Wednesday, January 13, 2010

Financial business case justification remains a requirement for IT vendors

In Gartner's 2010 trends report, Daryl Plummer, managing vice president and chief Gartner fellow indicates that "For many organizations, the economic and budgetary challenges of 2009 drove important changes in the general governance of IT investment decisions, accelerating the trend toward greater accountability and transparency. According to Daryl "With a strong emphasis on business-case justifications, chief financial officers (CFOs) assumed a more active role. Although most organizations enter 2010 preparing for a return to growth, this financial oversight is unlikely to be lifted anytime soon. For IT leaders, greater fluency in the language of business has become a requirement." (Ref: http://www.gartner.com/it/page.jsp?id=1278413)


As the economy recovers, it is clear that IT spending will increase in 2010, but buyers will remain frugal well into this recovery. Brian Gammage, vice president and research fellow for Gartner indicates that this conservatism will be widerspread in their 2010 important trends report, "With greater financial and regulatory oversight for all IT investment decisions, few organizations will be unaffected."

Alinean has coined this trend Frugalnomics - the permanent shift towards economic scrutiny and business case requirements for almost all B2B investments.

What does this mean for IT solution providers? Frugal buyers will continue to reign, and connecting with them means helping them illuminate potential areas of savings and recommending solutions that have quantified value.

Solution providers need to connect early with buyers on how they will save money or generate business advantages, in a quantified and credible fashion. Interactive on-line demand-gen tools that help assess opportunities and point to savings, or demonstrate the quantified value of solutions is required.

Into the sales process, sales teams need to evolve quickly from selling with antiquated feature/function/price presentations and proposals to customer focused value engagements - automating opportunity discovery, goal / solution alignment and return on investment (ROI) quantification.

Gartner confirms that Frugalnomics is here to stay, and the solution providers that evolve their sales / marketing arsenal to meet this need will be the clear winners.

Gartner: Quantify carbon remediation / Green IT value or prepare to lose market share

Gartner just released their list of 2010 trends, and one of the top 9, the importance of providing carbon remediation / Green IT business case, has a significant impact on IT solution provider marketing / sales strategies for the coming year. (Ref: http://www.gartner.com/it/page.jsp?id=1278413)

According to Gartner research, one of the most important trends is that by 2014, “most IT business cases will include carbon remediation costs. Economic and political pressure to demonstrate responsibility for carbon dioxide emissions will force more businesses to quantify carbon costs in business cases.“
As a result, Gartner indicates that “Vendors will have to provide carbon life cycle statistics for their products or face market share erosion.”

Those that step up to include carbon costs in business cases will realize this market share improvement because customers will be forced to do business with those organizations that demonstrate and quantify environmental sustainability. And although the carbon case will not be the reason for business case approval, it can be the cause of dismissal.

As frugal buyers look to make the best economical and social decisions on each purchase decision:
• savvy IT marketing teams need to help prospects quantify the carbon value for proposed solutions using on-line interactive value assessment tools
• Sales enablement teams will be sure to include quantified carbon savings highlighted in each business case ROI / TCO sales tool (where such value is credible)

For some good examples of carbon emission demand-gen tools:

• AT&T Launches the AT&T Connect ROI Calculator to help prospects quantify reduction in carbon emissions with on-line conferencing
http://uc.att.com/regain_momentum/download.html

• Microsoft launches GreenIT initiative with Alinean research and tools:
Desktop Energy Savings
https://roianalyst.alinean.com/msft/AutoLogin.do?d=974615308025157268

Server Energy Savings Calculators
https://roianalyst.alinean.com/msft/AutoLogin.do?d=385362107470671949

Discretionary Spending Increase in 2010 - Drives Value Based Sales / Marketing Tool Needs

All major analyst firms are predicting better times ahead for technology vendors in 2010, with many estimating a modest 3% growth. Forrester however thinks these estimates are low and is indicating that 6.6% growth for US tech market, and 8.2% growth for global tech market should be expected. Although not a return to a double-digit bonanza, good times appear to be upon us.

In sentiment, Forrester indicates that formal IT budgets do not point the way to the upward revision in growth estimates. The spending should come instead as organizations realize they need to invest quicker than planned to meet underestimated growth demands and to drive technology enabled business processes improvements or products. And as well, underspending on infrastructure over the past 2 years means that any incremental business investments will likely drive some bolstering of the IT foundation. For example, an acceleration of datacenter and PC virtualization to meet growing application computing and management maturity demands.

Of great importance to IT solution providers, because formal budgets will not contain the growth, if solution providers want their fair share of the growth, they need to be sure that they are helping customers allocate and drive discretionary spending. This means proactively:
  • engaging customers on strategic planning - assessing the environment to determine needs, because most customers need help determining what issues they have and what options are available - strategy vs. product focus

  • helping customers generate ROI business cases to make sure that proposed incremental projects are prioritized above other options as competition for these discretionary spending will be fierce - business value vs. feature/function/price

  • helping customers quantify how proposed solutions are less expensive than competitive alternatives, because when all is said and done with potential budget increases, Frugalnomics reigns - TCO advantages vs. shootout / discounting
What can be done now to best capture a disporportionate positive share of this potential growth in discretionary spending:
  • Demand-Gen Tools: Marketing needs to be able to deliver tools to to help prospects /customers assess opportunities and quantify the value of proposed solutions. In these frugal times, such value-based interactive demand-gen tools we have developed for our IT solution provider clients have been proven to entice 50% more leads compared to other initiatives, achieve 240% superior conversion rates, and increase on-line loyalty with 44% increases in repeat visitors and 65% increases in time per visit.

  • Sales Tools: Used to evolve direct and channel sales professionals from antiquated features/function/price selling to modern selling with ROI and business value, sales enablement teams using interactive value-based sales tools have been proven to reduce the time it takes to develop credible assessments and business cases from days to an hour or less, reduce discounting and increase deal size by 20%, reduce sales cycles by 30-40%, drive channel partner loyalty, and increase the competitive success rate of proposals by over 60%.


More information on the predictions can be found at:

http://blogs.forrester.com/vendor_strategy/2010/01/global-tech-recovery-will-drive-us-it-market-growth-of-66-and-82-globally-in-dollars-in-2010.html