Survival of the Adaptable

Whether its is a change in the circumstances at a prospective client, a change in project focus at a client, a change competitive environment, a change in the market, a change in technology, a change of people, or any other change for that matter, one thing we can always count on is that the only constant is change itself.

There have been lots of articles stressing the strategic importance of developing your ability to cope with and manage change. But as Darwin put it "It is not the strongest or most intelligent of the species which survive, but those most adaptable to change."

Trying to manage a change event is a reactive approach to a surprise and therefore is usually stressful. Adapting to change in an attempt to cope is not what I am talking about when I say adaptability. This approach leaves you managed by change instead of managing it.

Successful companies are proactive and anticipate changes and adapt ahead of time. They stay agile (agile = fast, flexible, focused and forget the past.) As you focus on closing out the quarter, and think about whether you will make the year, are you being proactive? Are you anticipating? Are you being agile? Are you winning? If so, you may continue to be successful, you may be ahead of the change curve as opposed to being managed by change. Or you may have a change coming that you can't yet see ! Watch out for the revolution.

If your direction is slowing, and you are losing more deals, then you're more than likely falling victim to the age old evolution. Survival of the fittest assisted by adaptability, and the museum of natural history for the rest.

Sales Process for Selling Software Application Solutions

Take a look at how the description of each phase of this pretty traditional solution sale process sets the stage for building relationships, gaining understanding and facilitating receptive venues for delivering your message so that you can differentiate and win more deals. Key is the right messge to the right person at the right time to get the right results.

This process allows your prospects team and company to collectively determine how you can best help them via your capabilities focused on their business requirements and success. Take a look at the following as if it were a simple list of 6 activities you made in the body of a letter you might write your prospect to confirm the evaluation approach you suggested while talking with them earlier:

1. Executive Discussion - we begin our investment in your project at the executive level to ensure focus on the partnership needed to deliver on our promise to you - a guarantee of success. This starts by discussing your company’s major business needs and vision for what you want to accomplish and the capabilities we have to help make it happen for you.

2. Needs Survey - a diagnostic step that provides a top down view of the business objectives as well as the critical issues you face, the reasons for them, and their impact on other aspects of your organization. The survey allows us to assess your perception of the capabilities needed to deliver a true competitive advantage and sustained growth. We dedicate ample time to each of your key staff beginning with the top executive or business process owner for an accurate and complete view of your business needs. We also challenge you to give us your toughest situation examples so we may prove we have the capability to meet and exceed your needs.

3. Pre-Proposal Review Meeting - This discussion identifies all the products, services, and investments identified for you to receive the benefits and returns you seek. The purpose of this meeting is to: 1) Confirm our survey findings with you and your executive team 2) Resolve all issues, and 3) Ensure that the proposal has been carefully read, understood and addresses all of your needs. Our intent is for you to have all the information needed to make an informed decision about choosing us as your best global partner.

4. “Proof Of Concept” Workshop. Once we are confident we have the right solution for you, and that we both agree on a way to do business together, we invest in building a Prototype Model of the solution or components of the solution you want. It is tailored specifically to your most challenging needs. We assemble the results of the survey into a presentation using your vision, your rules, and your data via our VentureFuel Suite™. The purpose of this event is to prove a match between your business objectives, your environment, and the specific, unique capabilities we offer. An important aspect of this step is to reveal additional new opportunities for improvement (often beyond those you may already have identified) and to show you how we can help you move from your current environment to your desired one. Depending on the level of depth you choose, this may be a no charge or fee based event. If fee based, the work done here is the beginning of the implementation process. Either way, this is a very effective way to eliminate all risk from the selection process.

5. Client References - Once we have confirmed that we add value to your business and are capable to best help you to achieve your objectives, we will provide you with client references to demonstrate proof of how we have helped businesses similar to yours to reach their goals.

6. Business Issues And Partnering Relationship Confirmation - At this point, we find it beneficial to have your Executive Sponsor (responsible for approving the solution and accepting our pre-negotiated contract) again meet with the our Executive Sponsor responsible for your success so that the business issues and partnering relationship can be finalized and we can get you up, running and achieving results as soon as you are ready.

The key ofcourse isn't the process but how you execute it.

To sell in China, software companies should be aware of Bing-Fa.

Thinking about how to help Chinese companies improve their prosperity in the battlefield of the global marketplace will go a long way in winning business (as long as you execute with local professionals and partners.)

China is the world’s oldest civilization and has survived when other civilizations have vanished. The Chinese have been admired for their virtue in, and love of, strategic thinking. Companies all around the globe, to some degree, study some Bing-Fa (a form of strategic thinking first applied to military strategy and which has since been applied to almost all human interactions), especially the most complete and one of the most popular Bing-Fa texts, that of Sun Tzu which written in the fourth century. Commonly referred to as Sun Tzu, The Art of War as it applies to business is on many global business leaders must read list.

As Sun Tzu said “victory is determined before the battle begins” and “the highest form of victory is to conquer with the right strategy.” But we must not lose sight of the fact that strategy without execution (even if execution simply means to reveal the strategy) is hallucination. In today’s global economy, execution of the right channel strategy with the right timing is becoming more important than ever, and can seem more complicated than ever. Also, execution of the right business strategy for your customers is more important than ever. The good news however is that many of you have systems today capable of helping companies to harmonize and formalize their strategies to meet the cycles of complex foreign and domestic policies and companies allowing them to adapt the ever-changing needs of a highly demanding world. These systems help companies prepare to seize favorable opportunities. I like the definition good luck which says it is that place where preparation meets opportunity. Without strategy, preparation and the ability to execute swiftly and decisively, opportunity is lost. Your solutions can help companies seize strategic opportunities and your approach may be best served by focusing your messaging around that.

It is not always the most intelligent, strongest, nor the least expensive who will enjoy the most prosperity in this highly competitive world in which companies compete. Rather it is the ones most responsive to change. It is the companies who are able to deploy the right strategies for the moment. Companies who are prepared to take advantage of situations as they change and who can react with the right timing.

Companies globally, recognizes the low labor cost advantage which companies in some regions, including China, have are becoming less of an advantage and competitors are reacting by becoming more effective and efficient through the implementation of adaptable systems. These systems are helping them improve their position relative to the Chinese low labor cost advantage therefore, over time, Chinese companies will also need to become more effective and efficient. Chinese companies will need systems capable of helping them deploy flexible strategies in order to remain competitive and in order to maximize their prosperity.

Demands made by the market must be seen as opportunities. In order to be most effective the systems companies use must be capable of handling highly sophisticated management and optimization strategies in a straightforward way. The complex must be made simple. Communication of new strategies must be automatic so that everyone in the company is organized with the discipline to execute the new strategies immediately and with unity. The systems must also be capable of communication over multiple sites, in multiple regions all across the globe. Everyone can be aligned with the same purpose while at the same time having the fear of doing the wrong thing reduced or eliminated by having the formal system directing what to do and how to execute on documented strategies.

There is an old story I once read about from China, of a person who had been hit with an arrow and sought help from an outer practice doctor (there are also inner practice doctors.) The doctor sawed off the arrow and told him he was finished and that the man was free to go. This doctor’s job was done but the cure was not complete. Integrated, adaptable, real-time systems can also eliminate the “saw off the arrow” syndrome by communicating the entire cure through holistic optimization strategy.

Leadership, as well as all others within the company must also have complete ability to see what is occurring continuously. They should be able to have formalized key performance indicators (KPI’s) as to how the company is executing vs the strategy. This should be done at an executive level, a management level and an operational level that are all aligned to a common set of objectives and goals. These KPI’s codify the relationships amongst people within the company and delineate their respective duties and responsibilities in the form of clear measures. Through continuous analysis, multi-dimensional visual representation, and alerts, all the insights necessary to carry out the strategies and identify areas for improvement are revealed. The alerts, which are triggered on events, are certain to be sent to the right person at the right time to facilitate the right action to keep the strategies on track. A system so designed, is a way for the leadership of the company to communicate at all times with every single person, ensuring unity of purpose. This is simply not possible with out technology. Without technology such as this, and to quote a Chinese maxim, “the Heaven is high, and the Emperor is far away” meaning that despite whatever policy or rules exist, people end up just doing whatever they please within their own sphere of influence.

Companies facing death at the hands of fierce competition have given birth to new idea and actions to help them survive. Resulting from this are new systems capable of allowing companies to define definite sets of basic rules the ability to combine basic rules into strategies for deployment. In music there are 8 basic note from which an infinite number of musical tunes can be created. It is the same with modern adaptable systems. These systems allow them also to define, ahead of time, events that trigger those strategies as well as the adaptable workflows that should result. Some systems are even capable of triggering actions from insights gained by real time analysis of actual performance and conformance to the strategies.

There will always only be 24 hours in the day. Companies need to make best use of those 24 hours. Brute force by labor alone and by stocking a lot of inventory, will not be enough for long term competitive advantage.

The essence of successful warfare strategy is deception and surprise. It is also to put yourself in the position of your competitor, anticipating what efficiencies they are working on in order to disarm their opposition. Develop your own long-term strategies to seize even the smallest of advantages. While companies may be flocking to China to take advantage of low labor costs today, Chinese companies must prepare for the competition yet to come, and implement new ways to optimize labor, inventory, space and assets now in order to make themselves secure against defeat later. Hope that the competition will not catch up is not a strategy. Eventually they awake. Adaptable systems allow for continuous improvement as underlying cause for problems are found and strategies are formed to resolve them. Continuous improvement is happening all over the world, and competition is heating up at an ever-increasing rate. Taking proactive measures now to ensure adaptability, by implementing systems capable of helping you define and execute a sophisticated and ever-evolving set of strategies, is the only effective long-term path to defending and improving prosperity.

Every second of every day, the bar is being raised for performance of your customers and prospects. To win new business, you must have systems that respond to those demands, now and in the future.

Managing the challenges of a global economy gets tougher and more complicated every day. Adding to the problem is the fact that the pace of change is accelerating exponentially. Now, more than ever, brute force solutions erode margins.

The way to penetrate China, is to think globally & strategically, and then to execute locally.

Together Everyone Achieves More - with a constellation of alliances

In moving forward with your vision and strategy you need the strength of global Alliances to reinforce your message, and to compete effectively. The competition is rarely just another company. As Benjamin Gomes-Casseres, author of The Alliance Revolution (Harvard University Press) put it, the real competition is often a constellation of competitors TEAMing thus Together Everyone Achieves More !

In order to compete more effective a major objective of your alliance program should be to work more closely with the partners. Systems Integrators, complementary product partners, implementors, consultants etc often see deal flow which is incremental to yours. They also tend to team up with friends to the exclusion of companies perceived as threats. "If yur not with us, yur agin us!" holds true in the real world.

The 5 F's General Framework I have used successfully with a number of software ventures is a hybrid of Ben's approach ( which can be found on www.alliancestrategy.com ) and what works from my own experiences and observations of my competitors approaches :

1. Focused (strategy before structure) - It is the strategy and the existing relationships (both friendly and competitive) which matter most in guiding partner choice, - then, partner choice and your mutual goals that guide the structure of the deal. The sequence is important. Companies that have followed this lesson are usually alot more successful in alliances than those who have rushed out to "sign up some partners" without thinking it through. Also, you need to create an organizational process that incorporates evaluating alliances as an option. Alliances will work for some things but not for others. You need infrastructure for tracking progress with alliances. To be successful, you need to be focused and proactive in evolving an alliance strategy. Joint goals will help drive effective investment of resources for all parties. As Ben says "Execute alliance strategies, don’t develop strategic alliances."
2. Fast (quick progress before perfection) - Execute! Strategy without execution is hallucination. If your expectations are reasonable they will often be fulfilled. The key is to grab opportunities for change and not ignore them, but to do something about them. Then fine tune with the wisdom of experience. Alliances are a way for you to quickly manage incompleteness in either your products, services, domain expertise and or market coverage. They help react quicker and often more credibly to competitive threats or market opportunities by TEAMing (Together Everyone Achieves More.)
3. Flexible (agility before compliance) - The only constant is change itself. Hanging loose in the relationship is key initially. Strategy should evolve from an assessment of your external competitive environment, your internal capabilities and resource availability, your appetite for balancing the investment/risk/reward formula and your mutually desired goals. Then, you can develop tighter tactics and policies. Some alliances may center on rounding out gaps in your product suite. Some will involve making “connections” with those surrounding the point of decision such as Systems Integrators (such as IBM, or Accenture etc.) Infrastructure Players may be important to you, or Players who can help expand your solution footprint, General Contractor & Reseller Players as well as other types of players on a pragmatic basis. You also need to stay close to developments within your market such as what is happening today with RFID mandates and directives coming from the DOD, Wal-Mart, Target and the FDA etc.
4. Families (constellations rule) - As Sun Tzu's said: "He whose ranks are united in purpose will be victorious." A variation on Together Everyone Achieves More – TEAMing. Create portfolios of alliances, not stand-alones – the competition isn’t just the company you sell against; it’s usually the group of companies who have chosen to TEAM. Now if your rivals don’t "get it", and you do, you jump to the lead position much quicker. Like in all families, the ones with good relationships work better. Nothing is more wasteful of time than setting up hand shakes, and press release ware with Alliances which do not result in additional business in some form. You need to focus on those relationships, which will result in mutual market expansion and additional real revenue business for all parties - then you need to build trusting relationships with the people involved to earn the right to work together.
5. Forget the past (don't let the past constrain your thinking or creativity - strategy can make the future happen.) - Do not assume that because your competition is in alliance with a company, that there is nothing you can do. Just the opposite. Look for opportunities to reducing the effectiveness of your competitors evolving alliance constellations. One of Sun Tzu's first moves in war was: "Disrupt the enemies alliances." Use preemption in some cases to get a corner on a market. Change the rules in another situation or even change the game so as to reduce their alliance's effectiveness. Offer more value by becoming your partner.

Without executive involvement and committment as well as a supportive internal infrastructure, the alliance strategy will usually fail, no matter how well thought out. Keep in mind that many companies bungle up this part of the business and if you get it right it can be a tremendous competitive advantage for you.

Smart Phones ( I currently use Samsung i600 )

THE NEW CELL PHONES New cell phone bells and whistles are arriving so quickly that most consumers should be cautious before spending hundreds of dollars on the latest product offering. It may be obsolete next month.

But the mega-trend you should keep an eye on is the move away from audio-centric (for phone calls only) to data-centric phones, also known as smartphones. A study by ABI Research estimates worldwide smartphone shipments at 80 million in 2005 and nearly 150 million by 2008. Larger screens, increased memory and storage devices, and access to high-speed broadband networks will permit the delivery of video and music programming to more mobile communication devices than ever before; cell phone gamers will be enjoying multi-player competitions at broadband speeds.

Much of the credit for this rapid advance in technology goes to the growing popularity of Mobile Weblogs, known as MoBlogs. Many MoBloggers create amateur journalism websites where breaking news events can be covered with video originating from their own cell phones, downloaded to their blogs in seconds. As one of the leaders in cell phone innovations, Samsung will offer a new cell phone (SPH-V5400) that not only functions as a 3.2-megapixel camera but also offers the ability to play feature-length movies and 3D games. Storage needs are met by a 1.5GB hard drive, but industry experts expect that to increase to as much as 10GB very quickly. When this occurs, expect to see phones that double as MP3 players, not to mention the ability to offer GPS mapping services as well as being a PDA. In 2005, cell phones will be using more GPS chips than any other device. Starting February 1, 2005, Verizon is marketing its new V-cast service in partnership with Microsoft's Windows Media Player. Special phones will offer access to 300 daily video clips from entertainment services including MTV Networks, 20th Century Fox and NBC Universal.

Cingular is now offering the Treo 650 SmartPhone, which allows globe-hopping users to make calls and transfer data in over 70 different countries. Within the United States, the Treo 650 has access to Cingular's EDGE network, the nation's fastest wireless data network. New multi-protocol cell phones will be able to switch between their own digital networks and local WiFi networks such as the one at your nearest Starbuck's or Barnes & Noble bookstore. As a result, they will soon double as Voice-Over-Internet-Protocol phones as soon as the cell phone companies can work out some complex billing issues between competing networks. This means that you'll have the option of placing calls via your network or via the Internet (VOIP).

There is an unfortunate downside to these rapid innovations--viruses. As the link between cell phone and Internet becomes stronger and more multi-layered, hackers will begin to look at the smartphone as their latest challenge. On January 11, F-Secure, a Finnish computer security company reported a Brazilian cell phone virus called Lasco.A, which spreads through a phone's Bluetooth connections as well as by attaching itself to files. This dual mode of contagion was a first for cell phone viruses, according to a spokesperson for the Finnish company. A cottage industry in cell phone virus protection software will undoubtedly spring up to offer protection from virus attack and, just like the virus protection on your desktop computer, it will require frequent online updates/downloads to stay current. Unfortunately, there are no new developments in the controversial area of interchangeability. Most users want the ability to keep their cell phone when they switch providers, but although number portability is now the law, interchangeability is not. There is an ongoing lawsuit by a California consumer group against T-Mobile, AT&T and Cingular for "locking" their cell phones. For more information, check in with http://www.consumerwatchdog.org.

Selling to Optimal-Edge CIOs

OPINION - (exerpt from SandHill.com Feb 14, 05)
Toby Redshaw, Corporate VP of I.T., Motorola
Today’s enterprise buyers are a whole new breed. Here’s how to speak their language.


I want to buy your software. But I want to be able to implement it in a few weeks, loosely couple it to my architecture and throw it away in 4 or 5 years if the next generation of software leapfrogs yours.That’s what it is going to take for my company to stay competitive.

Like many I.T. buyers, I’m done with living on the leading edge – or bleeding edge – of technology adoption. Too often, enterprises were burned investing in new technology too quickly in areas that simply did not matter to the P&L. Today enterprise buyers are focused on “optimal-edge” I.T. strategies: Leveraging new technology to our company’s competitive advantage. We think and buy differently - and want to work with vendors who understand us. Part of our mission is to shrink spend in areas that just keep the lights on or maintain status quo. We want to move that money to where it can impact shareholder value, grow market share and make the company more competitive.

Not Your Father’s CIOThe CIO profile and thereby the I.T. organization’s profile has changed a lot in the past 10 years – a relatively short period of time considering the CIO position is not much older than that. CIOs used to be executives who came up through the technology ranks, usually from the programming side. In the early to mid 1990s as the business processing reengineering “trend” took off, companies realized most I.T. leaders did not understand the business well and could not readily communicate across the business. That’s when more business-savvy CIOs became fashionable.Today’s optimal-edge CIOs are different. The I.T. leadership role is one of collaborative catalyst driving change under an umbrella of serving the business and delivering a competitive advantage. These leaders possess three key characteristics:

1. Deep technical awareness, especially around emerging architecture, evolving software and how that matters to the business
2. Real business experience and profit-loss leadership
3. Change management, controls and communications skills

In 5 years, this CIO profile will be commonplace. Today, it is still rare. In most companies, the CIO has a seat at the “big table” but he or she still stands behind the make-and-sell components of the business. That’s probably how it should be today. But as the experience and service components of GDP continue to grow, the digital parts of the enterprise will become more important.I.T.’s Improving ReputationInformation technology is emerging from an era of anger and distrust within the enterprise. During the post-Y2K and Internet spending hangover, the business leaders were saying, “We gave you all this money and what did we get?” The I.T. project failure rate was significant. The business response was to get I.T. more supervision. Now, I.T. operates with strict financial oversight. In fact, at many firms, squeezing I.T. costs is 80 percent of the game.

Optimal-edge companies are done pointing fingers at the business-I.T. gap and starting to point them at something new: the potential of today’s emerging technology. We are at an in inflection point in technology history. We’re moving toward a state of ubiquitous and accelerating IP networks. The huge growth layers are the layers below the desktop PC: mobile devices, mobile computing, appliances, sensor nets – all have tremendous potential.New I.T. DriversThe convergence of new technology and new leadership is leading to new drivers within enterprises.

• A nimble environment. The era of giant ERP-type implementations is fading away. Enterprises can achieve a competitive advantage if they leverage I.T. in ways that matter to the P&L and market share. Today’s technology presents the real potential for your competitor to leapfrog over you. For example, if you bought supply chain technology four years ago, today’s solutions are radically superior. Your competitor could have been asleep at the wheel for the past decade but he awoke yesterday and bought a solution that is better than yours. The good news for optimal-edge enterprises is that a services-oriented architecture world means new solutions can be implemented quickly and can be added to legacy systems. So even if a new solution is needed to stay competitive, there should not be huge rip and replace costs.
• Increased responsibility. In addition to I.T. having financial oversight, there is a critical mass developing with corporate boards having active I.T. committees. For the first time, top-down I.T.-savvy oversight will become the norm.
• Do more with less. If you really do believe in an architected stack and I.T. efficiency and reusable components and Web services, I.T. organizations should be able to do more with less. There are Fortune100 companies that have been spending $1 billion on I.T. for 10 years. There has got to be savings in both shutting down legacy and better leveraging the remainder across the enterprise via Web services, smart governance and standards. Governance should be about optimization not about being the “hall monitor.” This mandate means you won’t see application people doing deals anymore. Procurement people and deal professionals do deals. It is the culmination of the era of distrust, as well as the leap forward in architecture and technology: We need to take money out of maintenance and put it into value-add initiatives for the business. Selling to Optimal-Edge CustomersChange is actually happening in software vendor behavior.

There have been many threats to large vendors:

• the crop of new, smaller vendors providing effective solutions;
• the increased fiscal responsibility and supervision of I.T. in the enterprise;
• the drive to do more with less I.T. spending.

My vendors are starting to realize that when I’m competing inside my large company for software dollars, I’m not just competing against other software projects. I’m competing against all the other projects in the company. These trends are forcing vendors to take a different approach.

The smart software vendors are moving towards a more customer-focused orientation. Smart vendors talk in terms of a compressed-delivery cycle.

• They put more skin in the game, more flexibility in their pricing models.
• Vendors are finally talking in terms of my business needs, saying, “We’ll save you money in this area – and we’ll commit to that.” Vendors really have no choice.
• In a services-oriented architecture world, it is much easier to sew together “best-of-value” solutions without the integration costs which would here-to-fore have pushed you toward big suites of applications.
• Our average integration costs have gone from $80,000 to $3,000 over the last three years.

Admittedly, we’re pretty leading-edge in that area but even if you‘ve got a quarter of that savings, the old vendor scare tactic, “You have to buy this big giant suite or your integration costs will be huge,” is no more.We have a place in our technology arsenal for both big and small vendors – provided they can deliver a competitive advantage. Here’s my advice to each.

Advice for Small Vendors

• Get a “big brother.”
• Sign a reference-able account to help out early in the product lifecycle.
• Obtain a real dollar proof statement of value from the client.
• Manage cash flow and margins.
• If you cannot fund significant R&D, you will get trumped or beaten.
• You need to look good to potential clients on a 2-3 year basis, not scrape by waging a 2 -3 quarter battle to fund R&D.
• Understand the time-value of a deal.
• Dancing around a deal for 9 or 12 months is the road to destruction for a small company. It will lead to a cost of sales that is prohibitive.
• Management needs to filter out deals that are sponges for time even if they seem like a good opportunity with a name brand, Fortune 100 potential client.

Advice for Large Vendors

• Understand my business. There is a trend towards having a conversation about my business and my business results rather than the features of the vendor’s product suite. I had a conversation with a large supply chain company this morning. The vendor said, “Look, I don’t want to sell you anything more. I want to help you solve your problem and I think we can solve it with products you already have…” Three years ago, you’d could not imagine that said. Now, my vendors are more in touch with my business needs. They’re focused on the long-term relationship.
• Do more M&A. Partnering and incorporating a smaller software vendor is a very clever way to get more entrenched with my company. It also allows vendors to achieve more functional adjacencies in their portfolio faster than the build-it approach.
• Avoid shortcuts to account management. For one big company working with another big company, the best account management is to dedicate a seasoned professional to my account. Someone who has a 5-10 year horizon rather than the old method of promoting reps off of accounts and into management because they have been successful. We need to maintain long term relationships.
• Constant VigilanceThe I.T. lifecycle changes in an services-oriented architecture, loosely-coupled world. The time to implement and leverage any modern software solution should be measured in weeks. That is a short cycle. Then leverage the solution with a low friction, new release path for up to 4 years. In the future, the economics of just unplugging software after 4 years may well be the most competitive model which enables the I.T. group to continually stay on the optimal edge.

Toby Redshaw is the corporate VP of IT strategy, architecture and e-business at Motorola.

Automate The Process Not the Salesforce

Whenever I hear the term Salesforce Automation (or SFA) it makes me cringe.

First of all there is no way to automate a salesforce and, if there was, who would want to? There are many aspects to the art and science of selling including the ability to build relationships, unerstanding what a prospective customers' key needs are (which includes understanding their industry and the solution domain), determining if you have the capabilities to meet those needs in such a differentiated was as to be considered best, and then there is proving your value and fit and convincing the prospect that you are the best alternative given their criteria. The process is often complex and sophisticated - it involves gaining an interest, building credibility, earning trust, proving understanding, proving fit, proving past success, negotiating price vs value, addressing any risk issues, referencing, setting proper post deal expectations and, of course, - closing the deal.

Given all this, you can't automate the salesforce but there is incredibly high value in trying to create a repeatable and guided selling process so as to coach the salesforce into best practices selling.

Old school SFA systems focused primarily on contact and calendar management and, if you were really sophisticated, you attempted to report activity, conversations, emails etc. Most sales reps resisted enterprise SFA in favor of keeping their contacts to themselves because they saw little or no value in SFA and did not trust management. It was perceived as a management tool for beating them over the heads at pipeline review time (because that is exactly what used to happen.) For the rep, the less the manager knew, the better.

Sales Process Automation (SPA) on the other hand delivers value to sales reps. By guiding them through a well thought out sales process so the reps actually use the system (which in turn makes the reliability of the data much higher.) SPA takes into account realistic outcomes of steps which may move the deal sideways or even backwards in the process until the desired outcome is achieved - only then is the deal moved to the next step.

Many of these systems allow you to attach RFP's, word documents, powerpoint presentations, emails and even call recordings to accounts, contacts and deals directly - allowing a complete history to be built relating directly to the deal cycle. Alerts to managers can be sent when action is needed. Other team members (including alliance partners) can be scheduled and can collaborate off of one version of the truth. Productivity is increased for all members of the group and TEAMing is facilitated. (Together Everyone Achieves More.)

For managers, SPA systems of today also provide robust analytics to help pinpoint what steps take longest, what unexpected results occur, where deals get stuck in the cycle, stage of deals progressing towards decision, win/loss analysis, forecast accuracy, rep productivity, pre-sales productivity, executive involvement, partner and alliance involvement and virtually anything else you want to analyze in trying to continuously improve the selling/buying process.

SPA's of today add a lot of additional value as well and are much easier to use and integrate with a broader CRM process (to include marketing automation, customer support etc.) Many are available On-Demand (Software as a Service) via a subscription model over the web, but include an offline version so the sales rep can work on deal, contact and account updates and managers can review reports and forecasts while flying to the next destination (an objection of early asp offerings now overcome.) Examples of this new breed of On-Demand SFA/SPA systems are SalesNet.com (the first on-demand CRM suite to offer Sales Process Automation over the web) and Salesforce.com (the most well known CRM suite over the web.)

In terms of process automation there are additional piece which can now be addressed such as the RFP process. This is one of the most time consuming for many sales support groups. Products from companies like Pragmatech.com are now available to help streamline RFP responses by making use of a continuously improving knowledge base. This Kb can then be used to help with ensuring letters, presentations and proposals are using consistent wording and messaging by automating the generation of variables in these documents.

The best news is that it is affordable for any size of software company to do this, and at the same time, the chances of having a successful implementation have increased dramatically. You can start with a piece and add to it as well so that the entire project is digestible by all.

Invigorate Your Company in 2005

I have known "MR" for many of my years in this business and he has always kept his finger on the pulse of shifts. What do you think of his survey results?

From M.R. Rangaswami, Sand Hill Group
CEO Outlook 2005 shows many longstanding habits of software vendors may be changing - for the better. Here’s a checklist to be sure your company is keeping up with the competition.
Feb 07, 05
I’ve been part of the software industry for more than twenty years. Technologies have come and gone, but one thing hasn’t changed: software vendors’ reputation as unresponsive and inflexible.

In the past, software vendors got caught up trying to capitalize on the “next big thing.” Customers would scramble to be a part of it. Revenues would skyrocket. And capturing a piece of the gigantic pie meant being able to forget about serving customers and managing the business: Customer requests fell on deaf ears. Sales strategies were heavy handed. Products worked only most of the time. Performance benchmarks were nonexistent.

Flash forward to 2005. Four years of recession has drained the coffers of many enterprises – and their vendors. Poorly managed vendors disappeared. The big guys are figuring out their next move. Yet the industry continues to renew: Even during the downturn, hundreds of new software companies have been born to take advantage of new technologies and business models.

With so many changes affecting the market today, Sand Hill Group decided to commission a study: CEO Outlook 2005. This new report examines software company leaders’ opinions of the coming year for the industry as well as their companies. (Click here for more information about the report).

The exciting part? The CEO Outlook 2005 study shows many signs that software vendors may be changing their ways – for the better.

Signs of Change
Now, as the industry seems poised for renewed growth after four lean years, it appears vendors may be responding to longtime complaints. Respondents to the study say they are using software as a service pricing. They recognize the impact of services-oriented architecture and open source. They are exploring options offshore – and undoubtedly other means to manage their bottom line more closely.

The participants in the study may be leading-edge vendors. Or they may simply represent younger companies. The vast majority of respondents were private which makes change easier: more able to change business models, adopt new pricing strategies and recreate products using the latest technology.

CEOs surveyed are bullish about their company’s prospects for 2005. Most are predicting double-digit revenue increases. They have budgeted for increases in profit and cash balances – not to mention marketing budgets and headcount. Clearly, executives are optimistic that the industry is on the mend.

Challenges Remain
But CEOs appear to be straddling two worlds: one in which they can watch the success of their own company, and another in which they are constrained by the realities of the overall software industry and today’s economic realities. They are optimistic, but realistic.

Many company leaders report their customers are very satisfied – yet fewer than half actually have a process for formally evaluating customer service. This is astonishing in a maturing industry which is dominated by a handful of large players.

The customer satisfaction finding is indicative of a larger problem: Lack of performance benchmarks. Software vendors need to operate like other value industries with close management of financial, customer service, product development and marketing metrics. In today’s highly competitive industry, anything less than constant attention to customer care is suicide.

Path to Change
In my experience, it seems every software company leader feels he or she is doing everything possible to engineer transition and to manage for the future. Review this checklist to see how your company stacks up.



Business model changes? How has your business model changed in the past year? Two years? If there are no changes going on, your company is not reacting to new market realities.

2) Customer monitoring? How does your company evaluate customer satisfaction? If informally, institute a customer satisfaction monitoring process which will monitor progress over time.

New technologies? What plans does your firm have for open source? Web services? Mobile technology? Enterprise customers are rapidly integrating these emerging technologies into their strategies and vendors need to incorporate them too.

New processes? What portion of your operations is outsourced? Offshored? How are you dealing with the predicted year of growth ahead? Re-energize your business model with new thinking and strategies by working with outside vendors.

Performance benchmarks? How does your company compare itself to the industry or to past performance? Every company must have a set of metrics to manage it which are watched over time and acted upon in case of diversion.


Clearly, the industry is in a period of transition. There will be many more experiments before it settles on a course. And there will certainly be new variables on the horizon which will shake things up yet again. It will take some time to reach the right model – much longer than anticipated. But many longtime software industry followers will applaud today’s CEOs for taking steps in the right direction.

M.R. Rangaswami is co-founder of Sand Hill Group and publisher of SandHill.com. Send us your ideas about how the industry is evolving and suggestions for performance benchmarks and change management. Email editor@sandhill.com

The Coming Service Revolution

OPINION from SandHill.com - is Ray right? post your own opinion.
Ray Lane, Kleiner Perkins
More than a change in pricing or business model, software as a service is an inevitable, fundamental shift in enterprise software culture.
Jan 31, 05
Software as a service is transforming our industry. It’s more than a new way of pricing or a business model change, it will drive a whole new mindset for enterprise software suppliers and customers. First, let me be clear about what I mean by software as a service. I’m not referring to ASPs – although they are a big part of it. I define software as a service as tying supplier revenue to a business outcome: the supplier sees the client’s end result, measures its success, and receives revenue based on the results achieved. This doesn’t necessarily mean success-based pricing, however. It can be subscription, or even license based. In some cases, a company offers to sell a service. Negotiations can take place around buying the intellectual property, but the company can buy a software license and pay the supplier to operate it. You can find a lot of examples of companies that are offering a service with very complex software behind it (Amazon, EBay, iTunes, SalesForce) - even if the customer owns a license (Elance, Oracle Online, Siebel On-Demand). These suppliers focus on selling knowledge – not bits. A Customer-Driven MovementThe concept of selling software as a service is not new. It has been on the table for more than 10 years. But it hasn’t been very meaningful or relevant until now. The recession forced a discussion between customers and the industry. In the past, this discussion was about prices, not “pricing”, but prices: They’re just too high. Now it’s a different conversation: Do we have a pricing model problem? Do we have a business model problem? Do we have an impedance mismatch between price and value? Would there be a competitive advantage to having a subscription-style pricing model?The nation has emerged from recession. But the software industry is only recently starting to recover after four hard years. Customers are in control. They’re forcing suppliers to compete with each other; they’re demanding lower prices and more accountability for results. But most of the large suppliers are not ready for change. And the only way they will change their models is if their customers demand it. But how do customers alter the behavior of a 40 year-old industry that still believes it is a ten year-old? When will customers learn that the benefit of a model change will be painful on them too, but the payoff might be worth it in results? It’s like stopping smoking: You’d go cold turkey. “I’m not going to pay up front. I’ll pay you ratably over the life of the project and you’ll profit when my project starts delivering business value.” If that happened, we’d see a lot more software delivered as a service and much happier customers.On the other hand, if the economy picks up much more, it’s possible that the balance of power will shift back to the software companies. I.T. organizations will start to scramble to meet growing demand from the business and lose their current focus on maximizing R.O.I. Further, the technology industry has always had the ability to reinvent itself which further shifts influence to the suppliers. These dynamics will only allow us to perpetuate the broken model we’ve always had: Selling licenses up front. But if customers can maintain control of pricing (through competition), they will force the industry more to sell software as a service, and price it accordingly.Making the TransitionIt will be many more years before we see the majority of the industry shift to this model. ASPs will emerge first, followed by today’s startups that don’t have to meet public expectations. It’s certain that large companies won’t lead this move, except where they are starting new businesses outside their traditional markets. But many established software companies will see the benefits and figure out how to make the transition: A service delivery and pricing model gets software vendors out of the “hockey stick” sales dynamic at the end of the quarter. It gets the customer out of having to buy something before they can use it. Even the largest, most entrenched suppliers can start by offering software online, especially to under-served markets and incremental offerings to existing customers. Companies can also use the down market and its lower expectations to begin offering more remedial commercial arrangements, such as term licenses or leases, for example. And then, vendors must learn to say “no” to big discounts to get deals done in the quarter. Every deal done for quarterly gratification by a sales team or analyst expectations erodes long term value. Customers already know this and drive supplier to highly discounted deals, which many times turn to shelf ware. But even the staunchest customers can be tempted. It’s like buying drugs: who do you blame, the buyer or the seller? Often, if the seller presents an attractive deal for short term benefit, then the buyer can’t resist. Say a supplier is offering 80 percent off the regular price, the buyer knows he’s buying a lot of pain and trading away the future value of having a supplier engaged with his outcome. At the same time, the supplier could make five times more over the life of the customer/project if he waits and negotiates a more ratable arrangement. Of course there’s a catch. The supplier must be more accountable for the claims made in the sales cycle: If the supplier thinks this is a bad idea, then a more serious problem exists.A Better ReputationA move to a service model means the reputation of the software industry improves. If the transition occurs gracefully, customer satisfaction will grow, profits will grow and become more predictable and, ultimately, the industry will grow from real demand by customers when the technology is actually needed and consumed. Although the industry’s past youth and cowboy culture was fun, the products of our industry are far too important to deliver over the transom with an 800 number for service. Ask yourself the question about the relative reputations of software service companies vs. software products companies (amongst their respective customers). It’s not even close, and that’s because service companies are in the business of pleasing their customers every day, not just when they need the next deal. How does a large supplier avoid a share price haircut when converting to a service model? First, this doesn’t happen overnight. Second, it requires education of public market analysts about the development of long term profits and cash flows. Analysts recognize that if you’re a software company that can grow 10 to 15 percent a year and increase profits and free cash flow, that you’re a good investment. There are way too many people in our business and on Wall Street thinking that this is still a get-rich-quick industry. Those days are gone. But the software industry is still a better investment than most any other industry, and will be for a long time.The Startup AdvantageSmall private companies starting up have an advantage. They can develop a service model from scratch and use it as a competitive advantage. Salesforce.com doesn’t offer more, they offer more service. Elance delivers a result through its intellectual capital, not bits. It boils down to simple economics. With a large customer, you can discount very large product sales up front and erode the value of a relationship or develop a long term relationship that is a win-win in terms of price/value that builds a more sustainable and predictable business. Any economic analysis will show that the service model will offer a better opportunity long-term for profits and cash flow, despite more required investment in the short term. As a startup, if you’ve got the right funding, start off as a service business, using subscription pricing. You won’t have to defend your history. No problems of changing business models. You will need to invest up front before you see the benefits, but once you do, it’s beneficial to customers, investors and management. It’s a much more predictable model. And it’s the way we’ll all be doing business in the future. Ray Lane is a general partner at venture capital firm, Kleiner Perkins Caufield & Byers. Before joining KPCB, Lane was president and COO of Oracle Corporation.

Compensating Sales Reps

As the pricing models change for enterprise software, so must the compensation plans for sales talent.
Whether you are a sales rep, manager, VP or CEO - this is an issue you must address.
What are your thoughts?
Post them here.