Thursday, May 20, 2010

Do ROI / TCO business cases make sense for IT Executives? HP thinks so.

HP has developed an overview of its business case best practice for CIOs. The service is designed to help IT executives structure a diagnosis of opportunities, and drive cost savings / increased IT value.

The practice features Alinean ROI / TCO tools and methodologies to help HP engage with IT executives to quickly and proactively plan cost savings and improvement initiatives.

The white paper "Business case development best practices
for data center and IT projects - Speed-up your project approval and start with confidence" is designed to introduce and promote HP's ROI / TCO analysis and business case development services, and is available at:

http://viewer.media.bitpipe.com/1254163440_830/1254165060_778/Business-Case-Develpment-Best-Practices-for-Data-Center--IT-Projects.pdf

Wednesday, May 19, 2010

VDI can save you big! Don't count the savings just yet.

Many solution providers are pitching VDI as the next big cost savings initiative for frugal IT executives to implement. However, the savings may not be all they are promised to be.

In a research study Alinean participated in on the total lifecycle costs of VDI compared to traditional desktops, VDI has proven to be about 10% more expensive in certain mainstream scenarios - particularly for traditional Office Workers, in an environment that is already well managed.

The objectives in the study were to understand customer perceptions and expectations from VDI, gather real world data from deployed organizations, and
provide customers with TCO guidance from a collection of industry experts. Although the study was sponsored by Microsoft, I can tell you that having participated in the debates and research that the results are factual and balanced.

First, surveys of 105 organizations in Financial Servies, Government, Manufacturing and Retail,indicated that unanimous market perception / sentiment is that VDI has a lower TCO than the PC.

Deeper analysis of actual costs and savings indicate that VDI is indeed cheaper than the PC in certain use cases / business applications, for example delivering VDI to structured task workers. However, the results also clearly indicated that VDI can be more expensive for office / knowledge workers, particularly when the organization's PCs are already well managed. Because a well managed environment is often a prerequisite to implementing VDI, this represents an interesting value realization connundrum.

For the study Total Cost of Ownership (TCO) was used to compare the costs of VDI vs. traditional PCs, tallying not just the up front costs, but the total costs over the entire lifecycle from planning, through deployment, management, evolution and retirement. Created by my friend Bill Kirwin at Gartner in 1989, it has been used since to great effect to help buyers make economic decisions for key IT solutions.

The TCO model compared the Direct Costs of both solutions, including CAPEX – Hardware, Software, and OPEX – Administration, Operations, Fees. As well, the service levels and capabilities of the systems need to be considered in any good TCO model, tallying the Indirect Costs for End-User Operations. The indirect costs include service level issues such as downtime / accessibility / support wait times when issues occur, as well as additional time users spend solving their own issues, or futzing with systems to get them to do what they need it to do.

According to the research study, VDI does indeed provide benefits in many situations including:
> Centralized Management - manage physical and virtual clients from a single console, centralized desktop lifecycle management
> Enhanced Security and Compliance - data is always locked in the data center, improved compliance through centralization
> Anywhere Access for Connected Devices - access desktops from any connected device, enable rich desktop experiences on thin clients and older PCs
> Increased busienss continuity - datacenter grade business continuity and disaster recovery, quickler resolution to desktop failures.


However, the bottom-line was surprising to many who beleive that VDI always delivers a lower TCO than traditional desktops.

Comparing the costs for VDI vs. PCs in a well managed office worker environment:

1) VDI was 9% more expensive than Windows XP SP3 -> $908/client/year for VDI versus $836/PC/year for Windows XP.

2) VDI was 11% more expensive than Windows 7

Of course these figures depend on the particular application and organizations opportunities for improvement, but are eye opening all the same.

The study considered environments where VDI may not be a panacea of savings, in particular supporting office / knowledge workers, and in an already well managed environment (Rationalized according to Microsoft's IO maturity scale). Many are considering broad VDI deployments, with office / knowledge workers the majority of the population in most organizations, so this scenario is mainstream. In researching organizations that have implemented VDI for office workers, issues were prevelant with user experience, This loss of productivity added to the indirect costs for VDI vs. PCs. The study indicates that many office worker applications, like VoIP, might have degraded performance, and graphic intensive applications currently don't always perform well over WANs. Start-up delays, performance issues, availability issues and offline access problems add to the UX issues.


Also, because implementing VDI often requires a certain base capability in order to deal with the added data center complexity, organizations often need to advance management capability / maturity prior to implementing VDI. Because Rationalized environments are already efficiency and optimized, VDI often cannot drive enough additional labor savings to overcome the added capital for VDI datacenter hardware and rather expensive software licensing investment.

For environments that are unmanaged or not well managed, the savings from VDI for office workers turn positive, but in these environments the capability to effectively implement VDI and acheive the savings is diminished. For task worker environments, the savings for VDI deliver between 10-30% (source: IDC), but can these savings be realized and the solution effectively implemented? And when the UX issues are considered and indirect costs are compared, do the savings still remain?

Having participated as an industry expert to review and validate the results, the study is an important one to open perceptions towards VDI. VDI indeed does not offer guarenteed savings. Certain applications are perfect for VDI, such as virtual call centers and global sourcing, but other mainstream applications are not cost effective at this time. As costs drop and UX improves, this can change, but for now, mainstream VDI will not deliver cost savings for most organizations.

Therefore, for today, the application is the most important driver for VDI, not cost savings, and this study should maintain decision makers focus on that fact.

A summary white paper on this important research study can be found at: www.microsoft.com/vdi


To calculate your own unique potential for savings, use the following on-line tool (registration required):
https://roianalyst.alinean.com/microsoft/virtualization/

Microsoft blog on VDI TCO can be found at: http://windowsteamblog.com/blogs/business/archive/2010/05/10/simplifying-desktop-virtualization.aspx

Thursday, May 13, 2010

Engage early with Senior Execs, or Lose the Deal

In the article Selling Business Value to Senior Executives, Tony Hillyard proposes that the most effective way to sell to executives is to engage earlier in the sales process.

According to Mr. Hillyard, “Many salespeople wait until the organization has started to go to the market to find solutions for their problems.”, and according to our research are then less likely to win deals, and more likely to discount.

Certainly knowing that the customer has an identified need and has a solution set in mind and budget allocated, salesprofessionals can save time and effort in the sales process. However, although engaging later in the buying cycle is indeed a more efficient sales engagement technique, it is much less effective.

During the Discovery phase of the buying lifecycle, senior executives are involved in 80% of the decisions driving the diagnosis of issues to address, setting objectives and setting the overall strategy. During this phase, executives and stakeholders are seeking vendor partners who can help them diagnose and spotlight key opportunities, and build a strategic roadmap for success. Influence is highest at this early phase. “By failing to engage senior customer executives in a business based discussion early enough, salespeople get ‘locked out’ of the early, critical phases of business problem resolution when senior executives are most active”, states Mr. Hillyard.

During the Consideration phase, where solution options are explored, vendor selection criteria is established, and alternatives are explored, executive decision makers involvement drops in half.

Once a solution has been competitively selected, the Decision phase yields a reengagement of the executive to 60%, mostly for review of the selection, business case and economic approval.

Waiting until later stages of the buying lifecycle to engage, Mr. Hillyard contends that salespeople “have by then missed any opportunity to influence key executive thinking regarding potential options for the solution that could include key differentiators for their products or services. They have also lost the opportunity to establish themselves as a trusted advisor to those key executives.”

But how to make this a reality? Many salespeople are not armed today to adequately engage executives in the consultative strategy phase. That can be changed with Executive Assessment tools, providing a structured way to connect and engage with executives in this crucial early buying phase.

Executive Assessment tools enable sales people to query stakeholders on current capability, maturity and performance using a survey. With answers to the survey, the assessment tool calculates current performance, compares performance to peers, highlights opportunities and builds a roadmap. The salesperson is now armed with a consultative executive engagement proposal to discuss opportunities and strategies, and set the stage for the vendors solutions.
One example of an executive assessment is Microsoft’s infrastructure optimization program, an executive assessment methodology and toolset used by account managers and partners to assess current levels of core infrastructure and business productivity infrastructure, and provide advice on ways to drive optimal optimization – reducing costs and improving capabilities.

The program can be reviewed at http://www.microsoft.com/optimization.

The bottom line: Engaging earlier has been proven to increase win rates by 30% and reduce discounting by 20%.

The original Selling Business Value to Senior Executives article can be found at: http://businessblogs.co.nz/2010/02/22/selling-business-value-to-senior-executives/

Wednesday, May 12, 2010

Wanted: Innovation Gridlock Buster

IT "Keeping the Lights on" Spending creates Innovation Gridlock

Each year Alinean examines the delicate balance in IT budgets between on-going operations, migrations and upgrades, and innovative investments. From our research, in 2009 innovation and migrations / upgrades suffered as budgets fell victim to the changing economic climate:

IT Operations (keeping lights on) - 66%
Upgrades and Migrations - 23%
Innovative IT Projects - 11%

This reversed a promising trend throughout the past decade of increasing innovation spending and reduced on-going operational costs.

HP recently commissioned a great research study conducted in February and March 2010. The worldwide survey results were designed to analyze the challenges that organizations face with budget allocation, and a term they coined - innovation gridlock.

This term is defined as “a situation where the IT organization is blocked from driving new business innovation because the majority of funding is consumed in operating the current environment.”

The highlights from this study reinforce our own research, that most organizations struggle with innovation vs. operations, and would love to innovate more.
  • 1 out of every 2 business executives felt that their organizations suffered from innovation gridlock.
  • 40% of the budget is spent on mission critical systems, 30% on legacy systems, and 30% on new IT initiatives.
  • Of the regions in the survey, LATAM as a percentage basis is innovating the most, North America and Asia Pac are innovating the least.
  • In looking at the effect of innovation gridlock, almost 7 out of 10 business and IT executives indicated that this gridlock prevents them from investing in new technologies to meet the changing business needs. More than half of executives in both groups felt innovation gridlock also prevented their organizations from keeping up with the
    competition.
  • Furthermore, 73 percent of business executives indicated that it prevented them from
    generating real flexibility in their operations
  • When asked what was stopping them from investing more in IT innovation, 1 in 2 of
    respondents indicated that too much budget is spent on operations.

As an IT solution provider, these CIOs, IT and business executives are looking for strategies to solve innovation gridlock. This is a problem they feel deeply, but don't know how to solve. Reducing keeping the lights on operations can free more budget to innovations. Consolidation, virtualization, cloud, automation are all options. If you can tie proposals to quantified reductions in operating costs and reallocation of budget to reduce the innovation gridlock you can help solve this struggle and be a gridlock busting hero.

The full HP study can be viewed at: http://www.hp.com/hpinfo/newsroom/press_kits/2010/breakingthegridlock2010/BreaktheInnovationGridlock.pdf

IT recovery full speed ahead. IT vendors, are you ready?

SearchCIO's latest survey on IT budgets and spending priorities confirms reports from Forrester, Gartner and other analysts, that the IT spending recovery in 2010 is upon us.

For the majority of the 282 respondents to the survey, 55% indicated that the recovery has begun, with 52% indicating more spending in the next three months than in the last three months. This shows a strong recovery, especially comparing to the meager 35% of budget increases in the SearchCIO survey of last November.

This means that every month more and more budget will be available, and projects that were on hold, or weren't even being considered could be on the decision block. Budgets that were once considered locked down are opening dramatically. As a sales professional, are you proactively prioritizing your projects ahead of others with a solid ROI business cases? If not, you may be left out of this recovery cycle.

According to the survey, deferred upgrades are first in line for much of the spending increases.
In fact, of the shops spending more in the next three months, 72% are tackling projects that were put on hold because of budget constraints. The three highest priorities are storage, enterprise applications and servers, with enterprise apps clearly leading as most important (32% of respondents).

Search CIO indicates that "2010 and perhaps 2011 will be somewhat chaotic years for CIOs." Decisions will need to be made regarding where to put precious budget increases - to shore up aged infrastructure or migrate to cloud vs. business applications and innovation. During the recession, many concentrated on security and disaster recovery as their must-do projects, given the legal and business mandates to do so. In the coming months, many will be dealing with a pent-up demand for new desktops (and therefore Windows 7) and other infrastructure items, software upgrades delayed by budget cuts, and a host of other long-delayed infrastructure, and more importantly, business projects.

My advice: IT solution providers need to act immediately and proactively get in line for the increase in discretionary budget and allocation. How to assure you get fair share when there will not be enough to go around, and environment is chaotic - have a business case that proves the value of your solution.... how it will save more than other projects, deliver higher ROI, provide quicker payback and better value than competitive offerings. Quantification is king.

Tuesday, May 11, 2010

Social Media have an ROI? It needs to.

As the main social media proponent for our organization, I participate and monitor our avenues constantly. As well, as the CEO, the buck stops with me, and like many executives, I demand payback on our investments. A question I have been raising lately - is all this time we spend on social media worth it?

Seems like I am not alone. When it comes to ROI as a search term, about 80%+ of the tweets / posts are about the ROI of social media..... is there any? how can it be measured?

Seems as though we are all participating in Social Media, but at the same time, all looking for value proof points.

I can honestly not say for sure whether there is an ROI yet from our efforts, however I couldn't see not participating right now on fear of missing something. MarketingSherpa's recent social media budget survey seems to indicate that I am not alone.


Only 7% indicated a confidence rating that social media is producing measurable ROI and therefore should be funded liberally. This is low, but the initiatives, like ours, are early and need time to mature.

Another 1/2 of all organizations were not as enthusiastic, but still believe in social media value, indicating conservative budget increases - based on the promise that social media will eventually produce ROI. This is the most promising of figures, but shows that social media needs to mature, because these same organizations will not continue to invest if value is not proven.

Lagging, 17% of organizations who still believe social media marketing is basically free, and should stay that way, are destined to get what they pay for.

The full results of the survey can be found at: http://www.marketingsherpa.com/article.php?ident=31612# (limited time).

Thursday, May 06, 2010

Alinean Powers Eight More B2B Assessment, ROI and TCO Campaigns

Industry-standard Sales and Marketing Tool Platform Provider Announces Record Growth and Key New Hires in Q1 2010

Alinean, the leading creator of value-based interactive sales and marketing tools for B2B vendors, today announced the addition of eight new customers in the first quarter of 2010 to its marquee list of leading B2B vendors, as well as several key new hires to expand capabilities and keep pace with the increased demand for effective assessment, Return on Investment (ROI) and Total Cost of Ownership (TCO) tools.

New Customers in Q1 2010Alinean has been selected to develop and power value-based sales and marketing campaigns for Wipro, PGI, CSC, CiRBA, MokaFive, Shoretel, Informatica and OfficeMax.

“Today’s business buyers are more conservative than ever, demanding that any investment they make drive tangible savings and provide quantified business advantages – a fundamental change called Frugalnomics,“ says Tom Pisello, CEO and founder of Alinean. “Leading B2B solution providers recognize that old sales and marketing techniques must evolve to meet these new economic buyer demands, and as a result, they are recognizing the need to connect and sell to economic buyers with Alinean-developed assessment, ROI and TCO demand-generation and sales enablement tools.”

These new customer campaigns include tools to use early in the buying process – to help diagnose and assess customer issues, such as assessment tools for cloud computing, collaboration and virtualized desktops. Assessment tools enable vendors to engage with customers to realize and prioritize issues they may not even know they have, and provide intelligent product/solution roadmaps and recommendations. Several of these new Alinean-powered tools will also be used later in the sales cycle, once a customer has a specific solution in mind, in order to justify the solution to executives and assure value versus competitive offerings, positive ROI and quick payback. These tools quantify ROI and TCO savings analysis of procurement, virtualization management, unified communications, content management and Business Intelligence (BI).

These new customers add to Alinean’s ever-growing list of over 70 loyal accounts, and join other leading B2B solution providers such as: HP, IBM, Microsoft, EMC, Dell, NetApp, Intel, AT&T, Siemens, Unisys, Thomson Reuters, Juniper Networks, BlueCoat, Novell and more. Combined with being named as the standardization choice at several accounts, this performance widens Alinean’s lead and affirms its position as the industry-standard value-based sales and marketing tool platform provider.

Key New Hires Amid Unprecedented Growth

To support additional clients and growing demand for value-based sales & marketing tools, Alinean has expanded its team by 20%. These key new hires include:
  • Dan Sixsmith, VP, Interactive Marketing Channels – formerly with interactive marketing and communications agency iNDELIBLE Media, Dan is driving Alinean partnerships with interactive marketing firms and content development & syndication channels.
  • Carl Wilhelm, Director of Product and Client Experience - former software development director with FedEx, Carl is leading Alinean’s commitment to continuing to deliver valued platform capabilities, working with clients on new requirements, launching new solutions and assuring superior service-level delivery.

Wednesday, May 05, 2010

Overcoming the fear of Value

In this blog post by Thomas Sant, he discusses why many of us fear inclusion of value propositions in proposals, and moreover, quantifying value.

As more business leaders require business value quantification to consider your project a priority, and moreover, to gain approval, overcoming this fear is more important than ever:

http://messagesthatmatter.blogspot.com/2010/04/overcoming-fear-of-value.html

Where have all my customers gone?

Are you ready to market and sell to the CFO?

Evidence continues to mount that the balance of power is shifting fast in IT decision making, and with cloud computing in the mix, more and more decisions on IT will be made not by the CIO or IT manager, but by CFO and business units.

As an IT marketer, sales professional, or sales enablement driver, are you and your team prepared for this shift of power? How will the connections, dialogue and deliverables need to change to convince a CFO or business leader vs. technical?

This article by Don Tennant and IT BusinessEdge confirms a report by Gartner of a week ago, documenting the shifting decision making landscape:

http://www.itbusinessedge.com/cm/blogs/tennant/is-the-cio-being-sidelined-by-the-cfo/?cs=40863&utm_source=itbe&utm_medium=email&utm_campaign=ABG&nr=ABG

I summarized the Gartner report and its implications in a prior blog post here:
http://tompiselloroiguy.blogspot.com/2010/05/cfo-top-it-decision-maker-in-most.html

Monday, May 03, 2010

Forrester - start of 4th wave of innovation - let the good times roll?

In Forresters latest earnings call CEO George Colony summarized the latest IT spending trends and projections. Mr. Colony discussed the positive IT spending growth of 2010, and more importantly, that we are at the start of a 4th innovation wave- a potential 7 to 10 year cycle of technology innovation. Is it time to let the good times roll?

With regard to IT spending growth for 2010, Forrester has been the most aggressive in their projections, with a view that IT spend would grow 8.4% in US, and 7.7% worldwide. While much higher growth projections than more conservative estimates from Gartner and IDC, we believe that these projections are spot on, as organizations realize growth opportunities and quickly allocate discretionary budgets to key IT projects in the second half of 2010.

Impact of this growth for IT sales enablement and demand-gen professionals? Because of the discretionary nature of the allocations, sales and marketing needs to be ahead of the decision making curve:
  1. As customer stakeholders research where to place precious budget dollars on-line and through other sources, marketing execs need to prove the value of their solutions (business benefits, savings and competitive advantage) to cost-conscience economic buyers.
  2. Even though current budgets and priorities may already be set, savvy sales professionals need to have assessments and business case proposals in place proactively in order that their projects get prioritized.
Decision makers will be looking for partners to help them discover opportunities and provide quantifiable proof that the proposed solutions will drive bottom-line impact and competitive cost advantages.

And what about the technology innovation wave? Is it time for all tech vendors to party like its 1999 again? Even though this new wave of 7 to 10 years of higher spending will be extremely positive for technology solution providers, Frugalnomics reigns with customers.

Providers will need to connect their solutions to quantifiable strategic benefits, tactical cost savings and superior value vs. competitive solutions. As opposed to some prior innovation waves, the singularity of the technology bubble burst has fundamentally changed IT spending decision making. Innovation of the 4th wave will not mean wild abandonment of information economics. Alignment, ROI and TCO will be as important as innovation in this 4th new wave.


The earnings call can be heard at: http://biz.yahoo.com/cc/2/112962.html

CFO is Now Top IT Decision Maker, making Value Sales / Marketing More Important Than Ever

According to a new Gartner and Financial Executives Research Foundation research survey, the CFO is becoming the top IT decision maker in many organizations, with:

  • over 75 percent indicating significant decision making involvement,
  • and 41 percent indicate being the main decision maker for IT investments.

The 2010 Gartner/FERF technology study received 482 responses to approximately 50 questions that covered senior finance managers' views of technology. The survey was conducted from late October 2009 through January 2010. More than 74 percent of the respondents were senior financial executives, including CFOs and controllers.

What does this growing CFO control mean to solution providers? Already a growing trend since the bursting of the tech bubble in 2001, more senior financial IT decision making means that proving the value of proposed projects, and quantifying bottom line impact is more important than ever. This trend we term "Frugalnomics".

For the CFO, most we talk to indicate that:
1) Proposals won't be considered a priority without a business case.
2) Won't be approved unless they show strategic alignment, tactical and quantified savings / benefits, and low risks
3) Won't be approved unless they prove less expensive in total costs / better value than competitive offerings.

Moreover, CFOs will be looking for proactive help and earlier involvement from solution providers, helping them to solidify strategies and identify opportunities for improvement, and not waiting for RFPs. A true value partner.

As CFOs become the major IT decision makers, the migration to more CFO control accelerates the need for value selling / marketing. As a solution provider, are you ready for this accelerating shift to value consulting and quantified proof points?

An overview of this research can be viewed at: http://www.cioinsight.com/c/a/Careers/The-CFO-Runs-IT-307705/?kc=CIOMINEPNL05172010