Wednesday, August 26, 2015

TCO is So 1990: Why TCS is the new TCO!

Think back to the 90's: Bill Clinton and the Bull market, Flip phones and the Internet, Forrest Gump and Pulp Fiction, Boy Bands and Nirvana, Friends and Seinfeld... and if you were in IT, the rage was TCO – Total Cost of Ownership.

TCO was first developed in 1987, to help compare the costs of different compute infrastructure. At the time, it was a battle between big iron vs. PCs and networked computing. TCO was vital in helping CIOs understand the true costs of not just buying the infrastructure, but owning and managing the systems over their useful lifecycle. The on going costs of administration, support were 3 to 5x more expensive than the original purchase price –– a real eye opener for many.

TCO was valuable as a financial model, to analyze the true and complete cost of IT across the enterprise and over time. The model was asset based, CAPEX focused and for the most part, isolated to the datacenter, network and desktop. At the time, the activities and costs associated with 90s IT were relatively easy to codify – a chart of accounts with a handful of easily defined capital and operating expense categories.  You could examine internal spending and tally a handful of consultants and services providers to understand your true cost of computing or compare different solutions using the TCO model.

Today, enterprise IT is all about the Cloud, Big Data, Internet of Things, Mobility and BYOD. The business spends more on technology than central IT, compute services are sourced by business groups and users as a service, and new levels of technical and financial abstraction have emerged.  
To go along with the benefits of flexibility, scalability and agility with this new model, IT struggles with a loss of central control, compliance and security, way more configuration and services options, and more hidden costs and risks.

In a more complex and vital environment, the need for technology financial analysis is more important now than in the 90s. Public, Private and hybrid decisions abound, and having a financial model that can help organizations make the right choices is key. However good it was in the past, the old asset-centric TCO approach is difficult if not impossible to apply to the 2015 IT world.  

At the IT Financial Management conference in April, Bill Kirwin, well known as the “Father” of the original TCO models at Gartner, discussed the idea of Total Cost of Services (TCS), an evolved approach to determine the true costs of these new compute options and services.
Just like in the original TCO model, research shows us that it’s not just the initial Cloud service fees that have a cost, and that BYOD may not be the free lunch IT expected. There is a complex web of additional expenses, both internal and external to not just procure but manage, support and secure the business compute services.

Kirwin defines TCS as “the full life-cycle cost of the entirety of activities – driven by market forces and directed by policies organized with supporting processes and procedures - that are performed by an organization or part of an organization to source, plan, provision, operate, control and refresh IT services offered to consumers of those services.”

Here’s a quick comparison of how the TCS model can evolve the concepts of TCO and help create a better view of IT decisions and finance:

Asset based
Business Service Demands
Resource based
Consumption based
Cap-Ex focused with defined refresh cycles
Op-Ex centric and continuous
Management and support
Centralized IT+ a few outsourced services
External services + Internal IT + Business + End users
Labor Drivers
Keeping the Lights-On vs. Innovation
Security and Compliance
End User Operations
Futz-factor and Peer support
BYOD and Shadow services
Indirect costs
SLAs, Velocity, Flexibility, Scalability, Elasticity, Agility and Risk

Technology needs a common costing model that will enable IT to compare different options and measure the true cost of these new service models.

For 30 years, TCO has been a useful metric to understand the cost of the old IT world.  But times have changed, and with it, the entire delivery model for IT services. As a result, we need a better financial model to help optimize service decision-making, and illuminate hidden costs and risks. TCS could be that new model.

When the “Father of TCO” says it’s time for TCO to grow up, perhaps it’s time to listen? 
TCS is the new TCO.

Bill Kirwin , CEO and Founder of IIIE, will be one of our featured presenters at the Value Selling and Realization Conference in Dallas TX on Feb 29/March 1 2016, discussing TCO and presenting the TCS model and it’s potential impact on technology decision making and optimization. Mark your calendars and stay tuned for this inaugural event.

Comparing and Selecting Solutions Using TCO -

The Frugalnomics Survival Guide - How to Use Your Unique Value to Market Better, Stand Out and Sell More -

Wednesday, August 12, 2015

End Death by PowerPoint and 1,000 White Paper Cuts

Most organizations spend a significant portion of their marketing budget on creating content to fuel demand generation programs, and to arm sales reps to have better conversations and engagements. 

Unfortunately, the majority of this content spend is currently wasted.

SiriusDecisions reports that 55% of current content spending is squandered.  This means that a typical company is wasting $1 out of every $7 spent on total marketing each year.*

From these findings, ½ of the waste is because sales reps can’t find the content they need for particular selling situations. This has fueled many recent sales enablement investments in content portals and sales playbooks, and for good cause.

But this is only addressing ½ of the waste. The other half of the wasted spending is because the content that sales reps do find and use is not perceived as adding value.

A recent survey revealed that 78% of sales execs say that even though content is an important element for effective selling, only 40% believed their current content is actually helping make a difference in engagements. (Qvidian)

And buyers feel the same way, with 71% reporting that they were recently turned off by vendor content, and a perception that only 7% of vendor content is focused on what they care about, Value, versus a typical “Product Pitch. (The Economist)

It’s time to end “Death by Powerpoint and a 1,000 White Paper Cuts”. Your content needs to stand apart from the crowd and be better.
So what can you do to make your content more valuable and effective? The research points out three of the most effective ways:

1)  Make it Interactive – It’s “short attention span theater” out there, and buyers have less time than ever to research and investigate new solutions. It’s no wonder that 91% of buyers prefer content that is visual and interactive, this according to Demand Gen Report’s 2015 Content Preferences survey. This means producing compelling content that can personalize itself based on discovery, improving relevance and communicating unique insights. 
This is why more than 30% like interactive storytelling and 20% leverage diagnostic assessments and ROI calculators to help research and drive B2B purchase decisions, and these numbers are increasing every year. (Demand Gen Report)
2)  Leverage the NeuroScience of Decision Making– there are three buy buttons in the brain, and your content has to stimulate each in order to gain interest and drive positive outcomes:

1.   The “New Brain” and Logic - The neocortex is the part of the brain responsible for rational thought. To appeal to this part of the brain, your content needs to provide provocative insights, quantify “do nothing” costs and provide financial justification.

2.   The Reptilian Brain and Emotion - the cerebellum is responsible for fight-or-flight and basic survival. To stimulate this part of the brain, your content needs storytelling and using simple visuals, show clear contrast between how the status quo is risky / costly, and how your proposed solution can “save the day”.

3.   The Middle Brain and Trust - the "limbic brain is responsible for measuring credibility and gauging trust. To connect with this part of the brain, you r content needs success stories, customer quotes and videos so the buyer can relate to other’s successes and ultimately “see themselves” in the results.

3)  Focus on Value – You are proud of your solutions, but as a result, buyer’s think too much of your content is focused on you, your company and your products / services, versus what buyer’s care about, their challenges and the value they can achieve in you helping them solve these issues. 

Buyer’s almost unanimously wanted content to Focus less on product specifics and more on value, Use more benchmarking data and research to support content, and to Provide more insight from industry thought leaders/analysts. (Demand Gen Report)

The Bottom-Line

It’s not enough to just work on making content easier to find, you have to make the content itself better as well. The three keys include leveraging more interactive content, triggering the 3 buy buttons in the brain, with a focus not on product, but on value.  

With these improvements in your content, you’ll be fueling better sales conversations, making your prospect engagements more effective, and substantially reducing ½ of current wasted spend.

More tips about how to address wasted content spend and develop more effective demand-gen and sales content can be found in the book: The Frugalnomics Survival Guide – How to Use Your Unique Value to Market Better, Stand Out and Sell More

The Economist Global Content Survey -

* Content marketing typically represents between 25-30% of total marketing spend (CMI).

Thursday, August 06, 2015

Going to DreamForce? Get your VIP Tickets for the Smart Selling Tools Lounge

Join popular blogger / speaker Dan Sixsmith (@DigitalAdvantg) from the Alinean team, and other luminaries like Joe Galvin and Jill Konrath, for a much needed break and exclusive events / interviews at the Smart Selling Tools Lounge.

Get a free signed copy of the  latest book from Alinean CEO Tom Pisello - The Frugalnomics Survival Guide - How to Use Your Unique Value to Market Better, Stand Out and Sell More.

Grab some time with the Alinean team, other sponsors like Qstream and SAVO Group, and Smart Selling analysts like Nancy Nardin, to recharge, grab a coffee, beverage or snack, all while comfortably watching the keynotes on wide-screen TVs.

Learn more about the event and speakers schedule:

Register with us ahead of the event for your exclusive VIP pass.