Hot Topic: Selling IT in 2003

All companies are subject to external pressures that affect the way they do business. Most feel some sort of competitive pressure, whether to reduce prices, or to innovate. Public companies feel pressure to increase shareholder value. The pressures, or business drivers, are usually the key factors that affect a company's business initiatives. While business drivers will largely be the same for all companies in the same industry sector, their responses - business initiatives - will depend on each company's specific circumstances. In turn, it is then these business initiatives that drive the targets and goals for each department and line manager. If you are trying to sell IT solutions, sales will be much easier if you can demonstrate that you can help managers reach those targets. This is not just Return On Investment (ROI), but "Personalised ROI" - returns measured by steps towards an individual's performance targets. If you can then make Personalised ROI cases to several key managers, then your sales case will get even stronger. As Edwin Ecob points out in "The Right Stuff" sales reps are increasingly required to talk in business terms.

However, not only are industries different from each other, but so also are the individual companies within a single industry sector. There's no substitute for extensive knowledge of an account, both of the business drivers and of how each company is responding to those drivers. The final piece of the jigsaw is to discover what IT solutions companies are buying to address these business initiatives. As an example, let's look at a couple of example industries.

Automotive

The automotive industry is strongly affected by the economic cycle - for instance, volatile and shifting demand has led to over-capacity. Competition and globalisation are leading to very tough sales environments. Although many automotive sector companies supply OEMs or Tier 1 suppliers, the ultimate driver of demand is the consumer. As such, fashion can affect automotive demand - recently, global manufacturers have seen a trend towards premium brands, rather than family cars. This has led to over-capacity in specific model production.

Environmental regulations are increasingly important in all industries and several issues affect automotive companies. Governments and consumers are demanding fuel efficiency and engine emission improvements, while governments are also issuing directives on recycling after use, such as the European end of life vehicle directive. There are also requirements to develop alternative fuel vehicles.

Many of the corporate responses are the same, such as consolidation, cost reductions, capacity reduction, innovation and price reductions. But some of the responses are very different - for example, BMW sold Rover to concentrate on the premium car market, while Ford bought Jaguar and Volvo to expand its premium car range. All companies are investing heavily in research and development.

Most are trying to add value above and beyond the product by offering services such as insurance, financing and even traffic avoidance systems.

Despite all the advances that have been made to reduce supply chain costs - at least for the OEMs - companies are still trying to get further improvements in supply chain efficiency through initiatives like the electronic procurement hub Covisint. Covisint was set up by DaimlerChrysler, Ford and GM to enable them to streamline purchasing. Renault, Nissan and the PSA group have also now joined.

Electronics

The electronics industry is also strongly affected by consumer demand and is also dictated by fashion - mobile phone handsets are a case in point. In addition, mobile phone manufacturers have been hit by the slow introduction of 3G networks that could have spurred consumers to upgrade their handsets. Consumers are not replacing their models as quickly as expected, leading to over-capacity in the industry. Contrast this with computer hardware adoption, which is spurred on by introduction of new software that requires more powerful computers. If the current economic uncertainty leads to companies and individuals postponing software upgrades and replacements, then this could also have a knock-on effect on the computer hardware manufacturers.

Competition and globalisation make sales in the electronics industry tough. With so many competitors it can be difficult to establish a differentiator, whether it be on price, quality or service. What happens is that low-cost manufacturers bring out lower-priced models, while quality brand competitors bring out better models. As a result, prices are constantly falling, with new products being developed to replace older models.

As with all industries, regulations affect the direction of new products, such as the directives on mobile phone radiation. Additionally, global companies have to track regulatory requirements country by country to ensure that products meet or exceed the rules in place in the end market.

Business initiatives to cope with these pressures include consolidation, capacity reduction and, most importantly, initiatives to speed the introduction of new products. In particular, a new outsourcing structure, where the product owner debugs the production process on a small pilot plant next to the design office, and then rolls out production globally with Contract Electronics Manufacturers is gaining ground.

Summary

We have identified a number of key initiatives that companies are exploiting to cope with the problems they face. Which initiatives are your specific target accounts employing? What IT solutions are businesses using for these initiatives? These are some of the questions that my colleague, Allan Behrens, will be addressing at the Cambashi seminar in April.

Dan Roberts
dan.roberts@cambashi.com

Also in this issue . . . .

Cambashi researches best practice and assists IT suppliers in best practice implementation. For more information on Cambashi services please email info@cambashi.com

e-Xpertise in Industry operates as an opt-in email. The opt-in policy means we never intentionally send any email to anyone who does not wish to receive it.

To subscribe: send an email with the word "subscribe" in the subject line to : expertise@cambashi.com

© Copyright 2003 Cambashi Ltd

back to top