Feature Article: A fistful of orders?

Times are tough. IT vendors' revenues from industrial users are down anything from 5% to 30%. Orders are really hard to get and big million dollar orders for new business initiatives are really, really hard to get. The vendors have sent their toughest sales representatives into town, they confronted the user procurement department mano a mano in the saloon, but they've come back bruised from the encounter saying they were beaten by "the user with no budget". Should we hire the "sales rep with no name", send them into town and expect them to pull off a victory in the final reel by bringing home a PO on the last day of the quarter?

For our money, things are different. There's business demand but it's not often the lone sales representative standing there with the order when the smoke clears at the PO Corral. The demand comes when an industrial user wants to implement some business initiative that is being driven throughout a user enterprise. In that case, we do see new orders but they come from team selling at two levels - both to the business initiative sponsor and to the team of managers who will be responsible for the proposed change. That's a lot of doors to knock on and it's the teams with deeper industry branch knowledge and long relationships that are winning orders.

Our thesis is that we've been through a discontinuity in the space time continuum of selling IT to industry. The same thing happened 25 years ago when industry's demand shifted to the purchase of commercial off the shelf software packages from buying programmers to write in-house applications. For 25 years these packages have helped users improve task and departmental productivity. This is coming to an end.

We don't agree with Ovum Holway's gloomy assertion that we won't see double digit growth again. We don't think that the use of IT has reached its natural limit in the economy. Investment by industry in plant and machinery is roughly 15% of value added. IT costs these same businesses roughly 3% of value added. However, some two thirds of IT costs are treated as running costs rather than investment. IT investment is an important but not an overwhelming part of investment.

We prefer to think of IT use by industry rather like electricity use by industry. Just as it took from the 1900s to the 1950s for industry to change the way it worked to cope with electricity there will be a long period where industry improves the way it works by using IT. Also, just as companies like Mitsubishi selling drives for control systems are not seen as part of the electricity industry, some future businesses that only exist because of IT will not be seen as part of the IT industry.

But, for the IT industry to get back to growth, users will need confidence that IT investment will enable them to change their business models and hence deliver ROI. This is simply a variation on the industrial revolution driver where investment replaces labour with capital. The information revolution twist is that these investments could, if systems were better designed to be both predictable and repeatable, be trusted to automate more business activities. That, in turn, will free expensive people to perform flexible and appropriate services which "delight" customers.

These solutions do require a different sales approach. We have to sell to business needs across processes, not for tasks. Buyers will be cross departmental teams, not a single project sponsor. It's too difficult for the lone sales representative to do all this alone. They have to visit people outside their current comfort zone and organise a team of sales and support people to match the buyers' demand to the available solutions.

Cambashi's own workload is beginning to reflect this change. We have weak demand for our classic sales and marketing planning services, but strong demand for our newer sales effectiveness service lines. We've been out on the road giving industry sales training. We're helping sales professionals understand how to call on different line of business managers in industry with information on business drivers, business initiatives and the "pains" managers feel. We've also been joining in account specific planning workshops. It is a pleasure to work with our clients' sales teams. We have been reminded again how much talent there exists among IT vendors' staff. Part of the solution is to get these people, including those not formerly in customer facing roles, commercially aware, energised, and to the point of sale!

Mike Evans

Also in this issue:

Planning for 2003: Still arguing over your 2003 quota?
2003 could be OK for Enterprise Applications vendors, but Engineering Applications vendors will have to focus to avoid the worst of the market downturn according to Dan Roberts.

Hot Topic: Euroland and Pricing Transparency?
The subject of European pricing and the implementation of the Euro-zone have never been more topical, with consumer strikes in Greece and German complaints about the "round-up" effect of the Euro. Nick Ballard takes a closer look.

Book Review: Convergence Marketing
Bob Brown reviews a book which lives up to the old adage; you can't judge a book by its cover.

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