell with end up with a services firm that lacks many of its best people and now appears to be an over-priced acquisition with lessened revenue prospects.

6) Sell the growth strategy internally and externally. Services people want to be part of growing (not volatile, stagnant or declining) firms. None of them want to be the last people out. Make sure you have a compelling vision for this part of your business and relentlessly communicate it to everyone there.

7) Understand the impact of this deal on the brand of both Dell and Perot. Both firms have good name recognition but a brand is that thing people instantly recall about a name or logo. IBM created a new entity for its services business while appending the IBM moniker to it. Ask yourself, what does Dell want us to think of when we hear of its services unit? Is it value, excellence, outsourcing, etc? I doubt its hardware sales.

Good luck Dell

September 8th, 2009

More on HP and BPO

Posted by Brian Sommer @ 6:53 pm

Categories: Current Affairs, Outsourcing, SAP, SaaS and Beyond, Selling Professional Services, Service Providers

Tags: Hewlett-Packard Co., BPO, Electronic Data Systems Corp., Business Process Outsourcing (BPO), Outsourcing, Managed Hosting, It Services, It Operations, Business Operations, Outsourcing & Subcontracting

Did you hear about their deal with Northgate Arinso?

A reader alerted me to this:

In August, NorthgateArinso took over HP-EDS’ SAP HCM and HR-focused outsourcing operations.

Although HP-EDS’s BPO operation in Germany is relatively small in size, this is a great proof point to your story. The story points out the motivation behind the deal, which is about volume & innovation. The news was only issued in German, but underpins your story completely.

Readers, I submitted this link to Google and got this Google translated version of the above referenced page. Launch this link to see it:
http://translate.google.com/translate?hl=en&sl=de&u=http://www.newsmax.de/gegen-den-trend-wachstum-bei-northgatearinso-deutschland-news88724.html&ei=mf6mSpKxIsWCnQeYuP25Bw&sa=X&oi=translate&resnum=1&ct=result&prev=/search%3Fq%3Dhttp://www.newsmax.de/gegen-den-trend-wachstum-bei-northgatearinso-deutschland-news88724.html%26hl%3Den%26safe%3Doff

August 27th, 2009

Your Analyst Firm Pitch

Posted by Brian Sommer @ 9:15 am

Categories: Marketing, Selling & Marketing Software, Selling Professional Services, Software Marketing

Tags: Analyst, Firm, Leadership, Strategy, Management, Brian Sommer

(Question: Do you have anything new and interesting to say?)

One of my old Marketing clients recently rang me up. They were prepping for a briefing call with an IT analyst firm. The lead Marketing exec wanted to run by me his thoughts for a presentation deck they wanted to use. He knew I’ve been on the receiving end of scores of these.

In general, I offered him this counsel:

1) Build an issue-based deck and create a separate company backgrounder document. If your deck is a narcissistic piece all about:

- our glorious leader
- our undifferentiated vision statement
- a world map with all of your offices
- a list of your solutions
- etc.

then you’re going to frustrate the analyst mightily. This is background stuff. If, and this is a big if, the analyst ever does write something about your firm, they’ll refer to this stuff later. First, you need to focus on the kinds of things that an analyst wants or needs to know.

2) The issue-based deck should define the:

- business challenges that solutions like yours solve
- recent research your firm has completed in this space
- unique insights your executives or your firm has on its solution space
- future concerns your firm is studying/watching

3) The issue-based deck should:

- confirm, challenge or refute some market assumptions the analyst may already have.

- include some non-obvious, ah-ha moments. Analysts aren’t stupid. They track your market and talk to all of your competitors. They know the score. Give them an excuse to write about something new or different. If they do, many analysts will credit your firm as the inspiration for this. And, isn’t that what you want anyway? Don’t you want your firm to be perceived as a leader in its space?

- be about 8-10 slides maximum. If you need more real estate than that, you don’t realize that your call may be only 20 minutes long and the analyst will speak for half of that. Make the material so powerful that the analyst wants to schedule a follow-up call.

- focused on original, new, novel content that few know. Showcase new market insights, new customer market needs, changing customer attributes, etc. Tie these insights to adjustments your firm is making to its products and solutions.

4) The background material should contain this:

- 1 slide – key dates/facts (e.g., year founded, equity structure, number of employees, revenues)

- 1 slide – a picture of your key offerings with a tiny note under each that explains why your approach or offering is so gosh-darned unique and competitively differentiated

- 1 slide – what your firm stands for – Are you the lowest cost SAP implementer in the world (i.e., low cost leader or process excellent)? Are you customer intimate (Think McKinsey the F500 CEOs they serve)? Are you a major innovator (e.g., Apple)? Are you a fast follower (e.g., most systems integrators don’t create anything but they install everyone else’s innovations)? If you’re a fast follower, know that an analyst will want to know what future innovations you expect to be hot and how you’ll ramp up for them. Service firms really struggle with this slide as they lack any real differentiation. Have you ever heard a service firm executive ever say they didn’t hire the best talent?

- 1 slide – key executives, their bios and their contact info

- 1 slide – proof of the value your firm has delivered to three clients. Don’t waste the analyst’s time telling me what your product is (i.e., “We make a SaaS-based general ledger that supports IFRS accounting in 13 countries). Instead, tell me that your solution has already saved a firm over $1billion by a patented process you created

When you get a chance to brief an analyst, remember that this isn’t an opportunity to drone on and on about yourself. You need to cultivate the image that you and your firm are special, thoughtful and strategic. The analyst needs to learn something from this exchange. If the only thing they learn is the names of your executives and the solutions you sell, I’ll guarantee that the analyst won’t write a report about you or, worse, will write a negative one.

Analysts write about things that impress them. Give them something to write about!

August 12th, 2009

So you're going to sell software or work a trade show booth...

Posted by Brian Sommer @ 2:15 pm

Categories: CRM, Marketing, Selling & Marketing Software, Selling & Marketing Software, Selling Professional Services, Software Marketing, sales

Tags: Software, Trade Show, Empathy, Sales Strategy, Telemarketing, Tools & Techniques, Sales Force Management, Healthcare, Sales, Marketing

…it’s time to get it right!

I get pitched software 24/7. Along the way, I hear and see some pretty amazing things but too often I get my ear bent for way too long by folks who can’t get to the point. Why? Because these pitchmen and women:

- lack empathy
- are too close to the product and not close enough to a prospect’s business needs
- don’t know what their product’s key differentiators really are (This assumes they exist!)
- can’t sell

In course after course, I tell people that I cannot teach empathy. Empathy is, to a very great extent, inherited. Some folks are so egocentric or narcissistic that they’ll never really hear what others say or care. I can’t ‘fix’ bad DNA or bad pathologies.

But, I can help those who listen and want to change. So, here’s a very abridged version of what you need to do to be successful on the convention trade floor or in a face-to-face meeting with a Fortune 500 CEO.

Great meetings and great outcomes occur when you are really prepared. If you’re a ‘shoot from the hip’ player, you waste a lot of time and burn a lot of bridges. You will say the wrong things and leave people guessing why they should even consider your solution. It takes too long to get serious time with a top executive so why blow it by being unprepared?

The preparation is needed not because you don’t know your product but because you don’t know the prospect! Stop right now – I can sense you want to pick up your phone and do that ‘dialing for dollars’ bit where you give your standard, undifferentiated pitch to strangers. Is it any wonder they almost all tell you “NO THANKS”? If you won’t even make the effort to understand even my most basic needs, I will not do business with you at all.

Stephen Covey had this maxim in his bestseller Seven Effective Habits book “Seek first to understand before being understood”. If you sell anything, brand or tattoo this saying onto yourself so you never forget it.

Great preparation means that you take the time to understand:

- the business, market, economic, budget, personal, political and other challenges confronting your prospect

- which of these problems are likely the most crucial 2-3 issues this individual must resolve. No one can focus on more than a couple of problems. If you’re in someone’s face gabbing away about something that’s down at the number 17 spot on their list of issues to fix, they don’t care. Their mind and career are wrapped around bigger issues – issues that you aren’t prepared to help them solve.

- how much the problem is (or problems are) costing this person’s business. If you don’t know how big the problem is, you’re probably not going to get the person to act on your suggestions. Worse, if you don’t know how big these issues are, you might be furiously selling the wrong solution. Either way, you fail and you wasted the prospect’s time.

- how a few critical aspects of your solution can really solve the most pressing of the prospect’s problems. For you sales people who can’t sell without giving me and others the 2-day function/feature demo-thon, this point may be wasted on you. Nonetheless, your best demos occur when you focus them on just a couple of critical process or function points. The value of your demo is to prove your solution has the critical capability someone needs and that it can do so elegantly and efficiently. Nothing more. When car companies sell autos, they talk about how great you’ll fell with the moon roof open, driving down the Pacific Coast Highway with some major hottie by your side. They don’t disassemble the engine and transmission and show you the platinum coating on each of the engine’s spark plugs. Sell the sizzle not the cow.

In trade shows, it’s worse than ever. At a trade show, I get accosted by people who want to scan my badge immediately before we even get talking. When they go for my badge, my flight response kicks in and I leave. When they do this, they’re saying that they just want to get my particulars so that their telemarketing people can badger me tomorrow. I haven’t even decided if I want, need or like this company and they’ve already decided that I am to be punished with unwanted sales pitches. That’s rude and it shows a serious lack of empathy.

Next, bad trade show people mistakenly believe I’ll come in for a sales pitch just to get an ink pen, Frisbee knockoff or enter in a contest for a chance to win a wheel of cheese. Nope – I don’t go there. First of all, these gimmicks are in no way connected to or indicative of the product/solution the company sells. In the seconds that I spend drifting by this booth, if I can’t figure out what you’re selling, I’m gone. Second, these ‘gifts’ aren’t even original. Hey MarCom folks, here’s a hint: If you can buy this gadget/giveaway in a catalog, someone’s already done it before. Find something original or relevant! UPS gives away little trucks that are painted in the Brown colors of UPS. I get that. But, the t-shirt you gave me is in my garage being used a car wax rag.

When you approach me at a trade show, try this tack:

- Start off by warmly greeting me – learn my name and tell me a tiny tidbit about you. I don’t need your life story but I do want to learn what role you play with your firm.

- Next, tell me the top three business problems your solution solves. Don’t give me software modules names (e.g., General Ledger, Accounts Payable, Analytics) and don’t tell me about your software delivery model (e.g., “We’re the leading SaaS HR vendor on the planet”). No, tell me about the kinds of business problems you solve (e.g., “We help firms identify who their best and worst managers are so that they dramatically reduce voluntary turnover” or “We help firms save billions of dollars annually through better hotel expense management”). Try saying “We help firms solve their _____ problem” three times.

- Then, tell me the enormity of the problem you are addressing and why so many companies need help with it (e.g., “Our research indicates that hospitals cannot find enough emergency room nurses and, worse, seem unable to retain them. This is causing hospitals to spend billions more in recruiting fees and bonuses. One hospital alone is now saving over $45 million annually because of our solution.”).

- Now, tell me three differentiators about your product/solution. Each of these must be polished into a compact phase that would fit on a bumper sticker. This is not the time to fire up a sales soliloquy. It is time to crispy impress the booth visitor that your solution warrants a deeper dive at their office. When you craft these three messages, think of this “What short little messages do we want this person to remember and to play back to their superiors when they get back to the office?”

If your messages are muddled, long, unfocused, rambling or weak, the prospect has nothing to take back to the office. Rehearse these with peers and don’t be surprised that no one in your firm can even agree as to what their top three differentiators are. Think of things like: 1) no one solves the frammerstammer problem like our firm; 2) our solution is years ahead of the competition – just look at our patent count!; and, 3) no one has better value delivery customer stories than us.

- Finally, let me leave gracefully. Thank me for my time and interest and then, and only then, ask if it would be okay to follow up with me. And, more to the point, tell me who will be following up. I might want to speak with you and not start all over with some contract telemarketer. You’ve done a lot to get my time and respect so don’t blow it now with a bad handoff.

Why did I do this post? I’ll be going to a lot of conferences this fall and I’d like to see a better exposition floor out there. So, if you’re going to the Oracle OpenWorld, HR Technology or other show, know this: I might be there and I might just write about your booth and my booth experience.

July 7th, 2009

It’s official: SaaS is now mainstream

Posted by Brian Sommer @ 6:45 am

Categories: Current Affairs, Selling & Marketing Software, Selling Professional Services, Service Providers, The Applications Market, Think About IT, software

Tags: Software-as-a-service, CIO, Unisys Corp., Software As A Service (SaaS), Managed Hosting, Cloud Computing, Emerging Technologies, Brian Sommer

It must be mainstream if Unisys and IBM are blessing it

Lately, I’ve done a couple of briefings with some large, serious, mainstream firms who have whispered their SaaS (software as a service) plans to me.

Let’s start with Unisys. Unisys is a very large systems integrator and hardware provider. Last week, they announced a number of new offerings to help clients make more of their application portfolio SaaS and cloud enabled. Unisys placed these offerings in an umbrella service offering called ‘secured cloud computing’.

In short, they’ll help a CIO transform more of their application portfolio to the cloud. Whose cloud? Unisys can make it their cloud or put a CIO’s offerings on other clouds like Amazon’s. Why is this important now? Unisys is betting that lots of CIOs would like to transition more demand volatility, server (size, quantity and demand) volatility, capital hardware costs, etc. to a cloud provider. CIOs can have their staff focus on develop strategic apps instead of keeping all their apps functioning on a lot of company owned hardware.

Unisys is also addressing a number of security concerns CIOs have about cloud computing. In particular, they have technologies to hide and encrypt data in-flight between web browsers and the cloud environment. Data on cloud servers is also encrypted to further secure it. To mitigate the performance drain that encryption can cause, much of this encrypt/decrypt activity is done in-core memory. These technologies can be deployed as software agents or appliances.

Beyond their technical abilities, the Unisys announcements also contained a number of consulting service offerings. Offerings such as:
- cloud advisory services
- security advisory services
- secure cloud value assessment services
- cloud application assessment services
- etc.

IBM has also crafted a group of consulting and outsourcing services to also help CIOs move into the cloud world.

So, let’s examine where the SaaS world has moved now. Originally, we had pioneers create the initial products and demand. That was ten years ago when Salesforce.com hit the scene. In subsequent years, we’ve seen highly innovative firms, like Amazon, make their cloud services available to clients.

Now, the conservatives in the industry are really embracing SaaS. When these behemoths get on board with a new technology, they do so with one goal: the rapid uptake of this technology into their client base. Unisys and IBM are doing that now.

Soon, every CIO from a mid-size firm and bigger will get multiple sales calls from numerous purveyors of cloud and SaaS solutions. Sure, they’ve gotten pitches from other firms in the past but now they’ll face a tsunami of sales calls from the large firms (services and hardware) who want to ‘help’ them make these moves into the cloud.

When the market stalwarts move into a new space, they do so only when they are convinced that it’s real and it’s here to stay. So, thank you Unisys and IBM for bringing the legitimacy to the SaaS and cloud space.

July 2nd, 2009

Satyam: PWC's version of the 'Who's On First?' comedy routine

Posted by Brian Sommer @ 8:41 am

Categories: Auditing - Tax - Accounting, Contracting, Current Affairs, GRC - Governance Risk Compliance, India & Services, Professional Services, Selling Professional Services, Service Providers, Stories That Should Upset You, Timber - The Mighty Fall

Tags: Audit, PricewaterhouseCoopers Consulting, Satyam, Indian, Financial Accounting, Financial Statements, Outsourcing, Finance, It Operations, Business Operations

Who’s on 1st?

Thank you, thank you, thank you to the folks at TechMarketView for finding the most inane testimony yet in the still amusing Satyam fraud saga.

The story, and you’ve got to read the source document in The Times of India, is a hoot. If I got this right, the Chairman & CEO of PWC India is maintaining that:

- they didn’t have any staff in their PW office in Bangalore so they outsourced the auditing of the Satyam balance sheets to another auditing firm in the same building as theirs in Bangalore
- the outsourced auditors, Lovelock and Lewes, apparently signed the PW name on the financial statements of Satyam
- the audit fees for Satyam were paid to PW Bangalore and then passed onto Lovelock and Lewes
- other PW partners (from Delhi and Kolkata) have testified that they don’t have anything to do with the PW Bangalore operation

Now, if you go to PWC’s global website for Indian offices, look at these two sequential listings:

The PWC offices in Bangalore

So who did Satyam contract their audit work to anyway? Did PW Bangalore have a duty to Satyam shareholders, investors and the business community to report that another did their work for them? How would anyone have known that this occurred? How common is this outsourcing practice?

Are these two firms really separate? How would anyone know differently? And, who hires an audit firm that has no staff? Now, that one item (i.e., hiring an auditor bereft of staff) should get any CFO fired and jailed. Honestly, didn’t anyone do any due diligence on these people? Didn’t someone notice something different about the ‘auditors’ business cards? But, even more amazing is that any audit firm would let another firm do its work and sign its reports. Are we really supposed to believe this story?

Seriously, last week while I was teaching Point of View Selling to a class of software executives, I used a humorous case study involving the mythical accounting firm: PATSY (Price Arthur Touche Sells and Young). Looks like my material wasn’t as creative as what some auditors are trying to sell to Indian investigators and clients.

This sort of fantastic tale that was woven before Indian investigators tells me that the audited financial statements of an Indian firm, even a supposedly reputable one, may not represent the work of the auditor or the true position of the firm audited. Talk about a no-confidence signal.

It’s high-time PWC crack the whip on those in its Indian operation. Stunts like this make the profession and Indian business in general look like a joke (and no one’s laughing).