June is the beginning of ITSMA's Academy Awards season. But there is still time for all you aspiring best actors and actresses in a services marketing drama. The application deadline for our Services Marketing Excellence Awards is June 30—see below for details. In other news this month, signs of optimism on the recovery front, a new report on "meeting the solutions challenge," and the annual ITSMA Europe Forum. As always, let me know of any topics or questions you'd like to see covered in future issues of the ITSMA E-ZINE.

Are you an avid E-ZINE reader? We're taking a fresh look at E-ZINE content and design and want your input. Write me if you are willing to review potential changes over the next few months. We'd greatly appreciate your help.

—Rob Leavitt, editor and ITSMA's director of member advocacy

What's Hot: Navigating the Recovery's Rocky Road

ITSMA's Chief Marketer's Conference two weeks ago was a great opportunity to take the pulse of marketing executives and other experts from a variety of leading technology companies. The mood was "cautiously optimistic," to borrow some diplomatic-speak. Some organizations, like IDC, expect near-term growth while others see a more anemic market through at least another year. In all, marketers are clearly still struggling to find the right combination of strategies and tactics to help boost growth and profitability amid the rocky road ahead.

When will the recovery come?

A majority of conference participants believe that the industry has hit bottom and a turnaround will begin in the third or fourth quarter of this year. They believe it will be the middle of 2003 before we are truly out of the woods, however. John Gantz, chief research officer for IDC, was among the most optimistic at the conference. Taking the long view, Gantz suggested that the recent downturn has followed a typical pattern for IT business cycles over the past 40 years, and a healthy rebound is sure to follow, as it has followed downturns in previous decades. In all, Gantz projected 5% IT spending growth in 2002 and more than 10% in 2003, with services showing even larger increases.

Optimism was certainly not unanimous. Several conference participants held a gloomier outlook and pointed to continuing losses, customer caution, and the lack of any "next big thing" to spur fresh technology investment. For example, John Parkinson, chief technologist for the Americas region for Cap Gemini Ernst & Young, asserted that most CIOs are already "tapped out" for 2002 and are still working through a massive surplus of technology investments from the late 1990s.

What will the recovery look like?

Uneven is the key word. Certain types of services, certain regions, and certain vertical industries will likely lead the way. Many marketers, not surprisingly, see security-related offers as holding great potential for growth. Rusine Mitchell-Sinclair, general manager of IBM Safety and Security Services, for example, noted that many client firms are appointing chief security officers to manage security investments and initiatives. The increasingly networked economy, with Web services promising to make networking even easier, according to Mitchell-Sinclair, puts an even greater premium on security.

Along with security, John Gantz of IDC pointed to four other areas of growth: e-business development and support (notwithstanding the dot-com crash), integration of enterprise applications with Web sites, wireless technology, and globalization. In terms of globalization, Gantz noted that although services represent roughly half of IT spending in most highly developed countries, services account for only one-third of IT spending in countries like Brazil and a mere 6% of IT spending in China. Increasing IT services sales in the fast-growing, less-developed markets represent an enormous opportunity for growth.

Buyer skepticism will continue to limit growth and profits, however. In the words of Michael Treacy, co-author of The Discipline of Market Leaders and chief strategist for GEN3 Partners, "Buyers have a hangover. There was a horrific period of excess spending and little came of it. We've had a string of overpromising on technologies and underdelivering. CIOs say 'Never again.'"

A related problem, according to Treacy and others at the conference, is the sense that cost structures for most IT professional services have gotten out of whack with reality. According to John Parkinson, more than half the revenue growth at the large professional services firms over the last 10 years was due simply to raising prices. Those days are gone, according to Parkinson. The upshot is that the cost pressures are leading many marketers to fear a growing commoditization of services as buyers now call the tune and fast-growing off-shore services providers provide cheaper alternatives to the large, high-overhead firms in the U.S.

What should marketers do right now?

Conference speakers and participants emphasized four main priorities for marketers today:

• Design a growth portfolio. Companies that sustain fast growth over time, according to Michael Treacy, build a portfolio of growth strategies that diffuse risk and spread managerial responsibilities. Such a growth portfolio consists of five elements: base retention (keep the growth you've already earned), market expansion (half of success is just showing up in the right markets), share gain (taking share from competitors), adjacent market penetration (leveraging existing capabilities), and new lines of business (moving into entirely new markets). Individual firms, of course, will have greater and lesser prospects in each of these areas.

• Balance sales support with continued brand development. Many marketers have shifted resources heavily toward immediate sales support. That's understandable, but strong brands remain critical factors in generating leads, getting onto short lists, and supporting efforts to close deals. Especially with fast-changing markets, noted Jeff Jones, president and CEO of the marketing agency LBWorks, "Brands provide a consistent view to the market and a context for any new offers and strategies."

• Orient marketing programs and messages toward client buying behavior and priorities. The majority of clients today, according to ITSMA's Julie Schwartz, are investing in technology to control costs rather than help increase revenue—although this varies by vertical industry. Other business priorities include building closer client relationships, ensuring security, and increasing supply chain efficiency. Clients are especially interested in vendors that can provide service level guarantees and document that they deliver on promises.

• Measure results. The drumbeat for marketers to prove the return on marketing investment continues to get louder. Conference participants were virtually unanimous in saying that documenting the value of marketing is becoming a top priority.

Perhaps the biggest question these days is "What role for marketing?" Services marketers have made tremendous gains over the last 10 years in creating a strategic role for themselves, building organizational credibility for marketing, and beginning to shift the emphasis from discrete products and services to more integrated solutions. Over the last year, however, cutbacks and revenue pressures have pushed many marketers back into the more traditional role of sales support. Some conference participants worried that even as the light appears at the end of the downturn tunnel, executives will pocket the savings from last year's cuts and try to move forward with a scaled-back marketing operation. Demonstrating leadership by designing sustainable growth strategies and building successful client relationships remains marketing's biggest challenge and greatest opportunity.

—Rob Leavitt

2002 Services Marketing Excellence Awards: Apply Now!

If adversity breeds creativity, we should see a bumper crop of Services Marketing Excellence (SME) Award applications this year. It has been a tough year for services marketers, but we've already seen some wonderful work in progress.

Categories for the 2002 awards include:

• New Services Development
• Brand and Reputation Management
• Customer Loyalty and Retention
• Solutions Marketing Programs
• Increasing Sales Effectiveness

Applications are due June 30, 2002. ITSMA will notify winners in August, and provide an opportunity for winning firms to present their programs at our annual MarketingServices/2002 conference, October 14-16, in Atlanta.

For more information, participation guidelines, and application forms, visit http://www.itsma.com/press/sme.htm.

Research Desk

Three Techniques to Improve Brand Positioning Research

Marketing experts insist that brand is more important than ever when demand is down and competition is up. Strong brands help build awareness, which generates new leads; they create positive impressions of capabilities and quality, which help close deals; and they reinforce the value of relationships, which supports client satisfaction and loyalty. Moreover, brand building can be more effective in tough times because costs are generally lower and many competitors cut back on their own branding spending.

It sounds sensible, but when push comes to shove, instead of brand building many firms cut back on brand spending and put their limited resources into programs that seem likely to generate more immediate results. But here's the rub: Few firms in our industry systematically measure brand and market positioning in ways that can highlight critical strengths and weaknesses and point to remedial action. It's hard to justify brand spending if you don't measure results and analyze the data to refine those investments.

Many firms do measure basic brand awareness and preference. Such measures are certainly useful, but a more in-depth approach to brand research and analysis can provide important insights that can support immediate refinements to key marketing and sales activities. Three techniques in particular are proving especially helpful as ITSMA works with member companies to increase the impact of their brand investments:

• Market Positioning Guide
• Brand Investment Matrix
• Brand Equity Index

Each of these is explained below.

• ITSMA's Market Positioning Guide plots the perceived strengths and weaknesses of a group of firms in different markets. In a recent study of IT professional services, for example, ITSMA surveyed 400 U.S.-based decision makers from Fortune 1000 companies and government entities. Among other issues, the study examined whether or not the buyers perceived different firms as strong in such areas as management consulting, systems integration, outsourcing, and providing IT solutions. The Market Positioning Guide shows how each firm in the different markets stacks up against competitors, thereby lending clear graphic evidence to support new investments in marketing for specific capabilities and markets. The Guide can be used to plot relative positioning in vertical markets as well.

• ITSMA's Brand Investment Matrix maps the attributes clients consider most important in a services vendor against their assessment of how firms are performing in those attributes. For example, the same ITSMA study of IT professional services showed that clients consider the three most important attributes to be "agrees to meet specific levels of performance," "has the ability to transfer knowledge to the client," and "has technical proficiency." Attributes such as having a global presence and being a low-cost provider were least important. Analyzing client priorities according to vertical markets and type of decision maker helps you construct specific messages that resonate well with target client concerns. Even more important, knowing how clients perceive your and your competitors' performance enables you to focus marketing investments in the most efficient manner.

• ITSMA's Brand Equity Index enables companies to construct a single, overall score that integrates a variety of critical brand data points and then compare that score to those of key competitors. Metrics incorporated in the Brand Equity Index include unaided awareness, aided awareness, familiarity (knowledge of the firm's offerings), favorability toward the firm, and perceived leadership in different markets. The Index assigns different weights to each metric to ensure that the overall score reflects strategic marketing priorities. For example, unaided awareness might count for 30 points out of 100 for a firm focused on building awareness, but only 10 out of 100 for a firm focused more on increasing favorability and perceived leadership. The Index itself is designed to be built directly into a broader marketing metrics dashboard or other reporting tool to provide an integrated view of marketing performance.

Marketers will likely continue to debate the seemingly age-old question of the relative value of brand versus other marketing investments. The more important question, though, is how to make sure that you are getting the biggest bang for your branding buck. Taking a more sophisticated approach to measuring and analyzing brand positioning will provide extremely valuable insights to support more effective marketing and sales efforts across the board.

—Rob Leavitt

ITSMA has recently completed two multiclient studies that utilize the techniques noted above. Enterprise Network Services: Market Positioning and Brand Awareness Study, 2002 provides detailed data on how enterprise buyers across eight major industries assess the capabilities and strengths of the major network services firms. Professional Services and Solutions Brand Awareness Study, 2002 provides detailed data and analysis on how buyers in nine major industries view the leading IT professional services firms. ITSMA works with study sponsors to provide custom analyses of their performance against key competitors and the market as a whole.

Tech Poll: CIOs Optimistic About Continued Increases in IT Spending

The CIO Magazine Tech Poll provides a monthly assessment of technology growth trends from a broad cross-section of CIOs, mostly from North America. The latest survey, conducted from May 9-16, 2002, suggests that chief information officers are increasingly optimistic about the prospects for IT spending over the next 12 months.

• During May, the Tech Poll panel projected that IT budgets will increase by 7.3% over the next 12 months, up from a 6.0% projection in April. This is the third month in a row with decidedly positive projections.
• Comparing IT spending in the second quarter of 2002 to the first quarter, 37.1% of the panel said it would be higher or significantly higher, while only 14.7% said it would be lower.
• Security software and storage systems show the strongest demand among eight specific IT categories, with more than half of the respondents expecting to increase spending in each area.
• When asked for the number one reason that would cause increased spending, 19.4% cited stronger end user demand while 16.6% said business is better. Only 10.6% cited a stronger macroeconomic environment.

May Tech Poll figures are based on 244 survey responses, with 93% from North America. CIOs comprised 89% of the total.

For more information, visit: http://www.cio.com/info/releases/052302_embargo.pdf.

Meeting the Solutions Challenge (ITSMA Update)

Driven by changing customer needs and the desire to create differentiation, information technology product and services companies are rushing to transform themselves into solutions providers. But the investments and organizational changes required can be overwhelming. ITSMA recently teamed with Babson College to assess the state of the field in solutions marketing. Meeting the Solutions Challenge, the first in a series of reports on our findings, focuses on a number of organizational and cultural changes required to accommodate a solutions orientation. Critical success factors that emerge from the study include cross-functional collaboration, creation of a distinct solutions organization with profit and loss responsibility, and an increasingly strategic role for marketing.

Read the full text: Meeting the Solutions Challenge is an ITSMA membership deliverable. It is available free to all ITSMA members and for sale to nonmembers via the ITSMA Web site. For more information or to download or purchase this Update, visit http://www.itsma.com/research/abstracts/U0039.htm.

From Infoglut to Intelligence: Structuring Research for Business Results (ITSMA Briefing Slides)

Last year's squeeze on marketing has put greater pressure on marketing research teams to support more effective decision making with fewer research dollars. The pressure has exacerbated traditional frustrations among both those responsible for buying and producing research (nobody uses it!) and those consuming the research (it costs too much while providing too few usable insights). Yet even today, few marketing organizations systematically measure the effectiveness of their research investments. A new ITSMA presentation outlines six guidelines to help structure a research program for improved business results, including avoiding common pitfalls, refining the research agenda, and aligning research with executive needs. The presentation also highlights best-practice examples from IBM, EMC, and EDS.

Download the presentation: From Infoglut to Intelligence is an ITSMA membership deliverable. It is available free to all ITSMA members and for sale to nonmembers via the ITSMA Web site. For more information or to download or purchase this presentation, visit http://www.itsma.com/research/abstracts/OLB050902.htm.

Security Solutions Positioning and Brand Study—Sign Up Now!

Two down and one to go! Sponsorship is closed for two multiclient positioning and brand studies (network services and storage solutions), but we have one more in the queue. Check out our Web site to explore the benefits of sponsoring our upcoming study on security solutions. Study sponsors are able to influence the research design as well as obtain customized reports and briefings. For more information or to sign up as a sponsor, view the detailed study prospectus on the ITSMA Web site:

• Security Solutions Market Positioning and Brand Awareness Study:
  http://www.itsma.com/research/prospectus/mk0286_sec02.htm

EuroNotes: Five Priorities for Building Services Brands

Interest among technology marketers in building a services brand has advanced recently amid signs that the investment community is taking brand strength more seriously. For technology firms placing greater emphasis on their services business, this creates a direct link between services branding and shareholder value.

The very nature of a services business, however, with its almost complete reliance on people rather than products, means that achieving a consistent, "branded" style and approach across the entire organisation is a challenge that analysts and many marketers themselves are only just beginning to understand. European branding specialists suggest that services marketers should focus on five priorities:

• Defining the company story
• Mapping client touch points
• Reinforcing brand strategy throughout the company
• Training employees to live the brand
• Measuring brand perceptions

Read the complete article

Upcoming Events: North America

Last Chance to Sign Up! June 11-14 Client-Centric Marketing Course—Accelerating Services' Growth (San Francisco)
Grab the last remaining seats! ITSMA's signature services marketing course provides an intensive, hands-on learning experience based on the four key phases of the ITSMA Marketing Framework: strategy and planning, solutions management, communication, and relationship management.

For more information or to register online, visit http://www.itsma.com/Events/event_desc/e06110200.htm or contact Lore Griffith at +1-781-862-8500, ext. 19, or lgriffith@itsma.com.

July 16 Online Briefing—Transformative Marketing: Next Steps in Marketing Solutions (free to members), 11:00-12:00 EDT
While solutions is considered by some to be just the latest marketing buzzword, most companies are striving to design and offer integrated business solutions that effectively differentiate them in the marketplace. Join ITSMA's Julie Schwartz and Adnelly Reyes for an in-depth review of ITSMA's latest research and assessment of the most effective steps in solutions marketing.

For more information or to register online, visit http://www.itsma.com/Events/event_desc/E07160200.htm or contact Lore Griffith at +1-781-862-8500, ext. 19, or lgriffith@itsma.com.

Upcoming Events: Europe

June 24-25 Annual Forum and Workshop: From the Eye of the Storm: Marketing's Role in Accelerating the Turnaround (London)
Given the current slow down in the technology and telecom sectors, service and solution providers are looking for ways to improve results with limited marketing resources. Marketing leaders are focusing on such questions critical as: Where should you focus your marketing efforts now? How has customer decision-making changed? What can marketing do to help customers move faster through the sales cycle? How can you measure the return from marketing?

ITSMA's 2002 European Forum will explore these and other urgent marketing issues with many of European marketing's best and brightest. Featured speakers at the forum include representatives from IBM Global Services, Fujitsu Services, PricewaterhouseCoopers, TecBrand, beasyousay, and ITSMA. The forum provides a unique opportunity both to learn from market leaders and also to network with services marketing peers.

Following the one-day forum on June 24, a daylong workshop on June 25 will explore techniques to build higher levels of recognition and influence for marketing within the organisation.

For more information or to register online, visit http://www.itsma.com/Events/event_desc/e06240200.htm or contact ITSMA Europe at +44 (0) 1494 616027 or info@itsma.com.

Complete 2002 Events Calendar: http://www.itsma.com/aspfiles/Events/calendar.asp

Toolbox: Client Experience Management

Each month ITSMA highlights a new idea, application, or other type of tool that marketers can use immediately to strengthen their programs and organizations.

All marketers understand that client acquisition, retention, and loyalty are central to long-term success. Yet few marketing organizations have developed a unified system to help integrate management of the various pieces of the puzzle, including generating leads, qualifying opportunities, structuring and managing client engagements, strengthening relationships, and building loyalty.

ITSMA's Guidelines for Client Experience Management helps marketers evaluate the quality of client interactions and the degree to which they have developed an integrated system to manage the full client experience.

Visit http://www.itsma.com/research/toolkit_free/CEM_guide.htm to view and download the tool.

View more ITSMA Tools.

ITSMA in the News:

• Seeking Opportunities in Tough Tech Times (Global Fin@nce)
• Positioning for the Turnaround (Services Revenue)
  Services Revenue is a new newsletter focused on the challenges and successes of marketing and selling service products. ITSMA E-ZINE readers are eligible for a 50% discount off the normal $99 subscription fee. For more information, contact Sid Saleh at sid@csmhub.com or +1-720-304-2134, or visit http://www.csmhub.com.

More ITSMA in the News

Do you have a services marketing question?
Visit Ask ITSMA to access our experience, insight, and research results.

(c) Copyright 2002, ITSMA

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About ITSMA
ITSMA specializes in helping companies market and sell services and solutions more effectively. As a membership organization, we provide research, consulting, and training to the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.