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e-Xpertise in Industry Issue #24
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May 2005

In this issue...

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Quote for Today

Because its purpose is to create a customer, the business has two - and only two - basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are "costs".
Peter Drucker

Feature Article: Compliance - Threat or Opportunity?

Within the corridors of power of public companies the debate about compliance is now well and truly established. Compliance is therefore a topic that offers sales people an opportunity to demonstrate that they are in tune with precisely those issues which are the immediate concern of their customers and prospects. In solution selling terms, the compliance issue clearly qualifies as a compelling event - an external pressure that requires a suitable corporate response from the company's board of directors. So compliance is a topic that your sales team should be able to harness in order to establish a dialogue with C-Level Executives - where the penalties for non-compliance are likely to be most keenly felt. So far, so good.

The first thing to recognise is that compliance, like all umbrella terms, can be applied to a wide range of issues in the business. It means different things to different people. Importantly, corporate responses to the challenges of compliance vary widely.

For those who like things to be simple, compliance may be synonymous with the Sarbanes Oxley Act. Not only is this not true - it is misleading. Compliance, as a topic for serious discussion, predates the Sarbanes Oxley act which was, in the view of some observers, rushed onto the statute book with indecent haste and insufficient attention to the drafting - a knee-jerk response to a spate of high profile corporate scandals such as Enron.

The genesis of the compliance issue was an international push to make public companies more transparent and protect shareholders from improper or even fraudulent practices. This renewed focus on corporate governance led to changes in perceived best practice in a wide variety of areas such as the division of the roles of chairman and CEO, guidelines on the selection and appointment of non-executive directors, director's remuneration and many other areas.

The biggest change is a higher expectation that directors take positive action to identify and monitor risk. They must take responsibility for reviewing and maintaining a company's internal processes.

At the topmost level, it has been compliance with the financial regulations that has been grabbing the headlines. But compliance issues can be found in all areas of the business. Health and safety at work legislation defines standards and procedures for the safe handling of foodstuffs or hazardous materials. Employment regulations cover many different issues from equal opportunities to working conditions. Environmental legislation defines proper procedures for the prevention of environmental damage. These are all compliance issues and non-compliance in any of them may carry high penalties - directors can be sent to jail, heavy fines may be imposed and business operations may be suspended while problems are corrected. But the real risk is the damage that can be done to the standing and reputation of the business in the market place. A serious incident in any of these areas could lead to a loss of reputation, driving customers to competitors and losing business. Good governance requires that these risks be recognised and evaluated.

Companies are only now coming to terms with the scope and implications of these compliance challenges. Clearly an holistic, rather than an ad hoc response is called for if only to ensure that compliance issues are prioritised. Yet many companies do not yet know how to manage the compliance issue - even in such simple terms as determining which director should be responsible. Candidates might include the CIO or the CFO - but maybe it needs a portfolio to itself - the CCO, or Chief Compliance Officer. Until the picture becomes clear, the potential for wasted sales effort is considerable.

Some IT vendors may be tempted to re-package some existing product or service to produce a "silver bullet" application. The point solutions that result may offer some value to customers but at the risk of missing the "big picture".

For IT vendors willing to engage in a serious debate with clients there is enormous long-term potential. The approach requires that vendors establish a dialogue with their customers to explore and evaluate the compliance challenges they face. The sales and marketing challenge is to use this dialogue to create sales opportunities that are often services led. The objective of engagement is to show that the supplier can be a trusted partner, with something to contribute. Vendors don't need to demonstrate that they know the answers - they need to demonstrate they can listen and debate a real business issue.

Then, when the prospect identifies a business initiative they want to run with, the IT supplier can put his hand up and say "we could help with that" and be believed!

Bob Brown

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Hot Topic: Differentiation 101

In recent discussions with a number of sales representatives, I've often been asked for the ever so elusive silver bullet questions. You know the ones: those that instantly turn the client from bystander to engaged participant, or vanquish all competition in one fell swoop.

This demonstrates that something at the point of sale is amiss. Maybe it's the sales person's confidence or understanding of his offering. More often than not, it's to do with positioning the solutions so the client can see how they provide extended value, over and above that offered by the competition.

This was not so much of a problem in the days when the client knew they wanted a TLA (Three Letter Acronym) software product and compared functionality tick lists. But such solutions for automating tasks have all been bought and now the sales person is asked to sell solutions that improve processes.

Many sales people find it difficult to map the value of their offerings to the needs of their prospect. In many cases this stems from a lack of understanding of their clients' business and needs. There is an ever present vendor-client language barrier obscuring clarity.

Many sales people have little or no hands-on experience in design and manufacturing. Faced with a torrent of mainly technical deliveries from their in-house trainers and marketing colleagues, the sales people take this collateral as gospel. Then they regurgitate it (with associated acronyms and jargon) to the client. They don't translate the collateral to their client's business processes, issues and priorities.

Many will find this criticism hard to bear. In some cases, such behaviour may be the exception and not the rule. Having talked to clients and sat through many vendor presentations over the past year or so, I'd argue that the message has yet to be assimilated by many of our teams. I see presentation after presentation about new features, interspersed with (possibly) obligatory vendor jargon.

Clients, on the other hand, are often challenged by the situation they face. Rarely, if ever, will they buy technology for technology's sake. They stand confused as to the difference between the vendors' solutions and, more importantly, how these solutions can really impact their business.

To a large degree, it is the sales person's ability to understand the client's business model and requirements which will give the opportunity to differentiate between offerings. He needs to use this knowledge to develop empathy with the client, creating a practical vision of the solution's value to the business.

In many organisations this requires a re-evaluation of the training and deliverables that we use to prepare and arm the sales teams. How many businesses encourage their sales people to develop business skills? How many provide them with intelligence about their clients' situation, language, competitors and markets? Are the collateral and product demonstrations focused on tangible benefits which relate to real business issues in the clients' specific industry - in 'client speak', not vendor jargon?

By engaging in more value focused discussions, sales people will find it easier to differentiate their solutions to their financial gain. Clients, at the same time, will find it easier to select vendors on attributes other than price.

Allan Behrens

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Book Review: "How come your marketing plans aren't working?" by Malcolm McDonald
Kogan Page 2005 : ISBN 0 7494 3726 X. UK £7.99

If you're involved with marketing planning and already know your Ansoff and Boston matrices, you probably won't learn much from this book. If on the other hand you don't know your four P's from your four Q's, and think that SWOT analysis is something to do with police raids, this book is an excellent place to start. Malcolm McDonald's introduction to the fundamentals of marketing provides you with a logical series of clearly explained processes and analytical tools that will help you write strategic marketing plans that represent "joined-up thinking".

The book is admirably concise and well structured, beginning with an explanation of the "marketing concept" and then following an orderly progression from corporate mission to marketing objectives and implementation plans. Consisting of 13 chapters of ten or so pages each, the book can easily be read from start to finish, or can be used as skim-first-and-dip-into-later reference material. Each chapter ends with a question-and-answer test; if you're of a competitive nature, these can be irritating if you haven't been given all the information or want to argue with the author's wording! If you can put that aspect aside, the tests work very well as a way of provoking deeper thought and expanding on the subject matter of the chapter.

The beauty of the subject matter is that like all the best theories, once it has been explained you feel you knew it all along. But if you start to feel too confident, try one of the self-assessment questionnaires in the book. You or your company may well be in for a rude shock.

Chris Russon

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Noticeboard

DAC:13-17th June 2005, Anaheim, USA. The Design Automation Conference.

DMS: 22-24th June, Tokyo, Japan.16th Design Engineering & Manufacturing Solutions Expo/Conference 2005.

SIGGRAPH: 31st July - 4th August, Los Angeles, USA. The 32nd International Conference on Computer Graphics and Interactive Techniques.

A full list of industry events can be found at IT industry events on the Cambashi website

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