IT vendors have accepted the fact that closing deals today requires
proving that their products deliver substantial value. But, with some
budget relief in sight for 2004, vendors may be optimistic about the
return of the happy days of pre-bubble selling -- and they could abandon
their commitment to ROI-based selling programs.
Unfortunately, most of the 2004 IT budget increases will not materialize
into a spending windfall, and scarce dollars are already allocated
to meet backlogged demands and cover key compliance, security and
infrastructure projects. The most forward-looking IT vendors will
continue to improve their value-selling methodology. They'll use tools
to help sales professionals and partners quantify ROI pre-sales, and
implement ongoing ROI-based service-level agreements.
In
a recent survey by CIO Insight and Computerworld, 80% of buyers
rated financial justification as important for IT purchase approvals.
However, more than 65% of buyers revealed that they do not have the
knowledge or tools needed to perform ROI calculations. ROI is required
for purchase approvals, but vendors focused on closing deals can't
leave the ROI analysis up to the client for three major reasons:
Prospects do not have the product feature and benefit insight,
financial-modeling knowledge or analysis tools needed to quantify
the value of the proposed solution.
Customers can take months to perform the justification, slowing
the sales cycle significantly.
Prospects are not able to quantify the differentiating value
and TCO advantages of the proposed solutions versus competitive
solutions.
These facts are proven in a recent study by Ernst & Young, which states
that more than 81% of buyers expect IT vendors to quantify the value
proposition of proposed solutions, and 61% of buyers rate a vendor's
ability to quantify its value proposition as important in the vendor
selection process.
The new ROI selling requirements for vendors represent a real and
permanent shift in the way solutions are bought and sold. In this
new era of corporate accountability, buyers will remain in control
of purchasing decisions. Companies are becoming more decentralized
in their decision making, and more stakeholders are involved in every
purchasing decision. Quantifying value is vital to helping prospects
rationalize their decisions to other stakeholders. It also helps them
competitively analyze and align each purchase decision with all other
opportunities, and prove value delivery on an ongoing basis.
To date, success-minded vendors have implemented several types of
ROI tools to help meet the new ROI selling requirements. These include:
Web-based ROI calculators, which are primarily used for
basic analysis, education and lead generation
Spreadsheet-based selling tools, typically developed by
an in-house, financially savvy marketer, or by a consultant.
More advanced software that encapsulates spreadsheet models
into a better presentation and report-building package.
To reach a new level of competitive advantage, sales and marketing
executives will need to view ROI selling as an enterprise initiative;
this shift will dominate selling strategies during the next decade.
Successful vendors will deploy a standardized selling toolkit that
addresses each step in the sales process with credible value quantification,
and with seamless integration into current CRM solutions and selling
methodologies. Just as other solutions have migrated from simple tools
to enterprise applications, these leading vendors will move their
ROI selling programs beyond point-based ROI solutions and view ROI
as an integral component of a successful selling process both pre-
and post-sale.
About the Author:
Tom Pisello is the CEO of Orlando-based Alinean,
the ROI consultancy helping CIOs, consultants and vendors assess and
articulate the business value of IT investments. He can be reached
at tpisello@alinean.com
Read this newsletter at: http://www.itmanagementnews.com/2004/0317.html
By Tom Pisello
