by Rolf Jester | May 15, 2013 | Submit a Comment
On May 14th the Australian Commonwealth government brought down its national budget for the year ending June 2014. So the IT pundits in Australia are busy pontificating about the impact of the national budget on the IT industry. Fair enough. That’s their job. It happens in all countries, states and provinces.
But as we listen to the pundits’ comments, and those of the IT industry groups and lobbyists, let’s bear in mind a few facts that are applicable worldwide. (My turn to pontificate!)
- The IT industry is not special. It’s an important industry, but no more so than any other. It employs a good number of people, as do other industries. It adds value, as do all viable industries. When well deployed and used, its products and services can help make its users more productive and effective; so can good HR consultants, well targeted financial services, the right plant & equipment, cost-effective transportation, the education sector and good public policy makers … and one could go on and on.
- Any special treatment for the IT industry, tax concessions or handouts, are going to be paid for by other taxpayers in the end, and many of those are themselves in the IT industry, or would spend money on IT.
- Seeking government “incentives” for investing in IT or in IT companies should be unnecessary if it’s such a great industry. (And if it’s not, why invest?)
- If an industry needs to be “promoted”, something must be wrong. Why can’t its sales and marketing people do that?
- In those countries where the government funds much of the education, a focus on specific IT vocational or technical skills is short-sighted. Those are already out of date by the end of the course. IT providers, like all business people, should be looking for the economy in which they operate to be providing a pool of educated people. Those are people with an education that prepares them for the rapidly changing and challenging business environment, people who can think and learn, and continue to do so when the world changes, as it will.
- It isn’t just specific IT spending initiatives in the budget that we should look for to see what the government itself will spend on IT. Every government activity, every existing and new program requires IT to make it work. Nothing much happens without IT. Therefore, commenting on the supposedly good news or disappointing news about IT initiatives misses the point.
These blog posts will continue to discuss the business of IT Services.
Category: Uncategorized Tags: IT Industry, National Budget
by Rolf Jester | May 1, 2013 | Submit a Comment
A fictional tale. The year is 2023.
Celia Young is COO of Tranzco, a midsized distribution company. She’s also, like all of us, a consumer, has a family, a personal life. At work she’s responsible for operations, the critical processes that enable sales, supply, delivery and the backoffice functions that support the business.
In this world of 2023, she’s an ordinary middle-of-the road user of the Information Services that pervade life in most of the world. Her uncle sometimes still reminisces about a time when people talked of “tech-savvy” people, about “digital natives” versus “digital immigrants”. None of that matters anymore in Celia’s world. Information Services are ubiquitous and taken for granted. No special skills are needed to use them. Young and old have taken to them naturally and intuitively. It just seemed to happen unobtrusively over the past decade. The consumer appliances and the services they provide access to just kept getting better, easier for real people to get value or fun out of.
There are still, of course, people who love the details of technology – designers, useability engineers, even people who build the actual devices, infrastructure and services. It’s still an important industry. But using these tools for everyday life or business is more important for most people.
Celia, like all her family and friends, effortlessly uses all the information and service resources around her, at home, on the road, on public transport, while shopping, out and about, and at work. The information she needs in her private and work life is simply “out there” and the devices to access it are everywhere. The tools (once called “apps”) she needs are either in those devices or accessed through those, she doesn’t really know or need to know. She invokes the services and functions she needs: the rest just happens. Information, applications, tools, communication services – they are all “just there” at her fingertips or by a gesture and word to a device that recognizes her face and voice. This is what she, and her family takes for granted.
It’s no different at work. For her personal tasks at work, she uses much the same sort of tools, devices and means as at home. Many of them are exactly the same. They’re in every room of the office building, at every workplace, office, meeting-room. Of course this was already beginning to happen in the previous decade, but it’s ubiquitous now, pervasive, taken for granted, an unobtrusive part of the fabric of everyday life.
Today, in Celia’s world in 2023, the business services behind the scenes are also like the ones she uses as a consumer. She has an info-com provider, her simple gateway to all the communications links, information tools, resources and capabilities she needs. In the old days these were called telephone service providers and “IT providers”.
Some of those same info-coms, and others, provide the services that Celia’s company needs. Like every business, Tranzco uses information and process services at various levels. To support the staff in their daily work, it uses communications and collaboration services from its main info-com provider. So all the video, voice and text communications and collaborations are served by that provider. The workers access those services from desks, other locations around the office, while on the move, wherever they are. So do customers and partners. The office facilities company that manages the building provides the in-house infrastructure, cabling, servers, wireless servers and infrastructure software, – the plant and equipment – to make this communication possible. They, like all companies in the property and facilities business undoubtedly use an information services subcontractor for that. That’s a normal part of office infrastructure.
Other providers take care of the essential backoffice functions that every business needs. An example is the HR function provided by an HR specialist firm, delivering access to the online information and services needed by Tranzco executives, HR specialists, line managers and staff. The HR firm delivers against stringent service levels, security and privacy rules, and it sources its infrastructure services behind the scenes to achieve that.
These are actually all functions for which Celia Young, as COO, is responsible. She has a small but capable sourcing team who manage the whole sourcing strategy and lifecycle as well as relations with the providers.
But some business functions are central to Tranzco’s competitive positioning. Its chosen strategy is to compete on the operational excellence of its global distribution network. Its competitors have different strategies – some compete on deep understanding of their customers’ industries and specific needs, some on price. But as a result of Tranzco’s strategic choices, COO Celia has the responsibility for ensuring that the company is always at the leading edge of distribution best practice. That means that those processes have to be sourced internally, maybe with occasional external specialist help. It means constant development and refinement of the business processes that are central to that operation, including of course the information and information services (“applications”) that are the embodiment of those processes. Thus a key part of Celia’s operation is a pro-active team of information and business-process specialists who work with all parts of the company and constantly seek to gain competitive advantage for Tranzco through the excellence of its operation. But they do this only for the key competitive processes. The rest are provided by best-in-class external providers.
For the central processes that are controlled in-house, Tranzco needs information infrastructure – secure communications and reliable, secure processing services. Based on its sourcing strategy, it has chosen to use another info-com provider for this, so as to maintain some competitive tension, and because this provider could demonstrably offer the very high levels of availability and security that Tranzco needs. Celia and her team of information specialists are convinced that the security delivered by a provider who is specialized in that is always going to be far greater than she could conceivably achieve by trying to hire her own security team. Her information services manager could never afford to maintain a sufficient team of constantly up-to-date experts with enough capacity to cover absences, allow for staff turnover, peaks of demand and security crises. She figures that a specialist provider can always do a better job as long as you demand it of them, pay them appropriately and manage the service level outcomes. That’s her decision, though some of her competitors may have made a different set of sourcing choices.
The info-com providers and the business services providers deliver access to resources that are “out there” in the same way as the personal resources that Celia and others use. Her uncle said that a decade ago people talked about these functions as being “in the cloud” but that term became passé quite quickly. In fact Tranzco , Celia and her staff know exactly “where” those services are: they aren’t in some vague nebulous nowhere, but managed by well-known and trustworthy providers with whom Tranzco has a solid relationship. These are providers who provide those services for a living, for thousands of customers. They can afford not just the best infrastructure and facilities, but the best processes and above all, the best people to manage them, and enough to cover all eventualities. (Of course in 2023 almost no-one cares anymore where the bits are physically recorded.)
There was a time, Celia knows from her uncle, when all of this applied only to telephone services. But although that might have been only a bit over a decade ago in calendar years, when she talks to her older relative it seems like another era.
Category: Uncategorized Tags: Future, IT Services, Outsourcing
by Rolf Jester | April 23, 2013 | 1 Comment
In too many IT provider companies, especially smaller and emerging providers, the marketing professionals are relegated to marketing communications, possibly demand generation programs and some aspects of branding. That’s what becomes clear from Gartner’s interactions with them. It also emerged from research we did some years ago into marketing roles within IT providers. CEOs indicated that they wanted marketing to be tactical and centered on demand generation. Their views differed significantly from the marketers we interviewed in the same survey.
But, as Gartner Fellow Jennifer Beck has said, “if you’re not marketing-led, you’re dead.”
Positioning yourself and the marketing function effectively in your company is clearly not a one-step process. But one thing that will help is to demonstrate your relevance and the relevance of the marketing function by taking the lead on a strategic marketing plan.
We’ve found that no matter how small your IT company is, or how new, there are some irreducible marketing elements for which you must plan.
A written marketing plan is a cornerstone of any effective marketing function. For marketing practitioners in IT providers, it can be instrumental in:
- Articulating a vision and a practical plan that exhibits leadership to the whole organization. It gets you engaged in the strategy process.
- Communicating the organization’s marketing direction to all who will have a role in executing it — which is the whole organization.
- Setting and communicating priorities, especially when the marketing budget is small.
- Providing the basis for the development of other plans, such as a sales plan, marketing communications plan, or channels plan.
- Gaining agreement from the board and senior executives on how to focus resources toward opportunities.
- Demonstrating that you have performed planning work thoroughly to avoid risk and misuse of resources — that is, keeping the vital marketing budget intact!
Many clients who are IT providers have asked me for guidance and an outline for a marketing plan that recognizes the realities of the IT market. So I provided a template for that plan, and recently revised it: Marketing Essentials: Marketing Plan Template for IT Services Providers.
It has proved itself over many years especially for emerging IT providers and smaller firms, and those in emerging markets.
The key, however, is that the plan you create must not just be a document, but a day-to-day guide to action, discussion, argument even. If people in your company are pulling out the marketing plan and arguing about it, then it’s serving its purpose. If you create it in the format of detailed slides, then you can carry it around on your tablet and use it to support your discussions with senior executives, colleagues, staff and others.
Sell It As You Develop It
As with any corporate initiative, the market plan should ideally record decisions that have already been discussed reasonably widely. It should have had both input and buy-in from stakeholders of all kinds — decision makers, people whose cooperation you’ll need and people who will need to execute the plan. In this sense, it is just like a sales proposal to a customer: proposals that come as a surprise have little chance of being accepted, or need a lot of uphill effort to sell them.
One telecoms marketer I know carries the key slides of his current plan with him on his tablet and will use them constantly to support his discussions with senior executives, colleagues, staff, analysts and even customers.
If you have sold the plan as you go, when you finally present it formally, the stakeholders will already be your contributors and collaborators. They will see their contributions in the plan. Heads will be nodding in agreement, not nodding off to sleep. The presentation will become a formal sealing of the agreement to proceed.
Bottom line: an effective marketing plan can be one of the tools that helps get you a seat at the strategy planning table.
Especially if you are an emerging IT provider, or one with limited experienced marketing staff, I’d appreciate feedback.
These blog posts will continue to discuss the business of IT Services.
Category: Uncategorized Tags: IT Services, marketing
by Rolf Jester | April 10, 2013 | 2 Comments
An interesting article by Charles Fishman in the Atlantic magazine, in December discussed what it called The Insourcing Boom, an apparent return in the US to on-shore manufacturing. The article is about manufacturing, not services, let alone IT services. But if the trend that Fishman discusses is real, could it be that there’s a shift in attitudes about offshoring generally? He points out, probably rightly, that there’s an element of fashion in business practices. Will this affect IT Services too?
I’ll leave that question for now, and see what actual future research shows. But if there is a change in attitudes, then that should affect how IT service providers sell their offerings.
Fishman’s article highlights a number of negatives associated with offshore outsourcing, and although he is discussing manufacturing, some of those same issues have long been pointed out by my colleagues with respect to using offshore IT services. They include hidden costs, loss of intellectual property, loss of agility, slowness to market, and loss of feedback from the offshored production process to the designers back home. It seems that some companies have even eliminated the cost advantage from offshore labor arbitrage, and are producing some items more cheaply in the US than in China.
Offshore services are now more usefully called global delivery because they have become part of a sophisticated mechanism for delivering services from multiple locations. But providers of services that include elements of that approach should start to think about how they would deal with any change in business buying behaviour, if that were to happen.
Broadly, the changes needed would fall into two categories. Firstly, the labor arbitrage advantage should cease to be the benefit that is primarily stressed. Secondly, and more positively, service providers have to look more closely at the real and lasting business needs of clients, well beyond the immediate project and its costs. The business values pointed out in the Atlantic article — agility, speed to market, IP retention and feedback from production to analysis and design — are potentially real requirements. They may get overlooked in the highly formalized procurement processes that treat services as a commodity. Smart services sellers will be using their deeper relationships with clients to understand the underlying needs, and proposing solutions that meet those, which may mean a greater element of on-shore and on-site service delivery. My observation is that the smarter of the India-based providers, for example, are doing that already.
But staying in touch with the changing perceptions and buying behaviours of clients is the key. I’m sure that my colleagues and I will be researching this.
These blog posts will continue to look at the business of IT Services.
Category: Uncategorized Tags: IT Services, Offshore, Outsourcing
by Rolf Jester | March 27, 2013 | 7 Comments
#1 of many …
Over the years as an analyst and marketer I have seen too many bad sales pitches from IT vendors. I’ve found a number of common slide types that appear again and again. They actually serve no useful purpose. If you’ve read my research and the recent blog posts you’ll have seen that I aim to help IT marketers and sales people; so, I’m in favour of good sales pitches. But I hate waste of time and effort; bad selling makes me wince.
Mea culpa: I talk from experience, having also committed many of the “sins” of sales presentations.
The most outstanding useless slide is the one I call the “common differentiators”. (Thanks to my colleague Jacqueline Heng for that name.) They are commonly used by numerous vendors, do not create differentiation, are vague and often not particularly relevant to the buyers. Here are the most common ones.
- Global presence
- End-to-end offering
- Solution provider
- Focused on business value-add
- Trusted partner for our clients
… and … most importantly, of course …
We could analyse each point at length, but it’s not really worthwhile. They are typically mostly meaningless and irrelevant. They are so common to all sales pitches that they have become white noise washing over the audience. Not only do people ignore them, they actually switch off and miss the unique gems of business value you are undoubtedly about to share with them.
These non-differentiators are rarely substantiated with credible evidence. An attempt to do so would likely just show up their emptiness anyway. Even more rarely are they related to the client’s actual need. They do not help your sales efforts. Yet I see them still, time and again.
There’s a lot of good material out there on sales presentations. For the IT industry, I published Marketing Essentials: Creating Effective IT Sales Presentations a few years ago.
I propose to highlight more useless sales pitch slides I’ve come across in future posts as I continue to research good selling of IT.
Category: Uncategorized Tags: sales pitch, Selling IT Services
by Rolf Jester | March 21, 2013 | 1 Comment
In marketing and selling of IT services, showing is better than telling.
If you’re selling IT services or software solutions to senior executives, then Thought Leadership Marketing (TLM) could be important in your marketing mix. It’s about showing what you can do for the client, rather than just telling.
For example, I talked recently to a Testing services company that claims a differentiated approach to software testing. For that company, TLM would be a way of providing its target buyers with valuable guidance and advice free of charge, while building awareness of its brand.
I’ve been researching the practice of Thought Leadership Marketing in the IT industry, and just published a revised version of the guide to how IT services and software providers can use it: Marketing Essentials: Targeting Senior IT Buyers With Thought Leadership Marketing
TLM is a marketing tool that IT professional service firms tend to use almost instinctively, but it can work for many other kinds of IT providers, especially services and software companies. It is the practice of giving some useful information or advice so as to create awareness of the value that you can deliver. It can favourably position you in the perception of senior executives, create differentiation and stimulate demand for your products or services. It has started to become an established marketing discipline.
Emerging IT providers – that’s the smaller ones who will one day be bigger – have asked for a cut-back version of my rather comprehensive guide. Here it is: Getting started with Thought Leadership Marketing.
- Know your positioning, audience and purpose. This is essential: don’t do anything before you have this clear.
- Decide whether TLM can reinforce that positioning and create awareness. The answer is likely to be positive if you are targeting CEOs or senior executives; if your value proposition is aimed at specific narrow vertical markets; if the value you deliver, and the way you communicate it are dependent on your deep knowledge of your client’s business; if you have genuine expertise to offer; and if it is possible to demonstrate the value of your offering through small doses of valuable advice – i.e. showing rather than telling.
- Decide your stance in the market and the position you are seeking to reinforce. I’ve seen plenty of expensive and glossy “though leadership” that is totally wasted because it doesn’t support the provider’s actual value proposition.
- Set goals and decide on resourcing – people and money. Our research has found that some companies waste money or don’t spend enough.
- Manage it as a marketing program, even though the thought leadership content will of course come from your subject matter experts. This is possibly the main thing that too many companies fail to do. They have thought leadership all right, but they don’t manage it as a marketing program.
- Track results: it’s a marketing program after all, and has to contribute to growth.
There’s a lot more to running a full TLM program in an IT provider. Picking the right content, the right stance, the right communications channels and the right follow-up mechanisms are just a few. That’s what the published full research note is about. But these points are what you need to get started.
These blog posts will continue to offer thoughts and advice on the business of IT Services, based on my research and that of my colleagues.
Category: Uncategorized Tags: IT Services, marketing
by Rolf Jester | February 25, 2013 | 3 Comments
Two recent media reports on automation in IT services highlight some old advice and a major shift in the business of IT services.
Ten years ago I applied a “counter-revolutionary” approach to the offshore revolution. The conclusion of my research was that traditional, non-offshore providers should adopt a two-pronged strategy. First “absorption”, which could be described as “if you can’t beat ‘em, join ‘em.” The second, longer-term part of the strategy was “annulment”, making the revolution irrelevant by undercutting its basis. In the case of offshore IT services, the idea was to automate the process as far as possible, thus making labor-arbitrage less relevant.
That was published in 2003 in http://www.gartner.com/resId=400171. It was based on a model developed by Professor Richard D’Aveni, published in “The Empire Strikes Back: Counterrevolutionary Strategies for Industry Leaders,” Harvard Business Review, vol. 80, no. 11. The model is still valid.
Of course the traditional IT service providers did adopt our advice, whether at our suggestion or not, and did “join ‘em”. The major global providers have huge offshore service centers now. But the idea of annulment by automation was treated a bit more sceptically.
The Economist of January 19th, 2013, had a special report “Rise of the Machines”. It describes two fascinating companies that are automating parts of the processes of IT service delivery. Blue Prism, a British startup, provides tools to allow non-engineers to robotically automate certain business processes. And IPsoft, a remote infrastructure management firm uses extensive automation to drastically reduce the labor content of infrastructure management services. Its Eliza program is well described in Meeting Eliza – Livemint.
So the counter-revolution has kicked in. Or is this the next revolution already? I’d be glad to hear from service providers as to what they’re doing about it.
Category: Uncategorized Tags: IT Services
by Rolf Jester | February 17, 2013 | Comments Off
I research the business of IT services, especially the marketing and selling of those services. One useful and enjoyable book on the topic is Selling the Invisible: A Field Guide to Modern Marketing by Harry Beckwith (Thomson Texere, 2001). While not new, it’s still available, though not as an e-book unfortunately: http://amzn.com/0446672319
“Selling the invisible” is a good way to describe the challenge of selling any service. It is arguably even harder to sell IT services and digital services than “tangible” services like air travel. Certainly that’s what I observe in my day-to-day job of researching IT providers’ businesses and advising those firms.
In my own career in IT marketing I always found that some of the best lessons come from industries other than one’s own. That’s where this book can be stimulating to new and useful insights.
The book’s format makes it easy to dip into. It consists of numerous short, easy-to-digest pieces of a page or so, each with a clear point and an example. Each one leaves you with something to think about. It’s useful as a “thought for the day” to bear in mind as you carry out your job. It’s sort of like a blog on paper! Of course the author now has a real blog too: http://www.beckwithpartners.com/blog/
My blog posts will continue to bring you stories and views to help with the challenge of selling IT services. I’ll share current findings from research and seek your feedback on planned research.
Category: Uncategorized Tags: IT Services
by Rolf Jester | February 13, 2013 | 9 Comments
When should service providers stop using “Cloud” to describe their services offerings?
A story today in the Australian “Computer Daily News” reports on a global study done by KPMG and chooses to highlight the finding that a third of executives surveyed said they found that they found higher than expected cloud implementation costs and integration costs. Now that’s a small signal of the sort of news you expect when a phenomenon starts to move along the Hype Cycle from the “Peak of Inflated Expectations” down into the “Trough of Disillusionment”. Only a small sign at this stage.
The original report is at http://www.kpmg.com/global/en/issuesandinsights/articlespublications/cloud-service-providers-survey/Pages/default.aspx
Remember “e-business”? What about “ASP”? Whatever happened to them? There was a time when everyone wanted to become an “Internet Business”. Then just about every company became one. So now, no-one is one anymore … because everyone is!
To be sure, there will come a time when you should stop using “cloud” to describe your services offerings.
I’m not, for these purposes, concerned with whether your offerings are “really” cloud services. However that will concern your customers, who are, according to our research, quite confused about the offerings on the market. Rather, I’ll deal with how you describe your offerings and how effective that is.
As we saw with e-business, when everyone is on the bandwagon there’s no longer anything differentiating about being there. For cloud, that time is not far off. The main “cloud computing” phenomenon is already sliding down the steep slope into the Trough of Disillusionment on Gartner’s Hype Cycle for Cloud Computing, 2012. That means that the most extreme hype phase is over and relatively soon we will see negative news and disillusioned user stories. On January 9th the Wall Street Journal published a piece about whether small businesses can save money by using cloud services. The story was balanced, but it did show some users whose experience was not all positive. Some were worried about security, outages and a lack of control. On the whole the story was still positive. At the bottom of the Trough of Disillusionment, there will be more negative news.
Of course that doesn’t mean that the advantages of cloud services will have gone away. Far from it. It just means that, as at the Peak the hype exceeds the reality, so in the Trough of the Hype Cycle, the gloom exceeds the reality. The good news for all is that that signals the start of the climb up the Slope of Enlightenment towards the Plateau of Productivity, when even the laggard adopters will buy in.
For some time you may have to retain the cloud word just to show that you have offerings in that category, but at that stage it has become a mere entry ticket. Your differentiation has once again to be built on the unique value that you deliver. That’s hard work. We know from our research how hard it is to differentiate IT services. Some of my colleagues and I addressed some of the mistakes that marketers make in Marketing Essentials: Seven Common Mistakes IT Services Providers Make in Differentiation.
It will be a balancing act to know when to drop the “cloud” word. Each provider will have to do the hard work of thinking through positioning and value propositions and creating effective offering descriptions that work for their target segments. There are no simple prescriptions.
I’d appreciate your feedback as we research this topic further.
These blog posts will continue to look at the business of marketing and selling IT services, based on my research and that of my colleagues.
Category: Uncategorized Tags: cloud, marketing